<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 26, 1997
FILE NOS. 33-19338
811-05426
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 47
/X/
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 48
/X/
------------------------
G.T. INVESTMENT FUNDS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
50 CALIFORNIA STREET, 27TH FLOOR,
SAN FRANCISCO, CALIFORNIA 94111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(415) 392-6181
------------------------
<TABLE>
<S> <C>
DAVID J. THELANDER, ESQ. ARTHUR J. BROWN, ESQ.
VICE PRESIDENT & ASSISTANT R. DARRELL MOUNTS, ESQ.
GENERAL COUNSEL KIRKPATRICK & LOCKHART LLP
CHANCELLOR LGT ASSET 1800 MASSACHUSETTS AVENUE, N.W.,
MANAGEMENT, INC. 2ND FLOOR,
50 CALIFORNIA STREET, 27TH FLOOR WASHINGTON, D.C. 20036
SAN FRANCISCO, CALIFORNIA 94111 (202) 778-9000
(NAME AND ADDRESS OF AGENT FOR SERVICE)
</TABLE>
------------------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
/ / IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B) OF RULE 485
/X/ ON FEBRUARY 28, 1997 PURSUANT TO PARAGRAPH (B) OF RULE 485
/ / 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1) OF RULE 485
/ / ON PURSUANT TO PARAGRAPH (A)(1) OF RULE 485
/ / 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2) OF RULE 485
/ / ON PURSUANT TO PARAGRAPH (A)(2) OF RULE 485
/ / THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED,
REGISTRANT HAS PREVIOUSLY ELECTED TO REGISTER AN INDEFINITE NUMBER OF ITS SHARES
OF COMMON STOCK. A RULE 24F-2 NOTICE FOR REGISTRANT'S FISCAL YEAR ENDED OCTOBER
31, 1996, WAS FILED ON DECEMBER 27, 1996.
CERTAIN SERIES OF THE G.T. INVESTMENT FUNDS, INC. ARE "FEEDER FUNDS" IN A
"MASTER/FEEDER" FUND ARRANGEMENT. THIS POST-EFFECTIVE AMENDMENT NO. 47 INCLUDES
A MANUALLY EXECUTED SIGNATURE PAGE FOR TWO MASTER TRUSTS, GLOBAL INVESTMENT
PORTFOLIO AND GLOBAL HIGH INCOME PORTFOLIO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
G.T. INVESTMENT FUNDS, INC.
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT
PROSPECTUS -- CLASS A AND CLASS B
<TABLE>
<CAPTION>
ITEM NO. OF
PART A OF FORM N-1A CAPTIONS IN PROSPECTUS
- --------------------------------- ------------------------------------------------------------------
<S> <C>
1. Cover Page................... Cover Page
2. Synopsis..................... Prospectus Summary
3. Condensed Financial
Information.................. Financial Highlights
4. General Description of
Registrant................... Investment Objective[s] and Policies; Risk Factors; Management;
Other Information
5. Management of the
Fund......................... Management
5A. Management's Discussion of
Fund Performance............. See Registrant's current Annual Report
6. Capital Stock and Other
Securities................... Dividends, Other Distributions and Federal Income Taxation; Other
Information
7. Purchase of Securities Being
Offered...................... Alternative Purchase Plan; How to Invest; How to Make Exchanges;
Calculation of Net Asset Value; Management
8. Redemption or
Repurchase................... Alternative Purchase Plan; How to Redeem Shares; Calculation of
Net Asset Value
9. Pending Legal
Proceedings.................. Not applicable
<CAPTION>
PROSPECTUS -- ADVISOR CLASS
ITEM NO. OF
PART A OF FORM N-1A CAPTIONS IN PROSPECTUS
- --------------------------------- ------------------------------------------------------------------
<S> <C>
1. Cover Page................... Cover Page
2. Synopsis..................... Prospectus Summary
3. Condensed Financial
Information.................. Financial Highlights
4. General Description of
Registrant................... Investment Objective[s] and Policies; Risk Factors; Management;
Other Information
5. Management of the Fund....... Management
5A. Management's Discussion of
Fund Performance............. See Registrant's current Annual Report
6. Capital Stock and Other
Securities................... Dividends, Other Distributions and Federal Income Taxation; Other
Information
7. Purchase of Securities Being
Offered...................... How to Invest; How to Make Exchanges; Calculation of Net Asset
Value; Management
8. Redemption or Repurchase..... How to Redeem Shares; Calculation of Net Asset Value
9. Pending Legal Proceedings.... Not applicable
</TABLE>
<PAGE>
G.T. INVESTMENT FUNDS, INC.
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT
STATEMENT OF ADDITIONAL INFORMATION -- CLASS A AND CLASS B
<TABLE>
<CAPTION>
ITEM NO. OF
PART B OF FORM N-1A CAPTIONS IN STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------- ------------------------------------------------------------------
<S> <C>
10. Cover Page................... Cover Page
11. Table of Contents............ Table of Contents
12. General Information and
History...................... Cover Page; Additional Information
13. Investment Objectives and
Policies..................... Investment Objective[s] and Policies;
Investment Limitations; Options, Futures and Currency Strategies;
Risk Factors; Execution of Portfolio Transactions
14. Management of the
Registrant................... Directors and Executive Officers; Management
15. Control Persons and Principal
Holders of Securities........ Directors and Executive Officers; Management
16. Investment Advisory and Other
Services..................... Management; Additional Information
17. Brokerage Allocation and
Other Practices.............. Execution of Portfolio Transactions
18. Capital Stock and Other
Securities................... Not applicable
19. Purchase, Redemption and
Pricing of Securities Being
Offered...................... Valuation of Fund Shares; Information Relating to
Sales and Redemptions
20. Tax Status................... Taxes
21. Underwriters................. Management
22. Calculation of Performance
Data......................... Investment Results
23. Financial Statements......... Financial Statements
</TABLE>
<PAGE>
G.T. INVESTMENT FUNDS, INC.
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT
(CONTINUED)
STATEMENT OF ADDITIONAL INFORMATION -- ADVISOR CLASS
<TABLE>
<CAPTION>
ITEM NO. OF
PART B OF FORM N-1A CAPTIONS IN STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------- ------------------------------------------------------------------
<S> <C>
10. Cover Page................... Cover Page
11. Table of Contents............ Table of Contents
12. General Information and
History...................... Cover Page; Additional Information
13. Investment Objectives and
Policies..................... Investment Objective[s] and Policies;
Investment Limitations; Options, Futures and Currency Strategies;
Risk Factors; Execution of Portfolio Transactions
14. Management of the
Registrant................... Directors and Executive Officers; Management
15. Control Persons and Principal
Holders of Securities........ Directors and Executive Officers; Management
16. Investment Advisory and Other
Services..................... Management; Additional Information
17. Brokerage Allocation and
Other Practices.............. Execution of Portfolio Transactions
18. Capital Stock and Other
Securities................... Not applicable
19. Purchase, Redemption and
Pricing of Securities Being
Offered...................... Valuation of Fund Shares; Information Relating to
Sales and Redemptions
20. Tax Status................... Taxes
21. Underwriters................. Management
22. Calculation of Performance
Data......................... Investment Results
23. Financial Statements......... Financial Statements
</TABLE>
<PAGE>
G.T. INVESTMENT FUNDS, INC.
CONTENTS OF POST-EFFECTIVE AMENDMENT
THIS POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT OF G.T. INVESTMENT
FUNDS, INC. CONTAINS THE FOLLOWING DOCUMENTS:
<TABLE>
<S> <C> <C>
Facing Sheet
Cross-Reference Sheet
Contents of Post-Effective Amendment
Part A -- Prospectus
-- GT Global Theme Funds
-- GT Global Income Funds
-- GT Global Growth & Income Fund
-- GT Global Latin America Growth Fund
GT Global Emerging Markets Fund
-- Prospectus -- Advisor Class
-- GT Global Theme Funds
-- GT Global Income Funds
-- GT Global Growth & Income Fund
-- GT Global Latin America Growth Fund
GT Global Emerging Markets Fund
Part B -- Statement of Additional Information
-- GT Global Theme Funds
-- GT Global Income Funds
-- GT Global Growth & Income Fund
-- GT Global Latin America Growth Fund
-- GT Global Emerging Markets Fund
-- Statement of Additional Information -- Advisor Class
-- GT Global Theme Funds
-- GT Global Income Funds
-- GT Global Growth & Income Fund
-- GT Global Latin America Growth Fund
-- GT Global Emerging Markets Fund
Part C -- Other Information
Signature Pages -- G.T. Investment Funds, Inc.
-- Global Investment Portfolio
-- Global High Income Portfolio
Exhibits
<FN>
- ------------------------
*The currently effective prospectuses and statements of additional information
for each of the following series of the Registrant are not affected by this
Amendment: GT Global Currency Fund and GT Global Small Companies Fund.
</TABLE>
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS -- 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.
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.
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.
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
Alternative Purchase Plan................................................................. 16
Investment Objectives and Policies........................................................ 17
Risk Factors.............................................................................. 25
How to Invest............................................................................. 30
How to Make Exchanges..................................................................... 37
How to Redeem Shares...................................................................... 38
Shareholder Account Manual................................................................ 40
Calculation of Net Asset Value............................................................ 41
Dividends, Other Distributions and Federal Income Taxation................................ 41
Management................................................................................ 43
Other Information......................................................................... 48
</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.
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
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 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."
Alternative Purchase Plan: Investors may select Class A or Class B shares, each subject to
different expenses and a different sales charge structure.
Class A Shares: Offered at net asset value plus any applicable sales charge
(maximum is 4.75% of public offering price) and subject to service
and distribution fees at the annualized rate of up to 0.50% of the
average daily net assets of each Fund's Class A shares.
Class B Shares: Offered at net asset value (a maximum contingent deferred sales
charge of 5% of the lesser of the shares' net asset value or the
original purchase price is imposed on certain redemptions made
within six years of date of purchase) and subject to service and
distribution fees at the annualized rate of up to 1.00% of the
average daily net assets of each Fund's Class B shares.
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Shares Available Through: Class A and Class B shares of each Fund's common stock are
available through broker/dealers who have entered into agreements
to sell shares with the Funds' distributor, GT Global, Inc. ("GT
Global"). Shares also may be acquired directly through GT Global
or through exchanges of shares of the other GT Global Mutual
Funds, which are open-end management investment companies advised
and/or administered by the Manager. See "How to Invest" and
"Shareholder Account Manual."
Exchange Privileges: Shares of a class of a Fund may be exchanged without a sales
charge for shares of the corresponding class of other GT Global
Mutual Funds. See "How to Make Exchanges" and "Shareholder Account
Manual."
Redemptions: Shares may be redeemed either through broker/dealers or the Funds'
transfer agent, GT Global Investor Services, Inc. ("Transfer
Agent"). See "How to Redeem Shares" and "Shareholder Account
Manual."
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 Fund shares of the distributing class or in shares of the
corresponding class of other GT Global Mutual Funds without a
sales charge.
First Purchase: $500 minimum ($100 for individual retirement accounts ("IRAs") and
reduced amounts for certain other retirement plans).
Subsequent Purchases: $100 minimum (reduced amounts for IRAs and certain other
retirement plans).
Net Asset Values: Class A and Class B shares of the Funds are quoted daily in the
financial section of most newspapers.
Other Features:
Class A Shares Letter of Intent Dollar Cost Averaging Program
Quantity Discounts Automatic Investment Plan
Right of Accumulation Systematic Withdrawal Plan
Reinstatement Privilege Portfolio Rebalancing Program
Class B Shares Reinstatement Privilege Automatic Investment Plan
Systematic Withdrawal Plan Dollar Cost Averaging Program
Portfolio Rebalancing Program
</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 Class A and Class B shares of the Funds are reflected in
the following tables(1):
<TABLE>
<CAPTION>
GT GLOBAL
GT GLOBAL GT GLOBAL FINANCIAL
HEALTH CARE TELECOMMUNI- SERVICES
FUND CATIONS FUND FUND
----------------- ----------------- -----------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- -------
SHAREHOLDER TRANSACTION COSTS (2):
<S> <C> <C> <C> <C> <C> <C>
Maximum sales charge on purchases of shares
(as a % of offering price)............................... 4.75% None 4.75% None 4.75% None
Sales charges on reinvested distributions to
shareholders............................................. None None None None None None
Maximum deferred sales charge (as a % of net asset value at
time of purchase or sale, whichever is less)............. None 5.00% None 5.00% None 5.00%
Redemption charges......................................... None None None None None None
Exchange fees:
-- On first four exchanges each year................... None None None None None None
-- On each additional exchange......................... $7.50 $7.50 $7.50 $7.50 $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.............. 0.97% 0.97% 0.93% 0.93% 0.98% 0.98%
12b-1 distribution and service fees........................ 0.50% 1.00% 0.50% 1.00% 0.50% 1.00%
Other expenses (after reimbursements)...................... 0.37% 0.37% 0.36% 0.36% 0.92% 0.92%
------- ------- ------- ------- ------- -------
Total Fund Operating Expenses.............................. 1.84% 2.34% 1.79% 2.29% 2.40% 2.90%
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
GT GLOBAL
GT GLOBAL GT GLOBAL CONSUMER PRODUCTS
INFRASTRUCTURE NATURAL RESOURCES AND
FUND FUND SERVICES FUND
----------------- ----------------- -----------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- -------
SHAREHOLDER TRANSACTION COSTS (2):
<S> <C> <C> <C> <C> <C> <C>
Maximum sales charge on purchases of shares
(as a % of offering price).................. 4.75% None 4.75% None 4.75% None
Sales charges on reinvested distributions to
shareholders................................ None None None None None None
Maximum deferred sales charge (as a % of net
asset value at time of purchase or sale,
whichever is less).......................... None 5.00% None 5.00% None 5.00%
Redemption charges............................. None None None None None None
Exchange fees:
-- On first four exchanges each year....... None None None None None None
-- On each additional exchange............. $7.50 $7.50 $7.50 $7.50 $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration
fees........................................ 0.98% 0.98% 0.98% 0.98% 0.98% 0.98%
12b-1 distribution and service fees............ 0.50% 1.00% 0.50% 1.00% 0.50% 1.00%
Other expenses................................. 0.77% 0.77% 0.82% 0.82% 0.86% 0.86%
------- ------- ------- ------- ------- -------
Total Fund Operating Expenses.................. 2.25% 2.75% 2.30% 2.80% 2.34% 2.84%
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</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
---- ----- ----- ----- ---- ----- ----- ----- ---- ----- ----- -----
Class A Shares (4).................... $66 $103 $144 $256 $65 $102 $141 $251 $71 $120 $171 $311
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class B Shares
Assuming a complete redemption at
end of period (5).................. $75 $104 $147 $271 $74 $102 $144 $266 $80 $121 $174 $326
Assuming no redemption.............. $24 $ 74 $127 $271 $24 $ 72 $124 $266 $30 $ 91 $154 $326
</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
---- ----- ----- ----- ---- ----- ----- ----- ---- ----- ----- -----
Class A Shares (4).................... $70 $115 $164 $297 $70 $117 $166 $302 $70 $118 $168 $306
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class B Shares
Assuming a complete redemption at
end of period (5).................. $78 $116 $167 $311 $79 $118 $170 $316 $79 $119 $171 $320
Assuming no redemption.............. $28 $ 86 $147 $311 $29 $ 88 $150 $316 $29 $ 89 $151 $320
<FN>
- ------------------
(1) THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUNDS. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies. 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) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See "How
to Invest."
(3) 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. With respect to Class A shares, without
reimbursements, "Other expenses" and "Total Fund Operating Expenses" would
have been 1.91% and 3.39%, respectively, for the Financial Services Fund
and its Portfolio. With respect to Class B shares, without reimbursements,
"Other expenses" and "Total Fund Operating Expenses" would have been 1.91%
and 3.89%, respectively, for the Financial Services Fund and its Portfolio.
The Funds also offer Advisor Class shares to certain categories of
investors. See "Alternative Purchase Plan." Advisor Class shares are not
subject to 12b-1 distribution and service 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.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes deduction of the applicable contingent deferred sales charge.
</TABLE>
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 offered
through this Prospectus 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+
--------------------------------------------------------------------------------------------------
AUGUST 7, 1989
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
-------------------------------------------------------------------------------- TO OCTOBER 31,
1996* 1995 1994* 1993* 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- -------- --------------
<S> <C> <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 $ 11.43
-------- -------- -------- -------- -------- -------- -------- --------------
Income from investment
operations:
Net investment income
(loss)..................... (0.17) (0.15) (0.22) (0.15) (0.18) 0.03 0.06 0.01
Net realized and unrealized
gain (loss) on
investments................ 4.79 3.73 2.02 0.57 (1.53) 6.78 0.97 0.39
-------- -------- -------- -------- -------- -------- -------- --------------
Net increase (decrease)
from investment
operations............... 4.62 3.58 1.80 0.42 (1.71) 6.81 1.03 0.40
-------- -------- -------- -------- -------- -------- -------- --------------
Distributions:
From net investment
income..................... (0.00) (0.00) (0.00) (0.00) (0.00) (0.07) (0.03) (0.00)
From net realized gain on
investments................ (2.86) (1.34) (0.00) (0.00) (0.14) (0.28) (0.00) (0.00)
In excess of net realized
gain on investments........ (0.00) (0.00) (0.06) (0.00) (0.00) (0.00) (0.00) (0.00)
-------- -------- -------- -------- -------- -------- -------- --------------
Total distributions....... (2.86) (1.34) (0.06) (0.00) (0.14) (0.35) (0.03) (0.00)
-------- -------- -------- -------- -------- -------- -------- --------------
Net asset value, end of
period....................... $ 23.60 $ 21.84 $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83 $ 11.83
-------- -------- -------- -------- -------- -------- -------- --------------
-------- -------- -------- -------- -------- -------- -------- --------------
Total investment return (c)... 23.14% 19.79% 10.11% 2.4% (8.9)% 54.2% 8.7% 3.5%(a)
-------- -------- -------- -------- -------- -------- -------- --------------
-------- -------- -------- -------- -------- -------- -------- --------------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $467,861 $426,380 $438,940 $461,113 $655,867 $552,897 $145,544 $ 49,903
Ratio of net investment income
(loss) to average net
assets....................... (0.71)% (0.72)% (1.23)% (0.90)% (0.97)% 0.19% 0.66% 3.2%(b)
Ratio of expenses to average
net assets:
With expense reduction...... 1.80% 1.85% 1.98% 2.00% 2.05% 2.01% 2.39% 2.5%(b)
Without expense reduction... 1.84% 1.91% --%(d) --%(d) --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate +++... 157% 99% 64% 61% 30% 23% 34% 183%(b)
Average commission rate per
share paid on portfolio
transactions+++.............. $ 0.0548 N/A N/A N/A 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.
* These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratios of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not applicable.
Prospectus Page 8
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL HEALTH CARE FUND
(CONTINUED)
<TABLE>
<CAPTION>
CLASS B++
-----------------------------------------------------
APRIL 1,
YEAR ENDED OCTOBER 31, 1993
--------------------------------------- TO OCTOBER
1996* 1995* 1994* 31, 1993*
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period............................... $ 21.56 $ 19.46 $ 17.80 $ 15.59
----------- ----------- ----------- -----------
Income from investment operations:
Net investment income (loss)..................................... (0.27) (0.25) (0.32) (0.14)
Net realized and unrealized gain (loss) on investments........... 4.72 3.69 2.02 2.35
----------- ----------- ----------- -----------
Net increase (decrease) from investment operations............. 4.45 3.44 1.70 2.21
----------- ----------- ----------- -----------
Distributions:
From net investment income....................................... (0.00) (0.00) (0.00) (0.00)
From net realized gain on investments............................ (2.86) (1.34) (0.00) (0.00)
In excess of net realized gain on investments.................... (0.00) (0.00) (0.04) (0.00)
----------- ----------- ----------- -----------
Total distributions............................................ (2.86) (1.34) (0.04) (0.00)
----------- ----------- ----------- -----------
Net asset value, end of period..................................... $ 23.15 $ 21.56 $ 19.46 $ 17.80
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Total investment return (c)........................................ 22.59% 19.17% 9.55% 14.2%(a)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Ratios and supplemental data:
Net assets, end of period (in 000's)............................... $ 107,622 $ 70,740 $ 39,100 $ 8,604
Ratio of net investment income (loss) to average net assets........ (1.21)% (1.22)% (1.73)% (1.40)%(b)
Ratio of expenses to average net assets:
With expense reduction........................................... 2.30% 2.35% 2.48% 2.54%(b)
Without expense reduction........................................ 2.34% 2.41% --%(d) --%(d)
Portfolio turnover rate +++........................................ 157% 99% 64% 61%
Average commission rate per share paid on portfolio
transactions+++................................................... $ 0.0548 N/A N/A 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.
(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
------------------------ ------------------------
DECEMBER DECEMBER
30, 1994 30, 1994
(COMMENCEMENT (COMMENCEMENT
OF OF
OPERATIONS) OPERATIONS)
YEAR ENDED TO OCTOBER YEAR ENDED TO OCTOBER
OCTOBER 31, 31, OCTOBER 31, 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** (.031)*** (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:
From net realized gain on investments............. (0.52) (0.00) (0.52) (0.00)
----------- ----------- ----------- -----------
Total distributions............................. (0.52) (0.00) (0.52) (0.00)
----------- ----------- ----------- -----------
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 (loss) to average net
assets:
With expense reductions and reimbursement by the
Manager.......................................... (1.14)% 0.20%(a) (1.64)% (0.30)%(a)
Without expense reductions and reimbursement by
the Manager...................................... (1.24)% (11.11)%(a) (1.74)% (11.61)%(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)
Without expense reductions and reimbursement by
the Manager...................................... 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
</TABLE>
- ------------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
+ 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 and $1.04 for Class A and Class B, respectively.
*** Before reimbursement by the Manager, net investment income per share would
have been reduced by $0.05 for each class.
N/A Not applicable.
Prospectus Page 10
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
CLASS A+
--------------------------------------------------------------
JANUARY 27,
1992
(COMMENCE-
MENT OF
YEAR ENDED OCTOBER 31, OPERATIONS) TO
---------------------------------------------- OCTOBER 31,
1996(C) 1995 1994(C) 1993 1992
---------- ---------- ---------- ---------- --------------
Per Share Operating Performance:
<S> <C> <C> <C> <C> <C>
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 (loss) 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++
-----------------------------------------------
APRIL 1,
YEAR ENDED OCTOBER 31, 1993 TO
---------------------------------- OCTOBER 31,
1996(C) 1995 1994(C) 1993
---------- ---------- ---------- -----------
Per Share Operating Performance:
<S> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 16.20 $ 17.66 $ 16.87 $ 12.68
---------- ---------- ---------- -----------
Income from investment operations:
Net investment income (loss).................... (0.23) (0.17) (0.10) 0.01
Net realized and unrealized gain (loss) on
investments.................................... 1.22 (0.43) 1.17 4.18
---------- ---------- ---------- -----------
Net increase (decrease) from investment
operations................................... 0.99 (0.60) 1.07 4.19
---------- ---------- ---------- -----------
Distributions:
From net investment income...................... (0.00) (0.00) (0.01) (0.00)
From net realized gain on investments........... (0.82) (0.86) (0.27) (0.00)
---------- ---------- ---------- -----------
Total distributions........................... (0.82) (0.86) (0.28) (0.00)
---------- ---------- ---------- -----------
Net asset value, end of period.................... $ 16.37 $ 16.20 $ 17.66 $ 16.87
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Total investment return (d)....................... 6.46% (3.37)% 6.50% 33.0%(a)
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Ratios and supplemental data:
Net assets, end of period (in 000's).............. $1,007,654 $1,111,520 $1,184,081 $455,335
Ratio of net investment income (loss) to average
net assets....................................... (1.34)% (0.99)% (0.52)% 0.3%(b)
Ratio of expenses to average net assets:
With expense reductions......................... 2.24% 2.27% 2.3% 2.5%(b)
Without expense reductions...................... 2.29% 2.33% --%(e) --%(e)
Portfolio turnover rate+++........................ 37% 62% 57% 41%
Average commission rate per share paid on
portfolio transactions+++........................ $ 0.0165 N/A N/A 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.
(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, 1994 MAY 31, 1994
(COMMENCEMENT (COMMENCEMENT
YEAR ENDED OCTOBER OF OPERATIONS) YEAR ENDED OCTOBER OF OPERATIONS)
31, TO 31, TO
------------------- OCTOBER 31, ------------------- OCTOBER 31,
1996(D) 1995(D) 1994 1996(D) 1995(D) 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 (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 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
transactions++............... $ 0.0080 N/A N/A $ 0.0080 N/A N/A
</TABLE>
- ------------------
+ Before reimbursement by the Manager, the net investment income per share for
Class A and Class B of the Financial Services Fund would have been reduced
by $0.13 and $0.13, respectively, for the year ended October 31, 1996, $0.59
and $0.59, respectively, for the year ended October 31, 1995, and $0.23 and
$0.23, respectively, from May 31, 1994 to October 31, 1994.
++ 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.
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
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
(COMMENCEMENT (COMMENCEMENT
YEAR ENDED OCTOBER OF OPERATIONS) YEAR ENDED OCTOBER OF OPERATIONS)
31, TO 31, TO
------------------- OCTOBER 31, ------------------- OCTOBER 31,
1996(D) 1995 1994 1996(D) 1995 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
-------- -------- -------------- -------- -------- --------------
Distributions:
From net investment
income..................... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
-------- -------- -------------- -------- -------- --------------
Total distributions....... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
-------- -------- -------------- -------- -------- --------------
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 from the
Manager.................... (0.19)% (0.32)% 0.41%(a) (0.69)% (0.82)% (0.09)%(a)
Without expense reductions
and reimbursement from 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 from the
Manager.................... 2.14% 2.36% 2.40%(a) 2.64% 2.86% 2.90%(a)
Without expense reductions
and reimbursement from 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
</TABLE>
- ------------------
+ Before reimbursement by the Manager, the net investment income per share for
Class A and Class B of the Infrastructure Fund would have been reduced by
$0.03 and $0.03, respectively, for the year ended October 31, 1995, and
$0.02 and $0.02, respectively, from May 31, 1994 to October 31, 1994.
++ 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
commission rates presented are for the Infrastructure Portfolio.
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
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, MAY 31,
1994 1994
(COMMENCEMENT (COMMENCEMENT
OF OF
OPERATIONS) OPERATIONS)
TO TO
YEAR ENDED OCTOBER 31, OCTOBER YEAR ENDED OCTOBER 31, OCTOBER
------------------------- 31, ------------------------- 31,
1996(D) 1995 1994 1996(D) 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:
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
</TABLE>
- ------------------
+ Before reimbursement by the Manager, the net investment income per share for
Class A and Class B of the Natural Resources Fund would have been reduced by
$0.14 and $0.13, respectively, for the year ended October 31, 1995, and
$0.04 and $0.04, respectively, from May 31, 1994 to October 31, 1994.
++ 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.
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
N/A Not applicable.
Prospectus Page 15
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GT GLOBAL THEME FUNDS
ALTERNATIVE PURCHASE PLAN
- --------------------------------------------------------------------------------
DIFFERENCES BETWEEN THE CLASSES. The primary difference between the two classes
of each Fund's shares offered through this Prospectus lies in their sales charge
structures and ongoing expenses, as summarized below. Class A and Class B shares
of each Fund represent interests in the same Fund and have the same rights,
except that each class bears the separate expenses of its Rule 12b-1
distribution plan and has exclusive voting rights with respect to such plan, and
each class has a separate exchange privilege. See "Management" and "How to Make
Exchanges." Each class has distinct advantages and disadvantages for different
investors, and investors should choose the class that better suits their
circumstances and objectives.
CLASS A SHARES. Class A shares of each Fund are sold at net asset value plus an
initial sales charge of up to 4.75% of the public offering price imposed at the
time of purchase. This initial sales charge is reduced or waived for certain
purchases. Purchases of $500,000 or more must be for Class A shares. Class A
shares of each Fund also bear annual service and distribution fees of up to
0.50% of the average daily net assets of that class.
CLASS B SHARES. Class B shares of each Fund are sold at net asset value with no
initial sales charge at the time of purchase. Therefore, the entire amount of an
investor's purchase payment is invested in that Fund. Class B shares bear annual
service and distribution fees of up to 1.00% of the average daily net assets of
that class, and Class B shareholders pay a contingent deferred sales charge of
up to 5% of the lesser of the original purchase price or the net asset value of
such shares at the time of redemption. The higher service and distribution fees
paid by the Class B shares of each Fund should cause that class to have a higher
expense ratio and to pay lower dividends per share than Class A shares of the
Fund.
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES. In deciding which class of
shares of a Fund to purchase, investors should consider the foregoing factors as
well as the following:
INTENDED HOLDING PERIOD. Over time, the cumulative expense of the 1.00% annual
service and distribution fees on the Class B shares of a Fund will approximate
or exceed the expense of the applicable 4.75% maximum initial sales charge plus
the 0.50% service and distribution fees on the Class A shares of a Fund. For
example, if net asset value remains constant, the Class B shares' aggregate
service and distribution fees would be equal to the Class A shares' initial
maximum sales charge and service and distribution fees approximately nine years
after purchase. Thereafter, Class B shares would experience higher cumulative
expenses. Investors who expect to maintain their investment in a Fund over the
long-term but do not qualify for a reduced initial sales charge might elect the
Class A initial sales charge alternative because the indirect expense to the
shareholder of the accumulated service and distribution fees on the Class B
shares eventually will exceed the initial sales charge paid by the shareholder
plus the indirect expense to the shareholder of the accumulated distribution
fees of Class A shares. Class B investors, however, enjoy the benefit of
permitting all their dollars to work from the time an investment is made. Any
positive investment return on this additional invested amount would partially or
wholly offset the higher annual expenses borne by Class B shares. Because the
Funds' future returns cannot be predicted, however, there can be no assurance
that such a positive return will be achieved.
Finally, Class B shareholders pay a contingent deferred sales charge if they
redeem during the first six years after purchase, unless a sales charge waiver
applies. Investors expecting to redeem during this period should consider the
cost of the applicable contingent deferred sales charge in addition to the
annual Class B service and distribution fees, as compared with the cost of the
applicable initial sales charge and annual service and distribution fees
applicable to the Class A shares.
REDUCED SALES CHARGES. Class A share purchases of $50,000 or more and Class A
share purchases made under a Fund's reduced sales charge plans may be made at a
reduced initial sales charge. See "How to Invest" for a complete list of reduced
sales charges applicable to Class A purchases.
WAIVER OF SALES CHARGES. The entire initial sales charge on Class A shares of a
Fund is waived for certain eligible purchasers and these purchasers'
Prospectus Page 16
<PAGE>
GT GLOBAL THEME FUNDS
entire purchase price would be immediately invested in that Fund. Investors
eligible for complete initial sales charge waivers should purchase Class A
shares. The contingent deferred sales charge is waived for certain redemptions
of Class B shares of a Fund. A 1% contingent deferred sales charge is imposed on
certain redemptions of Class A shares on which no initial sales charge was
assessed.
Investors should understand that the contingent deferred sales charge on the
Class B shares and the initial sales charge on the Class A shares are both
intended to compensate GT Global and selling broker/dealers for their
distribution services. Broker/dealers may receive different levels of
compensation for selling a particular class of shares of the Funds.
See "How to Invest," "How to Redeem Shares," and "Management" for a more
complete description of the initial and contingent deferred sales charges,
service fees and distribution fees for Class A and Class B shares of each Fund
and "Dividends, Other Distributions and Federal Income Taxation" and
"Calculation of Net Asset Value" for other differences between these two
classes.
ADVISOR CLASS SHARES. Advisor Class shares are offered through a separate
prospectus to (a) trustees or other fiduciaries purchasing shares for employee
benefit plans that are sponsored by organizations that 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; (c) any account with assets of at
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.
- --------------------------------------------------------------------------------
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,
Prospectus Page 17
<PAGE>
GT GLOBAL THEME FUNDS
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 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
Prospectus Page 18
<PAGE>
GT GLOBAL THEME FUNDS
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 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
Prospectus Page 19
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GT GLOBAL THEME FUNDS
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 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
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<PAGE>
GT GLOBAL THEME FUNDS
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, 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
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<PAGE>
GT GLOBAL THEME FUNDS
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 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
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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. 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 Forward 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,
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GT GLOBAL THEME FUNDS
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 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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GT GLOBAL THEME FUNDS
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 will
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GT GLOBAL THEME FUNDS
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. All purchase orders will be executed at the public offering price next
determined after the purchase order is received, which includes any applicable
sales charge for Class A shares. Orders received before the close of regular
trading on the New York Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern
time, unless weather, equipment failure or other factors contribute to an
earlier closing time) on any Business Day will be executed at the public
offering price for the applicable class of shares determined that day. A
"Business Day" is any day Monday through Friday on which the NYSE is open for
business. The minimum initial investment is $500 ($100 for IRAs and $25 for
custodial accounts under Section 403(b)(7) of the Code and other tax-qualified
employer-sponsored retirement accounts, if made under a systematic investment
plan providing for monthly payments of at least that amount), and the minimum
for additional purchases is $100 ($25 for IRAs, Code Section 403 (b)(7)
custodial accounts and other tax-qualified employer-sponsored retirement
accounts, as mentioned above). 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."
WHEN PLACING PURCHASE ORDERS, INVESTORS SHOULD SPECIFY WHETHER THE ORDER IS FOR
CLASS A OR CLASS B SHARES OF THE FUNDS. ALL PURCHASE ORDERS THAT FAIL TO SPECIFY
A CLASS WILL AUTOMATICALLY BE INVESTED IN CLASS A SHARES. PURCHASES OF $500,000
OR MORE MUST BE FOR CLASS A SHARES.
PURCHASES THROUGH BROKER/DEALERS. Shares of the Funds may be purchased through
broker/dealers with which GT Global has entered into dealer agreements. Orders
received by such broker/dealers before the close of regular trading on the NYSE
on a Business Day will be effected that day, provided that such order is
transmitted to the Transfer Agent prior to its close of business on such day.
The broker/dealer will be responsible for forwarding the investor's order to the
Transfer Agent so that it will be received prior to such time. After an initial
investment is made and a shareholder account is established through a
broker/dealer at the investor's option subsequent purchases may be made directly
through GT Global. See "Shareholder Account Manual."
Broker/dealers that do not have dealer agreements with GT Global also may offer
to place orders for the purchase of shares. Purchases made through such
broker/dealers will be effected at the public offering price next determined
after the order is received by the Transfer Agent. Such a broker/ dealer may
charge the investor a transaction fee as determined by the broker/dealer. That
fee will be in addition to the sales charge payable by the investor, with
respect to Class A shares, and may be avoided if shares are purchased through a
broker/ dealer that has a dealer agreement with GT Global or directly through GT
Global.
PURCHASES THROUGH THE DISTRIBUTOR. Investors may purchase shares and open an
account directly through GT Global, the Funds' distributor, by completing and
signing an Account Application accompanying this Prospectus. Investors should
mail to the Transfer Agent the completed Application together with a check to
cover the purchase in accordance with the instructions provided in the
Shareholder Account Manual. Purchases will be executed at the public offering
price next determined after the Transfer Agent has received the Account
Application and check. Subsequent investments do not need to be accompanied by
an application.
Investors also may purchase shares of the Funds through GT Global by bank wire.
Bank wire purchases will be effected at the next determined public offering
price after the bank wire is received. A wire investment is considered received
when the Transfer Agent is notified that the bank wire has been credited to a
Fund. The investor is responsible for providing prior telephone or facsimile
notice to the Transfer Agent that a bank wire is being sent. An investor's bank
may charge a service fee for wiring money to a Fund. The Transfer Agent
Prospectus Page 30
<PAGE>
GT GLOBAL THEME FUNDS
currently does not charge a service fee for facilitating wire purchases, but
reserves the right to do so in the future. Investors desiring to open an account
by bank wire should call the Transfer Agent at the appropriate toll-free number
provided in the Shareholder Account Manual to obtain an account number and
detailed instructions.
CERTIFICATES. 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.
PURCHASING CLASS A SHARES
Each Fund's public offering price for Class A shares is the next determined net
asset value per share (see "Calculation of Net Asset Value") plus a sales charge
determined in accordance with the following schedule:
<TABLE>
<CAPTION>
SALES CHARGE AS PERCENTAGE OF DEALER
AMOUNT OF REALLOWANCE
PURCHASE ------------------------------ AS PERCENTAGE
AT THE PUBLIC OFFERING NET OF THE
OFFERING PRICE PRICE INVESTMENT OFFERING PRICE
- ----------------- ------------- --------------- -----------------
<S> <C> <C> <C>
Less than
$50,000........ 4.75% 4.99% 4.25%
$50,000 but less
than
$100,000....... 4.00% 4.17% 3.50%
$100,000 but less
than
$250,000....... 3.00% 3.09% 2.75%
$250,000 but
less than
$500,000....... 2.00% 2.04% 1.75%
$500,000 or
more........... 0.00% 0.00% *
</TABLE>
* GT Global will pay the following commissions to broker/ dealers that
initiate and are responsible for purchases by any single purchaser of Class
A shares of $500,000 or more in the aggregate: 1.00% of the purchase amount
up to $3 million, plus 0.50% on the excess over $3 million. For purposes of
determining the appropriate commission to be paid in connection with the
transaction, GT Global will combine purchases made by a broker/dealer on
behalf of a single client so that the broker/dealer's commission, as
outlined above, will be based on the aggregate amount of such client's share
purchases over a rolling twelve month period from the date of the
transaction.
All shares purchased without a sales charge based on the aggregate purchase
amount equalling at least $500,000 will be subject to a contingent deferred
sales charge for the first year after their purchase equal to 1% of the lower of
the original purchase price or the net asset value of such shares at the time of
redemption. See "Contingent Deferred Sales Charge -- Class A Shares."
From time to time, GT Global may reallow to broker/ dealers the full amount of
the sales charge or may pay out additional amounts to broker/dealers who sell
Class A shares. In some instances, GT Global may offer these reallowances or
additional payments only to broker/dealers that have sold or may sell
significant amounts of Class A shares. To the extent that GT Global reallows the
full amount of the sales charge to broker/dealers, such broker/dealers may be
deemed to be underwriters under the Securities Act of 1933, as amended.
Commissions also may be paid to broker/dealers and other financial institutions
that initiate purchases of at least $500,000 made pursuant to sales charge
waivers (i) and (vii), described below under "Sales Charge Waivers -- Class A
Shares."
The following purchases may be aggregated for purposes of determining the
"Amount of Purchase":
(a) Individual purchases on behalf of a single purchaser, the purchaser's spouse
and their children under the age of 21 years, including purchases in connection
with an employee benefit plan or plans exclusively for the benefit of such
individual(s), such as an IRA, individual Code Section 403(b) plan or
single-participant self-employed individual retirement plan ("Keogh Plan") and
purchases made by a company controlled by such individual(s);
(b) Individual purchases by a trustee or other fiduciary purchasing shares for a
single trust estate or a single fiduciary account, including an employee benefit
plan (such as employer-sponsored pension, profit-sharing and stock bonus plans,
including Code Section 401(k) plans, and medical, life and disability insurance
trusts) other than a plan described in "(a)" above; and
(c) Individual purchases by a trustee or other fiduciary purchasing shares
concurrently for two or more employee benefit plans of a single employer or of
employers affiliated with each other (again excluding an employee benefit plan
described in "(a)" above).
Prospectus Page 31
<PAGE>
GT GLOBAL THEME FUNDS
SALES CHARGE WAIVERS -- CLASS A SHARES. Class A shares are sold at net asset
value without imposition of sales charges when investments are made by the
following classes of investors:
(i) Trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations that have at least 100 but less than 1,000
employees, and trustees or other fiduciaries purchasing shares for employee
benefit plans which are sponsored by organizations with collective retirement
plan assets of $500,000 or more and have less than 100 employees, and purchases
of at least $500,000 by trustees or other fiduciaries of employee benefit plans
with collective retirement plan assets of $100 million or more.
(ii) Current or retired Trustees, Directors and officers of the investment
companies for which the Manager serves as investment manager and/or
administrator; employees or retired employees of the companies composing
Liechtenstein Global Trust or affiliated companies of Liechtenstein Global
Trust; the children, siblings and parents of the persons in the foregoing
categories; and trusts primarily for the benefit of such persons.
(iii) Registered representatives or full-time employees of broker/dealers which
have entered into dealer agreements with GT Global, and the children, siblings
and parents of such persons, and employees of financial institutions that
directly, or through their affiliates, have entered into dealer agreements with
GT Global (or that otherwise have an arrangement with respect to sales of Fund
shares with a broker/dealer that has entered into a dealer agreement with GT
Global) and the children, siblings and parents of such employees.
(iv) Companies exchanging shares with or selling assets to one or more of the GT
Global Mutual Funds pursuant to a merger, acquisition or exchange offer.
(v) Shareholders of any of the GT Global Mutual Funds as of April 30, 1987 who
since that date continually have owned shares of one or more of the GT Global
Mutual Funds.
(vi) Purchases made through the automatic investment of dividends and other
distributions paid by any of the other GT Global Mutual Funds.
(vii) Registered investment advisers, trust companies and bank trust departments
exercising DISCRETIONARY investment authority with respect to the money to be
invested in the GT Global Mutual Funds provided that the aggregate amount
invested pursuant to this sales charge waiver is at least $500,000, and further
provided that such money is not eligible to be invested in the Advisor Class.
(viii) Clients of administrators of tax-qualified employee benefit plans which
have entered into agreements with GT Global.
(ix) Retirement plan participants who borrow from their retirement accounts by
redeeming GT Global Mutual Fund shares and subsequently repay such loans via a
purchase of a Fund's shares.
(x) Retirement plan participants who receive distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in GT Global Mutual Funds,
the proceeds of which are reinvested in Funds' shares.
(xi) Accounts not eligible for the Advisor Class as to which a financial
institution or broker/dealer charges an account management fee, provided the
financial institution or broker/dealer has entered into an agreement with GT
Global regarding such accounts.
(xii) Certain former AMA Investment Advisers' shareholders who became
shareholders of the GT Global Health Care Fund in October 1989, and who have
continuously held shares in the GT Global Mutual Funds since that time.
(xiii) An investor purchasing shares of a Fund with redemption proceeds from a
registered management investment company that is not one of the GT Global Mutual
Funds, on which the investor was subject to a front-end sales charge or a
contingent deferred sales charge.
REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in a Fund
have a one-time privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of that Fund and/or one or more of the other GT Global Mutual Funds. The
Transfer Agent must receive from the investor or the investor's broker/dealer
within 180 days after the date of the redemption both a written request for
reinvestment and a check not exceeding the amount of the redemption proceeds.
The reinstatement purchase will be effected at the net asset value per share
next determined after such receipt. Gain on the redemption is taxable
notwithstanding exercise of the reinvestment privilege. See "Dividends, Other
Distributions and Federal Income Taxation -- Taxes."
REDUCED SALES CHARGE PLANS -- CLASS A SHARES. Class A shares may be purchased at
reduced sales
Prospectus Page 32
<PAGE>
GT GLOBAL THEME FUNDS
charges either through the Right of Accumulation or under a Letter of Intent.
For more details on these plans, investors should contact their broker/ dealers
or the Transfer Agent.
RIGHT OF ACCUMULATION. Pursuant to the Right of Accumulation, investors are
permitted to purchase shares of a Fund at the sales charge applicable to the
total of (a) the dollar amount then being purchased plus (b) the dollar amount
of the investor's concurrent purchases of other GT Global Mutual Funds (other
than GT Global Dollar Fund) plus (c) the price of all shares of GT Global Mutual
Funds (other than shares of GT Global Dollar Fund not acquired by exchange)
already held by the investor. To receive the Right of Accumulation, at the time
of purchase investors must give their broker/dealer, the Transfer Agent or GT
Global sufficient information to permit confirmation of qualification. THE
FOREGOING RIGHT OF ACCUMULATION APPLIES ONLY TO CLASS A SHARES OF THE FUNDS AND
OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
LETTER OF INTENT. In executing a Letter of Intent ("LOI"), an investor indicates
an aggregate investment amount he or she intends to invest in the Class A shares
of a Fund and the Class A shares of other GT Global Mutual Funds (other than GT
Global Dollar Fund) in the following thirteen months. The LOI is included as
part of the Account Application located at the end of this Prospectus. The sales
charge applicable to that aggregate amount then becomes the applicable sales
charge on all purchases made concurrently with the execution of the LOI and in
the thirteen months following that execution. If an investor executes an LOI
within 90 days of a prior purchase of GT Global Mutual Fund Class A shares
(other than shares of GT Global Dollar Fund), the prior purchase may be included
under the LOI and an appropriate adjustment, if any, with respect to the sales
charges paid by the investor in connection with the prior purchase will be made,
based on the then-current net asset value(s) of the pertinent Fund(s).
If at the end of the thirteen month period covered by the LOI the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the reduced rate and the
sales charges applicable to the purchases actually made. Shares having a value
equal to 5% of the amount specified in the LOI will be held in escrow during the
thirteen month period (while remaining registered in the investor's name) and
are subject to redemption to assure any necessary payment to GT Global of a
higher applicable sales charge.
For purposes of an LOI, any registered investment adviser, trust company or bank
trust department which exercises investment discretion and which intends within
thirteen months to invest $500,000 or more can be treated as a single purchaser,
provided further that such entity places all purchase and redemption orders.
Such entities should be prepared to establish their qualifications for such
treatment. THE FOREGOING LOI APPLIES ONLY TO CLASS A SHARES OF THE FUNDS AND
OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES. Purchases of Class A shares
of $500,000 or more may be made without an initial sales charge. If a
shareholder within one year after the date of purchase redeems any Class A
shares that were purchased without a sales charge by reason of a purchase of
$500,000 or more, a contingent deferred sales charge of 1% of the lower of the
original purchase price or the net asset value of such shares at the time of
redemption will be charged. Class A shares will not be subject to the contingent
deferred sales charge to the extent that the value of such shares represents:
(1) reinvestment of dividends or other distributions or (2) shares redeemed more
than one year after their purchase. Such shares purchased without a sales charge
may be exchanged for Class A shares of another GT Global Mutual Fund (other than
GT Global Dollar Fund) without the imposition of a contingent deferred sales
charge, although the contingent deferred sales charge described above will apply
to the redemption of the shares acquired through an exchange. The waivers set
forth under "Contingent Deferred Sales Charge Waivers" below apply to
redemptions of Class A shares upon which a contingent deferred sales charge
would otherwise be imposed. For federal income tax purposes, the amount of the
contingent deferred sales charge will reduce the gain or increase the loss, as
the case may be, on the amount realized on redemption. The amount of any
contingent deferred sales charge will be paid to GT Global.
PURCHASING CLASS B SHARES
Each Fund's public offering price for Class B shares is the next determined net
asset value per share. See "Calculation of Net Asset Value." No initial sales
charge is imposed. A contingent deferred sales charge, however, is imposed on
certain redemptions of Class B shares. Because Class B shares are
Prospectus Page 33
<PAGE>
GT GLOBAL THEME FUNDS
sold without an initial sales charge, the Fund receives the full amount of the
investor's purchase payment.
Class B shares will not be subject to a contingent deferred sales charge to the
extent that the value of such shares represents: (1) reinvestment of dividends
or other distributions or (2) shares redeemed more than six years after their
purchase. Redemptions of most other Class B shares will be subject to a
contingent deferred sales charge. See "Contingent Deferred Sales Charge
Waivers." The amount of any applicable contingent deferred sales charge will be
calculated by multiplying the lesser of the original purchase price or the net
asset value of such shares at the time of redemption by the applicable
percentage shown in the table below.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
AS A PERCENTAGE OF THE LESSER OF
NET ASSET VALUE AT REDEMPTION OR
REDEMPTION DURING THE ORIGINAL PURCHASE PRICE
- --------------------------- ---------------------------------
<S> <C>
1st Year Since Purchase.... 5%
2nd Year Since Purchase.... 4%
3rd Year Since Purchase.... 3%
4th Year Since Purchase.... 3%
5th Year Since Purchase.... 2%
6th year Since Purchase.... 1%
Thereafter................. 0%
</TABLE>
In determining whether a contingent deferred sales charge is applicable it will
be assumed that the redemption is made first of shares acquired pursuant to the
reinvestment of dividends and distributions; then of shares purchased seven
years or more prior to the redemption; and finally, of shares held for the
longest period of time within the applicable six-year period. For shares
acquired in an exchange, the length of the holding period will be measured from
the date of original purchase.
For example, assume an investor purchased 100 shares at $10 per share for a cost
of $1,000. Subsequently, the shareholder acquired 15 additional shares through
dividend reinvestment. During the second year after the purchase the investor
decided to redeem $500 of his or her investment. Assuming at the time of the
redemption a net asset value of $11 per share, the value of the investor's
shares would be $1,265 (115 shares at $11 per share). The contingent deferred
sales charge would not be applied to the value of the reinvested dividend
shares. Therefore, the 15 shares currently valued at $165.00 would be redeemed
without a contingent deferred sales charge. The number of shares needed to fund
the remaining $335 of the redemption would equal 30.455. Using the lower of cost
or market price to determine the contingent deferred sales charge, the original
purchase price of $10.00 per share would be used. The contingent deferred sales
charge calculation would therefore be 30.455 shares times $10.00 per share at
the contingent deferred sales charge rate of 4% (the applicable rate in the
second year after purchase) for a total contingent deferred sales charge of
$12.18.
For federal income tax purposes, the amount of the contingent deferred sales
charge will reduce the gain or increase the loss, as the case may be, on the
amount realized on redemption. The amount of any contingent deferred sales
charge will be paid to GT Global.
CONTINGENT DEFERRED SALES
CHARGE WAIVERS
The contingent deferred sales charge will be waived for (1) exchanges, as
described below; (2) redemptions in connection with a Fund's systematic
withdrawal plan not in excess of 12% of the value of the account annually; (3)
total or partial redemptions made within one year following the death or
disability of a shareholder; (4) minimum required distributions made in
connection with a GT Global IRA, Keogh Plan or custodial account under Section
403(b) of the Code or other retirement plan following attainment of age 70 1/2;
(5) total or partial redemptions resulting from a distribution following
retirement in the case of a tax-qualified employer-sponsored retirement plan;
(6) when a redemption results from a tax-free return of an excess contribution
pursuant to Section 408(d)(4) or (5) of the Code or from the death or disability
of the employee; (7) a one-time reinvestment in Class B shares of a Fund within
180 days of a prior redemption; (8) redemptions pursuant to a Fund's right to
liquidate a shareholder's account involuntarily; (9) redemptions pursuant to
distributions from a tax-qualified employer-sponsored retirement plan, which is
invested in GT Global Mutual Funds, which are permitted to be made without
penalty pursuant to the Code, other than tax-free rollovers or transfers of
assets, and the proceeds of which are reinvested in GT Global Mutual Funds; (10)
redemptions made in connection with participant-directed exchanges between
options in an employer-sponsored benefit plan; (11) redemptions made for the
purpose of providing cash to fund a loan to a participant in a tax-qualified
retirement plan; (12) redemptions made in connection with a distribution from
any retirement plan or account that is permitted in
Prospectus Page 34
<PAGE>
GT GLOBAL THEME FUNDS
accordance with the provisions of Section 72(t)(2) of the Code, and the
regulations promulgated thereunder; (13) redemptions made in connection with a
distribution from any retirement plan or account that involves the return of an
excess deferral amount pursuant to Section 401(k)(8) or Section 402(g)(2) of the
Code or the return of excess aggregate contributions pursuant to Section
401(m)(6) of the Code; (14) redemptions made in connection with a distribution
from a qualified profit-sharing or stock bonus plan described in Section 401(k)
of the Code to a participant or beneficiary under Section 401(k)(2)(B)(IV) of
the Code upon hardship of the covered employee (determined pursuant to Treasury
Regulation Section 1.401(k)-1(d)(2)); and (15) redemptions made by or for the
benefit of certain states, counties or cities, or any instrumentalities,
departments or authorities thereof where such entities are prohibited or limited
by applicable law from paying a sales charge or commission.
PROGRAMS APPLICABLE TO CLASS A SHARES AND CLASS B SHARES
AUTOMATIC INVESTMENT PLAN. Investors may purchase either Class A or Class B
shares of a Fund through the GT Global Automatic Investment Plan. Under this
Plan, an amount specified by the shareholder of $100 or more ($25 or more for
IRAs, Code Section 403(b)(7) custodial accounts and other tax-qualified
employer-sponsored retirement accounts) on a monthly or quarterly basis will be
sent to the Transfer Agent from the investor's bank for investment in the Funds.
Participants in the Automatic Investment Plan should not elect to receive
dividends or other distributions from the Funds in cash. A sales charge will be
applied to each automatic monthly purchase of Class A Fund shares in an amount
determined in accordance with the Right of Accumulation privilege described
above. To participate in the Automatic Investment Plan, investors should
complete the appropriate portion of the Supplemental Application provided at the
end of this Prospectus. Investors should contact their brokers or GT Global for
more information.
DOLLAR COST AVERAGING PROGRAM. Investors may purchase either Class A or Class B
shares of a Fund through the GT Global Dollar Cost Averaging Program whereby a
shareholder invests the same dollar amount each month. Accordingly, the investor
purchases more shares when a Fund's net asset value is relatively low and fewer
shares when a Fund's net asset value is relatively high. This can result in a
lower average cost-per-share than if the shareholder followed a less systematic
approach. Dollar cost averaging does not assure a profit and does not protect
against loss in declining markets. Because such a program involves continuous
investment in securities regardless of fluctuating price levels of such
securities, investors should consider their financial ability to continue
purchases when prices are declining.
A participant in the GT Global Dollar Cost Averaging Program first designates
the size of his or her monthly investment in a Fund ("Monthly Investment") after
participation in the Program begins. The Monthly Investment must be at least
$1,000. The investor then will make an initial investment of at least $10,000 in
the GT Global Dollar Fund. Thereafter, each month an amount equal to the
specified Monthly Investment automatically will be redeemed from the GT Global
Dollar Fund and invested in Fund shares. A sales charge will be applied to each
automatic monthly purchase of Class A Fund shares in an amount determined in
accordance with the Right of Accumulation privilege described above. To
participate in the Dollar Cost Averaging Program, investors should complete the
Dollar Cost Averaging Application provided at the end of this Prospectus.
Investors should contact their brokers or GT Global for more information.
PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
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(es) 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
Prospectus Page 35
<PAGE>
GT GLOBAL THEME FUNDS
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. Shareholders participating in
the Program may also participate in the Right of Accumulation, Letter of Intent,
and Dollar Cost Averaging programs. Certain broker/dealers may charge a fee for
establishing accounts relating to the Program. To participate in the Portfolio
Rebalancing Program, investors should complete the Portfolio Rebalancing Program
Application at the end of this Prospectus. Investors should contact their
broker/dealers or GT Global for more information.
Prospectus Page 36
<PAGE>
GT GLOBAL THEME FUNDS
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Shares of any Fund may be exchanged for shares of the same class of any of the
other GT Global Mutual Funds (including the other Funds), based on their
respective net asset values without imposition of any sales charges, provided
that the registration remains identical. 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. If an investor does not
surrender all of his or her shares in an exchange, the remaining balance in the
investor's account after the exchange must be at least $500. Exchange requests
received in good order by the Transfer Agent before the close of regular trading
on the NYSE on any Business Day will be processed at the net asset value
calculated on that day. The terms of the exchange offer may be modified at any
time, on 60 days' prior written notice.
An investor interested in making an exchange should contact his broker/dealer or
the Transfer Agent to request the prospectus of the other GT Global Mutual
Fund(s) being considered. Certain broker/dealers may charge a fee for handling
exchanges.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to his or
her broker/dealer or the Transfer Agent by telephone at the appropriate
toll-free number provided in the Shareholder Account Manual. Exchange orders
will be accepted by telephone provided that the exchange involves only
uncertificated shares on deposit in the shareholder's account or for which
certificates have previously been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine 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.
EXCHANGES BY MAIL. Exchange orders should be sent by mail to the investor's
broker/dealer or to the Transfer Agent at the address set forth in the
Shareholder Account Manual.
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.
Prospectus Page 37
<PAGE>
GT GLOBAL THEME FUNDS
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value (subject to any applicable
contingent deferred sales charge for Class B shares or, in limited
circumstances, Class A shares) and redemption proceeds will be sent within seven
days of the execution of a redemption request. If a redeeming shareholder owns
both Class A and Class B shares of the Funds, Class A shares will be redeemed
first unless the shareholder specifically requests otherwise.
REDEMPTIONS THROUGH BROKER/DEALERS. Shareholders with accounts at broker/dealers
who sell shares of the Funds may submit redemption requests to such
broker/dealers. If the shares are held in the broker/dealer's "street name," the
redemption must be made through the broker/dealer. Broker/ dealers may honor a
redemption request either by repurchasing shares from a redeeming shareholder at
the net asset value next determined after the broker/dealer receives the request
or, as described below, by forwarding such requests to the Transfer Agent (see
"How to Redeem Shares -- Redemptions Through the Transfer Agent"). Redemption
proceeds normally will be paid by check or, if offered by the broker/dealer,
credited to the shareholder's brokerage account at the election of the
shareholder. Broker/dealers may impose a service charge for handling redemption
transactions placed through them and may have other requirements concerning
redemptions. Accordingly, shareholders should contact their broker/ dealers for
more details.
REDEMPTIONS THROUGH THE TRANSFER AGENT. Redemption requests may be transmitted
to the Transfer Agent by telephone or by mail, in accordance with the
instructions provided in the Shareholder Account Manual. Redemptions will be
effected at the net asset value next determined after the Transfer Agent has
received the request in good order and any required supporting documentation
(less any applicable contingent deferred sales charge for Class B shares or, in
limited circumstances, Class A shares). Redemption requests will not require a
signature guarantee if the redemption proceeds are to be sent either: (i) to the
redeeming shareholder at the shareholder's address of record as maintained by
the Transfer Agent, provided the shareholder's address of record has not been
changed within the preceding thirty days; or (ii) directly to a pre-designated
bank, savings and loan or credit union account ("Pre-Designated Account"). ALL
OTHER REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institution.
A notary public is not an acceptable guarantor. A shareholder with questions
concerning the Funds' signature guarantee requirement should contact the
Transfer Agent.
Shareholders may qualify to have redemption proceeds sent to a Pre-Designated
Account by completing the appropriate section of the Account Application at the
end of this Prospectus. Shareholders with Pre-Designated Accounts should request
that redemption proceeds be sent either by bank wire or by check. The minimum
redemption amount for a bank wire is $1,000. Shareholders requesting a bank wire
should allow two business days from the time the redemption request is effected
for the proceeds to be deposited in the shareholder's Pre-Designated Account.
See "How to Redeem Shares -- Other Important Redemption Information."
Shareholders may change their Pre-Designated Accounts only by a letter of
instruction to the Transfer Agent containing all account signatures, each of
which must be guaranteed. The Transfer Agent currently does not charge a bank
wire service fee for each wire redemption sent, but reserves the right to do so
in the future. 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.
Prospectus Page 38
<PAGE>
GT GLOBAL THEME FUNDS
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.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may participate in the GT Global Systematic Withdrawal Plan. A
participating shareholder will receive proceeds from monthly, quarterly or
annual redemptions of Fund shares with respect to either Class A or Class B
shares. No contingent deferred sales charge will be imposed on redemptions made
under the Systematic Withdrawal Plan. The minimum withdrawal amount is $100. The
amount or percentage a participating shareholder specifies to be redeemed may
not, on an annualized basis, exceed 12% of the value of the account, as of the
time the shareholder elects to participate in the Systematic Withdrawal Plan. To
participate in the Systematic Withdrawal Plan, investors should complete the
appropriate portion of the Supplemental Application provided at the end of this
Prospectus. Investors should contact their broker/ dealers or the Transfer Agent
for more information. With respect to Class A shares, participation in the
Systematic Withdrawal Plan concurrent with purchases of Class A shares may be
disadvantageous to investors because of the sales charges involved and possible
tax implications, and therefore is discouraged. In addition, shareholders who
participate in the Systematic Withdrawal Plan should not elect to reinvest
dividends or other distributions in additional Fund shares.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in doubt as to what documents are required should contact
his or her broker/dealer or the Transfer Agent.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after the date the request is executed. Requests for redemption which are
subject to any special conditions or which specify a future or past effective
date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which the Funds have not
yet received good payment, the Funds may delay payment of redemption proceeds
until they have assured themselves that good payment has been collected for the
purchase of the shares. In the case of purchases by check it can take up to 10
business days to confirm that the check has cleared and good payment has been
received. Redemption proceeds will not be delayed when shares have been paid for
by wire or when the investor's account holds a sufficient number of shares for
which funds already have been collected.
A Fund may redeem the shares of any shareholder whose account is reduced to less
than $500 in value through redemptions or other action by the shareholder.
Written notice will be given to the shareholder at least 60 days prior to the
date fixed for such redemption, during which time the shareholder may increase
his or her holdings to an aggregate amount of $500 or more (with a minimum
purchase of $100).
Prospectus Page 39
<PAGE>
GT GLOBAL THEME FUNDS
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Shareholders are encouraged to place purchase, exchange and redemption orders
through their broker/dealers. Shareholders also may place such orders directly
through the Transfer Agent in accordance with this Manual. See "How to Invest;"
"How to Make Exchanges;" "How to Redeem Shares;" and "Dividends, Other
Distributions and Federal Income Taxation -- Taxes" for more information.
Each Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send the completed Account Application (if initial purchase) or letter stating
Fund name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global
P.O. Box 7345
San Francisco, California 94120-7345
INVESTMENTS BY BANK WIRE
An investor opening a new account should call 1-800-223-2138 to obtain an
account number. WITHIN SEVEN DAYS OF PURCHASE SUCH AN INVESTOR MUST SEND A
COMPLETED ACCOUNT APPLICATION CONTAINING THE INVESTOR'S CERTIFIED TAXPAYER
IDENTIFICATION NUMBER TO GT GLOBAL AT THE ADDRESS PROVIDED ABOVE UNDER
"INVESTMENTS BY MAIL." Wire instructions must state Fund name, class of shares,
shareholder's registered name and account number. Bank wires should be sent
through the Federal Reserve Bank Wire System to:
WELLS FARGO BANK N.A.
ABA 121000248
Attn: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, 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 40
<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.
The different service and distribution fees borne by each class of shares will
result in different net asset values and dividends. The per share net asset
value of the Class B shares of a Fund generally will be lower than that of the
Class A shares of that Fund because of the higher service and distribution fees
borne by the Class B shares. The per share net asset value of the Advisor Class
shares of a Fund generally will be higher than that of the Class A and Class B
shares of that Fund because of the absence of any service and distribution fees
applicable to the Advisor Class shares. It is expected, however, that the net
asset value per share of the classes will tend to converge immediately after the
payment of dividends, which will differ by approximately the amount of the
service and distribution fee accrual differential between the classes.
- --------------------------------------------------------------------------------
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
Prospectus Page 41
<PAGE>
GT GLOBAL THEME FUNDS
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 Class B shares of a Fund will be lower than the per
share income dividends on Class A shares of that Fund as a result of the higher
service and distribution fees applicable to Class B shares; and the per share
income dividends on both such classes of shares of a Fund will be lower than the
per share income dividends on the Advisor Class shares of that Fund as a result
of the absence of any service and distribution fees applicable to Advisor Class
shares. SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Fund shares of the distributing class (or in shares of the
corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional shares are made at net asset value without
imposition of a sales charge. IF NO ELECTION IS MADE BY A SHAREHOLDER, ALL
DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY REINVESTED IN ADDITIONAL
FUND SHARES OF THE DISTRIBUTING CLASS. Reinvestments in another GT Global Mutual
Fund may only be directed to an account with the identical shareholder
registration and account number. These elections may be changed by a shareholder
at any time; to be effective with respect to a distribution, the shareholder or
the shareholder's broker must contact the Transfer Agent by mail or telephone at
least 15 Business Days prior to the payment date. THE FEDERAL INCOME TAX
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
Prospectus Page 42
<PAGE>
GT GLOBAL THEME FUNDS
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 (which normally
includes any initial sales charge paid on Class A shares). An exchange of Fund
shares for shares of another GT Global Mutual Fund (including another Fund)
generally will have similar tax consequences. However, special tax rules apply
when a shareholder (1) disposes of Class A shares of a Fund through a redemption
or exchange within 90 days after purchase and (2) subsequently acquires Class A
shares of that Fund or any other GT Global Mutual Fund on which an initial sales
charge normally is imposed without paying that sales charge due to the
reinstatement privilege or exchange privilege. In these cases, any gain on the
disposition of the original Class A shares will be increased, or loss decreased,
by the amount of the sales charge paid when those shares were acquired, and that
amount will increase the adjusted basis of the shares subsequently acquired. In
addition, if Fund shares are purchased within 30 days before or after redeeming
other shares of the same Fund (regardless of class) at a loss, all or a part of
the loss will not be deductible and instead will increase the basis of the newly
purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Funds and their shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors 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
Prospectus Page 43
<PAGE>
GT GLOBAL THEME FUNDS
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 and GT Global have undertaken to limit each Theme
Portfolio's expenses (exclusive of brokerage commissions, taxes, interest and
extraordinary expenses) to the annual rate of 2.40% and 2.90% of the average
daily net assets of each Fund's Class A and Class B Shares, respectively. 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 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.
Prospectus Page 44
<PAGE>
GT GLOBAL THEME FUNDS
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.
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.
</TABLE>
Prospectus Page 45
<PAGE>
GT GLOBAL THEME FUNDS
<TABLE>
<S> <C> <C>
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>
------------------------
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' Class A
and Class B 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. As distributor, GT Global collects the sales charges imposed on
purchases of Class A shares and any contingent deferred sales charges that may
be imposed on certain redemptions of Class A and Class B shares. GT Global
reallows a portion of the sales charge on Class A shares to broker/dealers that
have sold such shares in accordance with the schedule set forth above under "How
to Invest." In addition, GT Global pays a commission equal to 4.00% of the
amount invested to broker/dealers who sell Class B shares.
Prospectus Page 46
<PAGE>
GT GLOBAL THEME FUNDS
A commission with respect to Class B shares is not paid on exchanges or certain
reinvestments in Class B shares.
GT Global, at its own expense, may provide additional promotional incentives to
broker/dealers that sell shares of a Fund and/or shares of the other GT Global
Mutual Funds. In some instances additional compensation or promotional
incentives may be offered to broker/dealers that have sold or may sell
significant amounts of shares during specified periods of time. Such
compensation and incentives may include, but are not limited to, cash,
merchandise, trips and financial assistance to broker/ dealers in connection
with preapproved conferences or seminars, sales or training programs for invited
sales personnel, payment for travel expenses (including meals and lodging)
incurred by sales personnel and members of their families or other invited
guests to various locations for such seminars or training programs, seminars for
the public, advertising and sales campaigns regarding one or more of the GT
Global Mutual Funds, and/or other events sponsored by the broker/dealers. In
addition, GT Global makes ongoing payments to brokerage firms, financial
institutions (including banks) and others that facilitate the administration and
servicing of shareholder accounts.
Under a plan of distribution adopted by the Company's Board of Directors
pursuant to Rule 12b-1 under the 1940 Act, with respect to each Fund's Class A
shares ("Class A Plan"), each Fund may pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of such Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.50% of the average daily net assets of each such Fund's Class A
shares, less any amounts paid by that Fund as the aforementioned service fee for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to a separate plan of distribution adopted with respect to each Fund's
Class B shares ("Class B Plan"), each Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of such
Fund's Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of such Fund's Class B
shares for its expenditures incurred in providing services as distributor.
Expenses incurred under the Class B Plan in excess of 1.00% annually may be
carried forward for reimbursement in subsequent years as long as such Plan
continues in effect.
GT Global's service and distribution expenses include the payment of ongoing
commissions; the cost of any additional compensation paid by GT Global to
broker/dealers; the costs of printing and mailing to prospective investors
prospectuses and other materials relating to the Funds; the costs of developing,
printing, distributing and publishing advertisements and other sales literature;
and allocated costs relating to GT Global's distribution activities, including,
among other things, employee salaries, bonuses and other overhead expenses. In
addition, its expenses under the Class B Plan include payment of initial sales
commissions to broker/dealers and interest on any unreimbursed amounts carried
forward thereunder.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders, and alternative means for
continuing the servicing of such shareholders would be sought. It is not
expected that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.
Prospectus Page 47
<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
Investment Plan, Systematic Withdrawal Plan and automatic dividend reinvestment
program may be provided quarterly. Shortly after the end of each Fund's fiscal
year on October 31 and fiscal half-year on April 30 of each year, shareholders
receive an annual and semiannual report, respectively. 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 the
Company's Funds will be voted in the aggregate on other matters, such as the
election of Directors and ratification of the selection by the Board of
Directors of the Company's independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Each Fund would be required to hold a shareholders'
meeting in the event that at any time less than a majority of the Directors
holding office had been elected by shareholders. Directors shall continue to
hold office until their successors are elected and have qualified. Shares of
each Fund and of the Company's other funds do not have cumulative voting rights,
which means that the holders of a majority of the shares voting for the election
of Directors can elect all the Directors. A Director may be removed upon a
majority vote of the shareholders qualified to vote in the election.
Shareholders holding 10% of the Company's outstanding voting shares may call a
meeting of shareholders for the purpose of voting upon the question of removal
of any Director or for any other purpose. The 1940 Act requires the Company to
assist shareholders in calling such a meeting.
Pursuant to the Company's Articles of Incorporation, it may issue six billion
shares. Of this number, 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 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
Prospectus Page 48
<PAGE>
GT GLOBAL THEME FUNDS
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 50 California Street,
27th Floor, San Francisco, California 94111.
PERFORMANCE INFORMATION. The Funds, from time to time, may include information
on their investment results and/or comparisons of their investment results to
various unmanaged indices or results of other mutual funds or groups of mutual
funds in advertisements, sales literature or reports furnished to present or
prospective shareholders.
In such materials, the Funds may quote their average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of each Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in a
Fund at the end of 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.
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.
Prospectus Page 49
<PAGE>
GT GLOBAL THEME FUNDS
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 50
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 51
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 52
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 53
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 54
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
P.O. Box 7345 ACCOUNT APPLICATION
SAN FRANCISCO, CA 94120-7345
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (Account No.: --------------------------------------)
</TABLE>
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies)
and date of trust instrument. Registration for Uniform Gifts/Transfers to
Minors accounts should be in the name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
------------------------------------ --------------------------------------------------------------------------------
Owner Social Security Number / / or Tax I.D. Number / / (Check applicable box)
------------------------------------ If more than one owner, social security number or taxpayer identification number
Co-owner 1 should be provided for first owner listed. If a purchase is made under Uniform Gift/
------------------------------------ Transfer to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)-----------------------------------------
( )
---------------------------------------------------------------------- ---------------------------
Street Address Home Telephone
( )
---------------------------------------------------------------------- ---------------------------
City, State, Zip Code Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund
selected. Checks should be made payable to "GT GLOBAL."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A Shares or
/ /Class B Shares (Not available for purchases of $500,000 or more or, except
for investors participating in the Portfolio Rebalancing Program, for the
GT Global Dollar Fund).
If a class share box is not checked, your investment will be made in Class A
shares.
<TABLE>
<S> <C> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA MID CAP GROWTH FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 23 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 01 / / GT GLOBAL DOLLAR FUND $
---------- ----------
03 / / GT GLOBAL EUROPE GROWTH FUND $
----------
CHECKWRITING PRIVILEGE
Checkwriting privilege available on Class A shares of GT Global Dollar Fund and GT Global Government Income Fund.
/ / Check here if desired. You will be sent a book of checks.
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS TOTAL INITIAL INVESTMENT: $
----------
All capital gains and dividend distributions will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions AND
dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund: Fund Name ------------------------------------------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right, power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF
THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND I/WE AGREE TO
ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE ACCOUNT
WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION PRIVILEGES
DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS ATTACHED AND
AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS,
INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS' TRANSFER AGENT, THEIR
OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS OR DAMAGES ARISING OUT
OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC INSTRUCTIONS REASONABLY BELIEVED
TO BE GENUINE, INCLUDING ANY SUCH LOSS OR DAMAGES DUE TO NEGLIGENCE ON THE
PART OF SUCH ENTITIES. THE INVESTOR(S) CERTIFIES(Y) AND AGREE(S) THAT THE
CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS AND RESTRICTIONS CONTAINED HEREIN
WILL CONTINUE UNTIL GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. OR THE FUNDS'
TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR REVOCATION. ANY CHANGE
IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME CASES, AS DESCRIBED IN
THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
UNDER PENALTIES OF PERJURY, I CERTIFY THAT THE TAXPAYER IDENTIFICATION
NUMBER ("NUMBER") PROVIDED ON THIS FORM IS MY (OR MY EMPLOYER'S, TRUST'S,
MINOR'S OR OTHER PAYEE'S) TRUE, CORRECT AND COMPLETE NUMBER AND MAY BE
ASSIGNED TO ANY NEW ACCOUNT OPENED UNDER THE EXCHANGE PRIVILEGE. I FURTHER
CERTIFY THAT I AM (OR THE PAYEE WHOSE NUMBER IS GIVEN IS) NOT SUBJECT TO
BACKUP WITHHOLDING BECAUSE: (A) I AM (OR THE PAYEE IS) EXEMPT FROM BACKUP
WITHHOLDING; (B) THE INTERNAL REVENUE SERVICE (THE "I.R.S.") HAS NOT NOTIFIED
ME THAT I AM (OR THE PAYEE IS) SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A
FAILURE TO REPORT ALL INTEREST OR DIVIDENDS; OR (C) THE I.R.S. HAS NOTIFIED ME
THAT I AM (THE PAYEE IS) NO LONGER SUBJECT TO BACKUP WITHHOLDING;
OR, / / I AM (THE PAYEE IS) SUBJECT TO BACKUP WITHHOLDING.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
THE I.R.S. DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT
OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
<TABLE>
<S> <C>
-----------------------------------------------------------
Date
X X
--------------------------------------------------------- ----------------------------------------------------------
X X
--------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ACCOUNT PRIVILEGES
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized By completing the following section, redemptions
Agent, if any, named below, hereby authorize the which exceed $1,000 may be wired or mailed to a
Transfer Agent of the GT Global Mutual Funds, to Pre-Designated Account at your bank. (Wiring
honor any telephone, telex or telegraphic instructions may be obtained from your bank.) A
instructions reasonably believed to be authentic bank wire service fee may be charged.
for redemption and/or exchange between a similar
class of shares of any of the Funds distributed --------------------------------------------------
by GT Global, Inc. Name of Bank
SPECIAL PURCHASE AND REDEMPTION PLANS --------------------------------------------------
/ / I have completed and attached the Bank Address
Supplemental Application for:
/ / AUTOMATIC INVESTMENT PLAN --------------------------------------------------
/ / SYSTEMATIC WITHDRAWAL PLAN Bank A.B.A Number Account Number
OTHER
/ / I/We owned shares of one or more Funds --------------------------------------------------
distributed by GT Global, Inc. as of April Names(s) in which Bank Account is Established
30, 1987 and since that date continuously A corporation (or partnership) must also submit a
have owned shares of such Funds. Attached is "Corporate Resolution" (or "Certificate of
a schedule showing the numbers of each of Partnership") indicating the names and titles of
my/our Shareholder Accounts. Officers authorized to act on its behalf.
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES
/ / I/We qualify for the Right of Accumulation sales charge discount
described in the Prospectus and Statement of Additional Information of
the Fund purchased.
/ / I/We own shares of more than one Fund distributed by GT Global. Listed
below are the numbers of each of my/our Shareholder Accounts.
/ / The registration of some of my/our shares differs from that shown on this
Application. Below are the account number(s) and registration(s) in each
case.
LIST OF OTHER GT GLOBAL MUTUAL FUND ACCOUNTS:
<TABLE>
<CAPTION>
<S> <C>
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
Account Numbers Account Registrations
</TABLE>
LETTER OF INTENT -- CLASS A SHARES
/ / I agree to the terms of the Letter of Intent set forth below. Although I
am not obligated to do so, it is my intention to invest over a
thirteen-month period in Class A shares of one or more of the GT Global
Mutual Funds in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
When a shareholder signs a Letter of Intent in order to qualify for a reduced
sales charge, Class A shares equal to 5% (in no case in excess of 1/2 of 1%
after an aggregate of $500,000 has been purchased under the Letter) of the
dollar amount specified in this Letter will be held in escrow in the
Shareholder's Account out of the initial purchase (or subsequent purchases, if
necessary) by GT Global, Inc. All dividends and other distributions will be
credited to the Shareholder's Account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
thirteen-month period, the purchaser will remit to GT Global, Inc. the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If this difference is not paid within twenty days after written request
by GT Global, Inc. or the shareholder's Authorized Agent, the appropriate
number of escrowed shares will be redeemed to pay such difference. If the
proceeds from this redemption are inadequate, the purchaser will be liable to
GT Global, Inc. for the balance still outstanding. The Letter of Intent may be
revised upward at any time during the thirteen-month period, and such a
revision will be treated as a new Letter, except that the thirteen-month
period during which the purchase must be made will remain unchanged. Exchange
requests involving escrowed shares must specifically reference those shares.
Exchanges of escrowed shares may be delayed to allow for the extra processing
required.
Any questions relating to this Letter of Intent should be directed to GT
Global, 50 California Street, 27th Floor, San Francisco, CA 94111.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Account Application for the purchase of Class A shares
including such shares purchased under a Right of Accumulation or Letter of
Intent or for the purchase of Class B shares in accordance with the terms of
our Dealer Agreement with GT Global, Inc. and with the Prospectus and
Statement of Additional Information of each Fund purchased. We agree to notify
GT Global, Inc. of any purchases properly made under a Letter of Intent or
Right of Accumulation.
<TABLE>
<CAPTION>
<S> <C>
---------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
---------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Number Representative's Name
( )
- -----------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
X
- -----------------------------------------------------------------------------------------------------------------------
Investment Dealer's Authorized Signature Title
</TABLE>
<PAGE>
<TABLE>
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[LOGO]
GT GLOBAL MUTUAL FUNDS SUPPLEMENTAL APPLICATION
P.O. Box 7345 SPECIAL INVESTMENT AND
SAN FRANCISCO, CA 94120-7345 WITHDRAWAL OPTIONS
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
ACCOUNT REGISTRATION
Please supply the following information exactly as it appears on the Fund's records.
- --------------------------------------------------------- ---------------------------------------------------------
Fund Name Account Number
- ---------------------------------------------------------- ----------------------------------------------------------
Owner's Name Co-Owner 1
- ---------------------------------------------------------- ----------------------------------------------------------
Co-Owner 2 Telephone Number
- ---------------------------------------------------------- ----------------------------------------------------------
Street Address Social Security or Tax I.D. Number
- ----------------------------------------------------------
City, State, Zip Code
Resident of / / U.S. / / Other ------------------
AUTOMATIC INVESTMENT PLAN / / YES / / NO
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to debit my/our personal checking account on
the designated dates in order to purchase / / Class A shares or / / Class B shares of the Fund indicated at the top of
this Supplemental Application at the applicable public offering price determined on that day.
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 1st day of the month in which you wish investments
to begin.)
Amount of each debit (minimum $100) $
-------------------------------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan
Application.
</TABLE>
- --------------------------------------------------------------------------------
[LOGO]
<TABLE>
<S> <C>
GT GLOBAL MUTUAL FUNDS AUTOMATIC INVESTMENT PLAN
</TABLE>
<TABLE>
<S> <C> <C> <C>
BANK AUTHORIZATION
- ------------------------- ------------------------------ ------------
Bank Name Bank Address Bank Account Number
I/We authorize you, the above named bank, to debit my/our account for amounts drawn by the Transfer Agent of the GT
Global Mutual Funds, acting as my agent. I/We agree that your rights in respect to each withdrawal shall be the same as
if it were a check drawn upon you and signed by me/us. This authority shall remain in effect until I/we revoke it in
writing and you receive it. I/We agree that you shall incur no liability when honoring any such debit.
I/We further agree that you will incur no liability to me if you dishonor any such withdrawal. This will be so even
though such dishonor results in the forfeiture of investment.
- --------------------------------------------------------- ---------------------------------------------------------
Account Holder's Name Joint Account Holder's Name
X X
- ------------------------------------ -------------- ------------------------------------ --------------
Account Holder's Signature Date Joint Account Holder's Signature Date
</TABLE>
(OVER)
<PAGE>
<TABLE>
<S> <C> <C> <C>
SYSTEMATIC WITHDRAWAL PLAN / / YES / / NO
MINIMUM REQUIREMENTS: $10,000 INITIAL ACCOUNT BALANCE AND $100 MINIMUM PERIODIC PAYMENT.
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to redeem the necessary number of / / Class A
or / / Class B shares from my/our GT Global Account on the designated dates in order to make the following periodic
payments:
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 18th day of the month in which you wish withdrawals
to begin.)
Maximum annual withdrawal of 12% of initial account balance for shares subject to a contingent deferred sales charge.
Withdrawals in excess of 12% of the initial account balance annually may result in assessment of a contingent deferred
sales charge, as described in the applicable Fund's prospectus.
Amount of each check ($100 minimum): $ -----------------
Please make checks payable to: --------------------------------------------------------------------------------------
(TO BE COMPLETED ONLY IF Recipient
REDEMPTION PROCEEDS TO BE PAID --------------------------------------------------------------------------------------
TO OTHER THAN ACCOUNT HOLDER Street Address
OF RECORD OR MAILED TO ADDRESS --------------------------------------------------------------------------------------
OTHER THAN ADDRESS OF RECORD) City, State, Zip Code
NOTE: If recipient of checks is not the registered shareholder, signature(s) below must be guaranteed. A corporation
(or partnership) must also submit a "Corporate Resolution" (or "Certification of Partnership") indicating the names
and titles of Officers authorized to act on its behalf.
AGREEMENT AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions
contained herein will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any
change or revocation. Any change in these instructions must be in writing with all signatures guaranteed (if
applicable).
- ----------------------------------------------------------
Date
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock
exchange; (4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary
public is NOT an acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature
guarantee requirement should contact the Transfer Agent.
</TABLE>
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
To: Bank Named on the Reverse
In consideration of your compliance with the request and authorization of the
depositor(s) named on the reverse, the Transfer Agent of the GT Global Mutual
Funds hereby agrees:
1. To indemnify and hold you harmless from any loss you may incur because of the
payment by you and of any debit by the Transfer Agent to its own order on the
account of such depositor(s) and received by you in the regular course of
business for payment, or arising out of the dishonor by you of any debit,
provided there are sufficient funds in such account to pay the same upon
presentation.
2. To defend at its own expense any action which might be brought by any
depositor or any other persons because of your actions taken pursuant to the
above mentioned request or in any manner arising by reason of your participation
in connection with such request.
<PAGE>
[LOGO]
GT Global Mutual Funds 415 392 6181
Fifty California Street
27th Floor
SAN FRANCISCO, CA
94111-4624
GT GLOBAL DOLLAR COST AVERAGING PROGRAM
<TABLE>
<S> <C>
Between: GT Global, Inc.
General Distributor of
The GT Global Mutual Funds
Fifty California Street, 27th Floor
San Francisco, California 94111
415 392 6181; 800 824 1580
and: Company -------------------------------------------------------------------
Address --------------------------------------------------------------------
Phone ---------------------------- Fax ----------------------------
</TABLE>
You have entered into either a Dealer Agreement or a Bank and
Bank-Affiliated Dealer Agreement (each an "Agreement") pursuant to which we
agreed to sell to you Class A and Class B shares of the mutual funds that now or
hereafter may be included in the GT Global Mutual Funds (collectively the
"Funds"; individually a "Fund") or a Bank and Bank-Affiliated Dealer Agreement
pursuant to which you agreed to sell such shares issued by the Funds as agent
for your customers. This Supplement to the Agreement is for the purpose of
establishing contractual terms between us with respect to the GT Global Dollar
Cost Averaging Program ("Program"). All capitalized terms used in this
Supplement and not otherwise defined shall have the same meanings assigned to
them as in the Agreement. All terms of the Agreement shall remain in full force
and effect unless specifically modified or suspended by the terms of this
Supplement.
1. You agree to make available to your customers the Program as described
from time to time in the then current Prospectus of any Fund. We will
provide you with reasonable amounts of literature and an account application
covering the Program.
2. A customer participating in the Program will designate the size of his or
her monthly Funds' investment ("Monthly Amount") as well as the total
amount he or she expects to invest over a 24-month period after participation in
the Program begins ("Total Amount"). A sales charge will be applied to each
automatic monthly purchase of Fund Class A shares in an amount determined in
accordance with the Fund's Right of Accumulation privilege. We will pay you a
commission if you are an agent, or we will pay you an agency commission if you
are a bank or bank-affiliated dealer. This commission will be equal to the
dealer compensation schedule that would be paid if the Total Amount the
participating shareholder expects to invest in the 24 months under the Program
were invested, instead, in the Fund at one time. You agree to pass through to
your broker(s) or registered representative(s) a portion of this commission in
accordance with your established compensation arrangement.
3. If a customer discontinues participation in the Program or otherwise
fails to invest the Total Amount as provided in the customer's Program
agreement, and the selling representative is still employed by you, you agree to
repay to us the portion of the commission applicable to any amount not invested
by the customer. If the selling representative is not employed by you, you agree
to repay us an amount equal to the portion of the commission paid that was
retained by your firm.
4. You acknowledge that all payments due to you under this Supplement are
subject to the limitations contained in each Fund's Prospectus and may be
varied or discontinued at any time.
<PAGE>
5. This Supplement shall be binding upon receipt by us in San Francisco,
California, of a counterpart hereof duly accepted and signed by you.
6. Either of us may cancel this Supplement at any time by written notice to
the other, except that Section 3 shall still remain in effect.
7. All communications to us should be sent to the address below. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you on Page 1.
Accepted:
<TABLE>
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Company ---------------------------------- GT Global, Inc.
Address ------------------------------------ Fifty California Street, 27th Floor
Address ------------------------------------ San Francisco, California 94111
Phone ------------------------------------- 415-392-6181; 800-824-1580
Fax ---------------------------------------- 415-445-7566
By: ---------------------------------------- By: /s/ WILLIAM J. GUILFOYLE
Signature ----------------------------------------
William J. Guilfoyle
---------------------------------------- Date: --------------------------------------
Print Name & Date
</TABLE>
DCALR702.085
May 1996
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global, Inc.
P.O. Box 7345 DOLLAR COST
SAN FRANCISCO, CA 94120-7345 AVERAGING APPLICATION
800 223 2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / CORPORATION / / TRUST / / UTMA/UGMA / / OTHER
1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / IRA ACCOUNT / / ACCOUNT REVISION:
APPLICATION ATTACHED (ACCOUNT NO.:
----------------)
</TABLE>
NOTE: Joint tenant registration will be as "joint tenants with rights of
survivorship" unless otherwise specified. Trust registrations should specify
name of trustee(s), beneficiary(ies) and date of trust instrument.
Registration for Uniform Transfers/Gifts to Minors should be in the name of
one custodian and one minor and include the state under which the
custodianship is created (using the minor's social security number).
<TABLE>
<S> <C> <C> <C>
/ / / / / / - / / / / - / / / / / / / / OR / / / / - / / / / / / / / / / / / / /
---------------------------------------------------------------------------------------------------------------------------------
Owner Check appropriate box / / Social Security Number
or / / Tax I.D. Number
-------------------------------------- --------------------------------------------------------------------
Co-owner 1
-------------------------------------- --------------------------------------------------------------------
Co-owner 2 Home Telephone
-------------------------------------- --------------------------------------------------------------------
Street Address Business Telephone
-------------------------------------- --------------------------------------------------------------------
City, State, Zip Code Resident of / / U.S. / / Specify Other
</TABLE>
2. FUND SELECTION
TOTAL INITIAL INVESTMENT $
----------------------------- ($10,000 MINIMUM). The initial investment will
be made without imposition of any sales charge in the GT Global Dollar Fund.
Method of payment / / check or / / bank wire. Make checks and bank wires
payable to "GT Global." Do not send currency. Bank wires should be sent
through the Federal Reserve Bank wire system to: Wells Fargo Bank, NA,
ABA#121000248. ATTN: GT Global AC-4023-050701 (Stating Fund Name,
Shareholder's Registered Name and Account Number)
ALL GT GLOBAL MUTUAL FUNDS ISSUE TWO CLASSES OF SHARES. Class A shares are
sold with an initial sales charge while Class B shares are sold without an
initial sales charge but are subject to higher expense levels and to a
contingent deferred sales charge payable on certain redemptions. Please read
the prospectus of the applicable GT Global Mutual Fund carefully before you
invest.
MONTHLY TRANSFERS: Each month, GT Global Dollar Fund shares will be
redeemed and either Class A or Class B shares of the designated GT Global
Mutual Fund(s) will be purchased including the applicable sales charge, if
any, in the amounts indicated below ($1,000 minimum aggregate per month):
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / CLASS A SHARES
OR / / CLASS B SHARES
/ / New Account / / Existing Account #
-------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
FUND NAME MONTHLY FUND NAME MONTHLY
AMOUNT AMOUNT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 03 / / GT GLOBAL EUROPE GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 18 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional shares 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>
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Dollar Cost Averaging Application for the purchase of
Class A shares including shares purchased under Right of Accumulation or
Letter of Intent, or for the purchase of Class B shares in accordance with
the terms of our Dealer Agreement with GT Global, Inc., and the Prospectus
and Statement of Additional Information for each Fund. We agree to notify GT
Global, Inc., of any purchases properly made under a Letter of Intent or
Right of Accumulation. Class B shares are not available for Right of
Accumulation or Letter of Intent.
<TABLE>
<S> <C>
--------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
- --------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Name Representative's Number
- -----------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
-------------------------------------------------------------
Investment Dealer's Authorized Signature and Title GT Global Use: DLR------------ BR ------------ Rep
--------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
IRA INSTRUCTIONS
To open an IRA Dollar Cost Averaging account:
Read the GT Global IRA Disclosure Statement carefully.
Complete both this Dollar Cost Averaging Application and the GT Global IRA Application. Shareholder is to sign
both forms.
Mail completed applications with a check to GT Global.
3. AGREEMENT AND SIGNATURES
I/We authorize GT Global, Inc., to transfer shares from my/our GT Global Dollar Fund account, established
hereby, to purchase shares in the other GT Global Mutual Fund(s) and the class indicated on the reverse side of
this application. I/We understand that these transfers will occur on the 15th day of each month, or the prior
business day, and will continue until the funds in my/our GT Global Dollar Fund account fall below the transfer
amount, or until I/we terminate the Dollar Cost Averaging Program in writing. I/We further understand that
monthly purchases of the Class A shares of the other GT Global Mutual Fund(s) indicated will be subject to
applicable sales charges, and that the Class B shares purchased may be subject to a contingent deferred sales
charge when redeemed, as described in the Prospectus of each Fund purchased.
By the execution of this Application(s) I/we represent and warrant that I/we have full right, power, and
authority and am/are of legal age in my/our state(s) of residence to make the investment applied for pursuant to
this Application. The person(s), if any, signing on behalf of the investors 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(s). I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF THE GT GLOBAL MUTUAL FUND(S)
IN WHICH I/WE AM/ARE INVESTING.
I/We and my/our assigns and successors understand and agree that the account will be subject to the
telephone exchange and telephone redemption privilege described in the current Prospectus of the GT Global
Mutual Fund(s) in which I/we am/are investing 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 and their officers and
employees will not be liable for any loss or damages arising out of any such telephone, telex, or telegraph
instructions reasonably believed to be genuine, including any such loss due to negligence on the part of any
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., 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 are guaranteed.
Please indicate the number of signatures required to process written redemption
requests: / / one / / two / / three / / four
(If you do not indicate the number of required signatures, ALL account owners must sign 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 either because: (a) I am (or the payee is) exempt from
backup withholding; (b) the Internal Revenue Service ("IRS") 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 IRS has
notified me that I am (or the payee is) no longer subject to backup withholding OR; / / I am (the payee is)
subject to backup withholding.
Note:
Dollar Cost Averaging accounts held in the GT Global Dollar Fund have the following privilege restrictions:
Check writing, telephone redemptions and exchanges. The other GT Global Mutual Funds which receive the monthly
Dollar Cost Averaging transfers enjoy all regular account privileges, including telephone redemptions and
exchanges.
The Dollar Cost Averaging program does not assure a profit and does not protect against loss in declining
markets. Because such a program involves continuous investment in securities regardless of fluctuating price
levels of such securities, you should consider your financial ability to continue purchases through periods of
low price levels.
- ------------------------------------------------------- -------------------------------------------------------
Date For GT Global Use Only
X X
- ------------------------------------------------------- -------------------------------------------------------
X X
- ------------------------------------------------------- -------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
SAN FRANCISCO, CA
94111-4624
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION EXISTING
SHAREHOLDER ACCOUNT NUMBER
</TABLE>
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 same name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
-------------------------------------- / // // // // // // // // /
Owner Social Security Number / / or Tax I.D. Number "TIN" / / (Check applicable box) If
- -------------------------------------- more than one owner social security number or taxpayer identification number should
Co-owner 1 be provided for first owner listed. If a purchase is made under Uniform Gift/Transfer
- -------------------------------------- to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)---------------------------
-------------------------------------- Failure to provide TIN will result in 31% withholding on redemptions and exchanges.
Street Address ( ) ( )
- -------------------------------------- ------------------------------- -------------------------------
City, State, Zip Code Home Telephone Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund selected
for Class A and Class B shares.
Checks should be made payable to "GT Global."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A
Shares / / Class B Shares or / / Advisor Class Advisor Class shares are
sold through a different prospectus than Class A and Class B shares, are not
sold directly to the general public and only available through certain
employee benefit plans, financial institutions and other entities that have
entered into specific agreements with GT Global, Inc. Special account
requirements apply to Advisor Class shares. Please see an Advisor Class
prospectus for complete information.
If a class share box is not checked, your investment will be made in Class A
shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per fund.
<TABLE>
<S> <C> <C> <C> <C>
07 GT GLOBAL WORLDWIDE GROWTH FUND ---------- 13 GT GLOBAL LATIN AMERICA GROWTH FUND ----------
05 GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 24 GT GLOBAL AMERICA SMALL CAP GROWTH FUND ----------
16 GT GLOBAL EMERGING MARKETS FUND ---------- 06 GT GLOBAL AMERICA GROWTH FUND ----------
11 GT GLOBAL HEALTH CARE FUND ---------- 23 GT GLOBAL AMERICA VALUE FUND ----------
15 GT GLOBAL TELECOMMUNICATIONS FUND ---------- 04 GT GLOBAL JAPAN GROWTH FUND ----------
19 GT GLOBAL INFRASTRUCTURE FUND ---------- 10 GT GLOBAL GROWTH & INCOME FUND ----------
17 GT GLOBAL FINANCIAL SERVICES FUND ---------- 09 GT GLOBAL GOVERNMENT INCOME FUND ----------
21 GT GLOBAL NATURAL RESOURCES FUND ---------- 08 GT GLOBAL STRATEGIC INCOME FUND ----------
22 GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 18 GT GLOBAL HIGH INCOME FUND ----------
02 GT GLOBAL NEW PACIFIC GROWTH FUND ---------- 01 GT GLOBAL DOLLAR FUND ----------
03 GT GLOBAL EUROPE GROWTH FUND ----------
Rebalance frequency - check one
/ / Monthly / / Quarterly / / Semi annual / / Total percentage must equal 100%.
Annual
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains distributions and dividends will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions and
dividends in cash.
Investment will be split according to allocation.
</TABLE>
<TABLE>
<S> <C>
AGREEMENTS AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any change or revocation. ANY
CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING WITH ALL SIGNATURES GUARANTEED (IF APPLICABLE).
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock exchange;
(4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary public is NOT an
acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature guarantee requirement should
contact the Transfer Agent.
</TABLE>
<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.
THEPR703 MC
<PAGE>
GT GLOBAL INCOME FUNDS
PROSPECTUS -- MARCH 1, 1997
- --------------------------------------------------------------------------------
GT GLOBAL GOVERNMENT INCOME FUND ("GOVERNMENT INCOME FUND") seeks a high level
of current income by investing primarily in high quality U.S. and foreign
government debt securities. The Fund's secondary objectives are capital
appreciation and protection of principal through active management of its
maturity structure and currency exposure.
GT GLOBAL STRATEGIC INCOME FUND ("STRATEGIC INCOME FUND") primarily seeks high
current income and secondarily seeks capital appreciation. The Fund allocates
its assets among debt securities of issuers in: (1) the United States; (2)
developed foreign countries; and (3) emerging markets.
GT GLOBAL HIGH INCOME FUND ("HIGH INCOME FUND") primarily seeks high current
income and secondarily seeks capital appreciation by investing all of its
investable assets in the Global High Income Portfolio ("Portfolio"), which, in
turn, invests primarily in the debt securities of issuers located in emerging
markets. The Portfolio's investment objectives are identical to those of the
Fund.
Individually, a "Fund" and, collectively, the "Funds."
There can be no assurance that any Fund or the Portfolio will achieve its
investment objectives. The investment experience of the High Income Fund will
correspond directly with the investment experience of the Portfolio.
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 Portfolio 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.
The Funds are designed for long-term investors and not as trading vehicles, do
not represent a complete investment program and are not suitable for all
investors. An investment in any of the Funds involves risk factors that should
be reviewed carefully by potential investors. The Strategic Income Fund and the
Portfolio both are authorized to borrow money for investment purposes, which
would increase the volatility of their performance and involves additional
risks. See "Investment Objectives and Policies" and "Risk Factors."
THE STRATEGIC INCOME FUND INVESTS UP TO 50% OF ITS TOTAL ASSETS, AND THE GLOBAL
HIGH INCOME PORTFOLIO INVESTS UP TO 100% OF ITS TOTAL ASSETS, IN LOWER QUALITY
AND UNRATED FOREIGN GOVERNMENT BONDS WHOSE CREDIT QUALITY IS GENERALLY
CONSIDERED THE EQUIVALENT OF U.S. CORPORATE DEBT SECURITIES COMMONLY KNOWN AS
"JUNK BONDS." INVESTMENTS OF THIS TYPE ARE SUBJECT TO A GREATER RISK OF LOSS OF
PRINCIPAL AND INTEREST. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED
WITH AN INVESTMENT IN THESE FUNDS. SEE "INVESTMENT OBJECTIVES AND POLICIES" AND
"RISK FACTORS."
This Prospectus sets forth concisely information an investor should know before
investing and should be read carefully and retained for future reference. A
Statement of Additional Information, dated March 1, 1997, has been filed with
the Securities and Exchange Commission ("SEC") and, as supplemented or amended
from time to time, is incorporated herein by reference. The Statement of
Additional Information is available without charge by writing to the Funds at 50
California Street, 27th Floor, San Francisco, California 94111, or 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 INCOME FUNDS
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 7
Alternative Purchase Plan................................................................. 13
Investment Objectives and Policies........................................................ 14
Risk Factors.............................................................................. 24
How to Invest............................................................................. 29
How to Make Exchanges..................................................................... 36
How to Redeem Shares...................................................................... 37
Shareholder Account Manual................................................................ 40
Calculation of Net Asset Value............................................................ 41
Dividends, Other Distributions and Federal Income Taxation................................ 41
Management................................................................................ 43
Other Information......................................................................... 47
Appendix A -- Description of Debt Ratings................................................. 50
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL INCOME FUNDS
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus.
<TABLE>
<S> <C> <C>
The Funds and the Portfolio: Each Fund is a non-diversified series of G.T. Investment Funds,
Inc. (the "Company"). The Portfolio is a non-diversified, open-end
management investment company.
Investment Objectives: The Government Income Fund primarily seeks high current income and
secondarily seeks capital appreciation and protection of
principal. The Strategic Income Fund and the High Income Fund
primarily seek high current income and secondarily seek capital
appreciation.
Principal Investments: The Government Income Fund invests primarily in high quality U.S.
and foreign government debt obligations.
The Strategic Income Fund allocates its assets among debt
securities of issuers in: (1) the United States; (2) developed
foreign countries; and (3) emerging markets, and selects
particular securities in each sector based on their relative
investment merit.
The High Income Fund invests all of its investable assets in the
Portfolio, which, in turn, invests primarily in debt securities of
issuers located in emerging markets.
Principal Risk Factors: There is no assurance that the Funds or the Portfolio will achieve
their investment objectives. Each Fund's net asset value will
fluctuate, reflecting fluctuations in the market value of its or
its corresponding Portfolio's portfolio holdings. The value of
debt securities held by the Government Income Fund, the Strategic
Income Fund and the Portfolio generally fluctuates inversely with
interest rate movements.
The Government Income Fund, the Strategic Income Fund and the
Portfolio will 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 differ favorably or unfavor-
ably from the U.S. economy. Changes in foreign currency exchange
rates will affect a Fund's or the Portfolio'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. The Portfolio will normally invest at least 65% of its
total assets in debt securities of issuers in emerging markets and
the Strategic Income Fund may invest in such securities. Such
investments entail greater risks than investing in securities of
issuers in developed markets.
The Government Income Fund, the Strategic Income Fund and the
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.
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL INCOME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Strategic Income Fund may invest up to 50% of its total
assets, and the Portfolio may invest up to 100% of its total
assets, in debt securities rated below investment grade or, if not
rated, determined by the Manager to be of comparable quality.
Investments of this type are subject to 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."
Alternative Purchase Plan: Investors may select Class A or Class B shares, each subject to
different expenses and a different sales charge structure.
Class A Shares: Offered at net asset value plus any applicable sales charge
(maximum is 4.75% of public offering price) and subject to service
and distribution fees at the annualized rate of up to 0.35% of the
average daily net assets of each Fund's Class A shares.
Class B Shares: Offered at net asset value (a maximum contingent deferred sales
charge of 5% of the lesser of the shares' net asset value or the
original purchase price is imposed on certain redemptions made
within six years of date of purchase) and subject to service and
distribution fees at the annualized rate of up to 1.00% of the
average daily net assets of each Fund's Class B shares.
Shares Available Through: Class A and Class B shares of each Fund's common stock are
available through broker/dealers who have entered into agreements
to sell shares with the Funds' distributor, GT Global, Inc. ("GT
Global"). Shares also may be acquired directly through GT Global
or through exchanges of shares of the other GT Global Mutual
Funds, which are open-end management investment companies advised
and/or administered by the Manager. See "How to Invest" and
"Shareholder Account Manual."
Exchange Privileges: Shares of a class of a Fund may be exchanged without a sales
charge for shares of the corresponding class of other GT Global
Mutual Funds. See "How to Make Exchanges" and "Shareholder Account
Manual."
Redemptions: Shares may be redeemed either through broker/dealers or the Funds'
transfer agent, GT Global Investor Services, Inc. ("Transfer
Agent"). See "How to Redeem Shares" and "Shareholder Account
Manual."
Dividends and Other Dividends are paid monthly from net investment income; other
Distributions: distributions are paid annually from net short term capital gain,
net capital gain and net gains from foreign currency transactions,
if any.
Reinvestment: Dividends and other distributions may be reinvested automatically
in Fund shares of the distributing class or in shares of the
corresponding class of other GT Global Mutual Funds without a
sales charge.
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL INCOME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
First Purchase: $500 minimum ($100 for individual retirement accounts ("IRAs") and
reduced amounts for certain other retirement plans).
Subsequent Purchases: $100 minimum (reduced amounts for IRAs and certain other
retirement plans).
Net Asset Values: Class A and Class B shares of the Funds are quoted daily in the
financial section of most newspapers.
Other Features:
Class A Shares Letter of Intent Reinstatement Privilege
Quantity Discounts Systematic Withdrawal Plan
Right of Accumulation Automatic Investment Plan
Portfolio Rebalancing Program Dollar Cost Averaging Program
Class B Shares Reinstatement Privilege Automatic Investment Plan
Systematic Withdrawal Plan Dollar Cost Averaging Program
Portfolio Rebalancing Program
</TABLE>
Prospectus Page 5
<PAGE>
GT GLOBAL INCOME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Class A and Class B shares of the Funds are reflected in
the following tables (1):
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC INCOME HIGH INCOME
INCOME FUND FUND FUND
---------------- ---------------- ----------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases of shares (as a % of
offering price).......................................... 4.75% None 4.75% None 4.75% None
Sales charges on reinvested distributions to
shareholders............................................. None None None None None None
Maximum deferred sales charge (as a % of net asset value at
time of purchase or sale, whichever is less)............. None 5.00% None 5.00% None 5.00%
Redemption charges......................................... None None None None None None
Exchange fees:
-- On first four exchanges each year..................... None None None None None None
-- On each additional exchange........................... $7.50 $7.50 $7.50 $7.50 $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.............. 0.72% 0.72% 0.72% 0.72% 0.99% 0.99%
12b-1 distribution and service fees........................ 0.35% 1.00% 0.35% 1.00% 0.35% 1.00%
Other expenses............................................. 0.32% 0.32% 0.33% 0.33% 0.35% 0.35%
------- ------- ------- ------- ------- -------
Total Fund Operating Expenses.............................. 1.39% 2.04% 1.40% 2.05% 1.69% 2.34%
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Funds, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Government Income Fund
Class A Shares (4)..................................................................... $61 $90 $121 $209
Class B Shares
Assuming a complete redemption at end of period (5).................................. $71 $95 $131 $240
Assuming no redemption............................................................... $21 $65 $111 $240
Strategic Income Fund
Class A Shares (4)..................................................................... $61 $90 $122 $210
Class B Shares
Assuming a complete redemption at end of period (5).................................. $71 $95 $132 $241
Assuming no redemption............................................................... $21 $65 $112 $241
High Income Fund
Class A Shares (4)..................................................................... $64 $99 $136 $241
Class B Shares
Assuming a complete redemption at end of period (5).................................. $74 $104 $147 $271
Assuming no redemption............................................................... $24 $74 $127 $271
</TABLE>
- --------------
(1) THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN A FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies. THE "HYPOTHETICAL
EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUNDS' AND
THE PORTFOLIO'S 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 Portfolio's projected or actual performance.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See "How
to Invest."
(3) 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. The Funds also offer Advisor Class shares
to certain categories of investors. See "Alternative Purchase Plan." Advisor
Class shares are not subject to 12b-1 distribution and service fees. The
Board of Directors of the Company believes that the aggregate per share
expenses of the High Income Fund and the Portfolio will be less than or
approximately equal to the expenses which the Fund would incur if the assets
of that Fund were invested directly in the type of securities being held by
the Portfolio.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes deduction of the applicable contingent deferred sales charge.
Prospectus Page 6
<PAGE>
GT GLOBAL INCOME 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, offered
through this Prospectus, for the periods shown. For the period March 29, 1988
(commencement of operations) to October 22, 1992, the Strategic Income Fund was
named G.T. Global Bond Fund and operated under different investment objectives,
policies and limitations. This information is supplemented by the financial
statements and accompanying notes appearing in the Statement of Additional
Information. The financial statements and notes for fiscal year ended October
31, 1996 and each of the preceding four years have been audited by Coopers &
Lybrand L.L.P., independent accountants, whose report thereon also is included
in the Statement of Additional Information.
GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------
1996 1995(C) 1994(c) 1993(c) 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period......................... $ 8.81 $ 8.63 $ 11.07 $ 9.83 $ 10.29 $ 10.46 $ 10.45 $ 10.86
-------- -------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income......... 0.57 0.62 0.65 0.74 0.92 0.99 1.18 1.15
Net realized and unrealized
gain (loss) on investments... 0.03 0.15 (1.52) 1.34 (0.31) (0.07) (0.02) (0.35)
-------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
resulting from investment
operations................. 0.60 0.77 (0.87) 2.08 0.61 0.92 1.16 0.80
-------- -------- -------- -------- -------- -------- -------- --------
Distributions:
From net investment income.... (0.57) (0.59) (0.65) (0.74) (0.83) (1.00) (1.15) (1.20)
From net realized gain on
investments.................. (0.10) (0.00) (0.27) (0.00) (0.13) (0.09) (0.00) (0.00)
In excess of net realized gain
on investments............... (0.00) (0.00) (0.55) (0.00) (0.00) (0.00) (0.00) (0.00)
Return of capital............. (0.00) (0.00) (0.10) (0.00) (0.00) (0.00) (0.00) (0.00)
From sources other than net
investment income............ (0.00) (0.00) (0.00) (0.10) (0.11) (0.00) (0.00) (0.01)
-------- -------- -------- -------- -------- -------- -------- --------
Total distributions......... (0.67) (0.59) (1.57) (0.84) (1.07) (1.09) (1.15) (1.21)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period.. $ 8.74 $ 8.81 $ 8.63 $ 11.07 $ 9.83 $ 10.29 $ 10.46 $ 10.45
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Total investment return(d)...... 7.11% 9.22% (8.87)% 21.9% 6.3% 9.4% 11.9% 7.2%
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period
(in 000's)..................... $240,945 $385,404 $502,094 $708,301 $623,387 $399,200 $259,726 $122,526
Ratio of net investment income
to average net assets.......... 6.52% 6.98% 6.87% 7.1% 9.0% 9.5% 11.4% 10.7%
Ratio of expenses to average net
assets:
With expense reductions....... 1.34% 1.35% 1.33% 1.4% 1.6% 1.6% 1.8% 1.7%
Without expense reductions.... 1.39% 1.38% --%** --%** --%** --%** --%** --%**
Portfolio turnover rate +++..... 268% 385% 625% 495% 351% 326% 334% 413%
<CAPTION>
MARCH 29, 1988
(COMMENCE-
MENT OF
OPERATIONS) TO
OCTOBER 31,
1988
--------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of
period......................... $11.43
--------------
Income from investment
operations:
Net investment income......... 0.49*
Net realized and unrealized
gain (loss) on investments... (0.44)
--------------
Net increase (decrease)
resulting from investment
operations................. 0.05
--------------
Distributions:
From net investment income.... (0.49)
From net realized gain on
investments.................. (0.12)
In excess of net realized gain
on investments............... (0.00)
Return of capital............. (0.00)
From sources other than net
investment income............ (0.01)
--------------
Total distributions......... (0.62)
--------------
Net asset value, end of period.. $10.86
--------------
--------------
Total investment return(d)...... 1.1%(a)
--------------
--------------
Ratios and supplemental data:
Net assets, end of period
(in 000's)..................... $57,063
Ratio of net investment income
to average net assets.......... 7.41%(b)*
Ratio of expenses to average net
assets:
With expense reductions....... 1.8%(b)*
Without expense reductions.... --%**
Portfolio turnover rate +++..... 291%(b)
<FN>
- ------------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Net of $0.01 per share of Fund operating expenses reimbursed by the
Manager.
** Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(d) Total investment return does not include sales charges.
</TABLE>
Prospectus Page 7
<PAGE>
GT GLOBAL INCOME FUNDS
GOVERNMENT INCOME FUND
(CONTINUED)
<TABLE>
<CAPTION>
CLASS B++
---------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------
1996 1995(C) 1994(c) 1993(c)
-------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.......................................... $ 8.80 $ 8.64 $ 11.07 $ 9.83
-------- -------- ----------- -----------
Income from investment operations:
Net investment income....................................................... 0.51 0.55 0.59 0.67
Net realized and unrealized gain (loss) on investments...................... 0.04 0.14 (1.52) 1.34
-------- -------- ----------- -----------
Net increase (decrease) resulting from investment operations.............. 0.55 0.69 (0.93) 2.01
-------- -------- ----------- -----------
Distributions:
From net investment income.................................................. (0.51) (0.53) (0.59) (0.67)
From net realized gain on investments....................................... (0.10) (0.00) (0.27) (0.00)
In excess of net realized gain on investments............................... (0.00) (0.00) (0.54) (0.00)
Return of capital........................................................... (0.00) (0.00) (0.10) (0.00)
From sources other than net investment income............................... (0.00) (0.00) (0.00) (0.10)
-------- -------- ----------- -----------
Total distributions....................................................... (0.61) (0.53) (1.50) (0.77)
-------- -------- ----------- -----------
Net asset value, end of period................................................ $ 8.74 $ 8.80 $ 8.64 $ 11.07
-------- -------- ----------- -----------
-------- -------- ----------- -----------
Total investment return(d).................................................... 6.54% 8.22% (9.39)% 21.1%
-------- -------- ----------- -----------
-------- -------- ----------- -----------
Ratios and supplemental data:
Net assets, end of period (in 000's).......................................... $166,577 $235,481 $ 262,405 $ 182,972
Ratio of net investment income to average net assets.......................... 5.87% 6.33% 6.22% 6.5%
Ratio of expenses to average net assets:
With expense reductions..................................................... 1.99% 2.00% 1.98% 2.0%
Without expense reductions.................................................. 2.04% 2.03% --%** --%**
Portfolio turnover rate +++................................................... 268% 385% 625% 495%
<CAPTION>
OCTOBER 22,
1992 TO
OCTOBER 31,
1992
-----------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period.......................................... $ 9.87
-----------
Income from investment operations:
Net investment income....................................................... 0.02
Net realized and unrealized gain (loss) on investments...................... (0.06)
-----------
Net increase (decrease) resulting from investment operations.............. (0.04)
-----------
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)
Return of capital........................................................... (0.00)
From sources other than net investment income............................... (0.00)
-----------
Total distributions....................................................... (0.00)
-----------
Net asset value, end of period................................................ $ 9.83
-----------
-----------
Total investment return(d).................................................... (0.4)%(a)
-----------
-----------
Ratios and supplemental data:
Net assets, end of period (in 000's).......................................... $ 2,624
Ratio of net investment income to average net assets.......................... 8.0%(b)
Ratio of expenses to average net assets:
With expense reductions..................................................... 1.9%(b)
Without expense reductions.................................................. --%**
Portfolio turnover rate +++................................................... 351%
</TABLE>
- ------------------
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Net of $0.01 per share of Fund operating expenses reimbursed by the Manager.
** Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(d) Total investment return does not include sales charges.
Prospectus Page 8
<PAGE>
GT GLOBAL INCOME FUNDS
STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
CLASS A+
--------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------------------------
1996 1995(C) 1994 1993(c) 1992 1991 1990 1989
-------- -------- -------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period........................ $ 10.32 $ 10.88 $ 13.61 $ 11.25 $ 10.91 $ 11.20 $ 11.17 $ 11.25
-------- -------- -------- --------- --------- --------- --------- --------
Income from investment
operations:
Net investment income......... 0.89 0.97 0.79 0.96 0.86 0.84* 1.04* 0.82*
Net realized and unrealized
gain (loss) on investments... 1.44 (0.69) (2.14) 2.85 0.31 (0.02) (0.17) (0.10)
-------- -------- -------- --------- --------- --------- --------- --------
Net increase (decrease) from
investment operations...... 2.33 0.28 (1.35) 3.81 1.17 0.82 0.87 0.72
-------- -------- -------- --------- --------- --------- --------- --------
Distributions:
From net investment income.... (0.82) (0.80) (0.79) (0.96) (0.83) (0.60) (0.84) (0.80)
From net realized gain on
investments.................. (0.00) (0.00) (0.38) (0.37) (0.00) (0.51) (0.00) (0.00)
In excess of net investment
income....................... (0.07) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Return of capital............. (0.00) (0.04) (0.21) (0.00) (0.00) (0.00) (0.00) (0.00)
From sources other than net
investment income............ (0.00) (0.00) (0.00) (0.12) (0.00) (0.00) (0.00) (0.00)
-------- -------- -------- --------- --------- --------- --------- --------
Total distributions......... (0.89) (0.84) (1.38) (1.45) (0.83) (1.11) (0.84) (0.80)
-------- -------- -------- --------- --------- --------- --------- --------
Net asset value, end of period.. $ 11.76 $ 10.32 $ 10.88 $ 13.61 $ 11.25 $ 10.91 $ 11.20 $ 11.17
-------- -------- -------- --------- --------- --------- --------- --------
-------- -------- -------- --------- --------- --------- --------- --------
Total investment return(d)...... 23.00% 3.06% (10.44)% 37.0% 11.1% 7.7% 8.3% 6.8%
-------- -------- -------- --------- --------- --------- --------- --------
-------- -------- -------- --------- --------- --------- --------- --------
Ratios and supplemental data:
Net assets, end of period
(in 000's).................... $185,126 $188,165 $275,241 $ 287,870 $ 83,849 $ 55,967 $ 44,545 $ 37,820
Ratio of net investment income
to average net assets......... 8.09% 9.64% 6.74% 7.2% 7.6% 7.2%* 9.6%* 7.7%*
Ratio of expenses to average net
assets:
With expense reductions....... 1.38% 1.42% 1.40% 1.7% 1.8% 1.9%* 1.9%* 1.8%*
Without expense reductions.... 1.40% 1.45% --%** --%** --%** --%** --%** --%**
Ratio of interest expenses to
average net assets............ N/A N/A 0.10% N/A N/A N/A N/A N/A
Portfolio turnover rate+++...... 177% 238% 583% 310% 418% 630% 501% 385%
<CAPTION>
MARCH 29, 1988
(COMMENCE-
MENT OF
OPERATIONS) TO
OCTOBER 31,
1988
---------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of
period........................ $ 11.43
---------------
Income from investment
operations:
Net investment income......... 0.45*
Net realized and unrealized
gain (loss) on investments... (0.24)
---------------
Net increase (decrease) from
investment operations...... 0.21
---------------
Distributions:
From net investment income.... (0.39)
From net realized gain on
investments.................. (0.00)
In excess of net investment
income....................... (0.00)
Return of capital............. (0.00)
From sources other than net
investment income............ (0.00)
---------------
Total distributions......... (0.39)
---------------
Net asset value, end of period.. $ 11.25
---------------
---------------
Total investment return(d)...... 1.2%(a)
---------------
---------------
Ratios and supplemental data:
Net assets, end of period
(in 000's).................... $ 21,830
Ratio of net investment income
to average net assets......... 7.2%*(e)
Ratio of expenses to average net
assets:
With expense reductions....... 1.7%*(e)
Without expense reductions.... --%**
Ratio of interest expenses to
average net assets............ N/A
Portfolio turnover rate+++...... 340%(e)
</TABLE>
- ------------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement by the Manager of Fund operating expenses of $0.01,
$0.04, $0.02 and 0.05 for the year ended October 31, 1991, 1990, 1989 and
1988, respectively. Without such reimbursements, the expense ratios would
have been 1.92%, 2.20%, 2.02% and 2.42% and the ratio of net investment
income to average net assets would have been 7.16%, 9.26%, 7.56% and 6.42%
for the year ended October 31, 1991, 1990, 1989 and 1988, respectively.
** Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Ratios are not meaningful due to short period of operation of Class B
shares.
(c) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(d) Total investment return does not include sales charges.
(e) Annualized.
N/A Not applicable.
Prospectus Page 9
<PAGE>
GT GLOBAL INCOME FUNDS
STRATEGIC INCOME FUND
(CONTINUED)
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------
1996 1995(C) 1994(C) 1993(c)
------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.......................................... $ 10.33 $ 10.88 $ 13.60 $ 11.24
------- ------- ----------- -----------
Income from investment operations:
Net investment income....................................................... 0.82 0.91 0.73 0.89
Net realized and unrealized gain (loss) on investments...................... 1.44 (0.69) (2.14) 2.85
------- ------- ----------- -----------
Net increase (decrease) from investment operations........................ 2.26 0.22 (1.41) 3.74
------- ------- ----------- -----------
Distributions:
From net investment income.................................................. (0.75) (0.73) (0.72) (0.89)
From net realized gain on investments....................................... (0.00) (0.00) (0.38) (0.37)
In excess of net investment income.......................................... (0.07) (0.00) (0.00) (0.00)
Return of capital........................................................... (0.00) (0.04) (0.21) (0.00)
From sources other than net investment income............................... (0.00) (0.00) (0.00) (0.12)
------- ------- ----------- -----------
Total distributions....................................................... (0.82) (0.77) (1.31) (1.38)
------- ------- ----------- -----------
Net asset value, end of period................................................ $ 11.77 $ 10.33 $ 10.88 $ 13.60
------- ------- ----------- -----------
------- ------- ----------- -----------
Total investment return(d).................................................... 22.15% 2.48% (11.02)% 36.2%
------- ------- ----------- -----------
------- ------- ----------- -----------
Ratios and supplemental data:
Net assets, end of period (in 000's).......................................... $338,178 $357,852 $ 458,550 $ 310,431
Ratio of net investment income to average net assets.......................... 7.44% 8.99% 6.09% 6.5%
Ratio of expenses to average net assets:
With expense reductions..................................................... 2.03% 2.07% 2.05% 2.4%
Without expense reductions.................................................. 2.05% 2.10% --%** --%**
Ratio of interest expenses to average net assets.............................. N/A N/A 0.10% N/A
Portfolio turnover rate+++.................................................... 177% 238% 583% 310%
<CAPTION>
OCTOBER 22,
1992 TO
OCTOBER 31,
1992
-----------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period.......................................... $ 11.36
-----------
Income from investment operations:
Net investment income....................................................... 0.01
Net realized and unrealized gain (loss) on investments...................... (0.13)
-----------
Net increase (decrease) from investment operations........................ (0.12)
-----------
Distributions:
From net investment income.................................................. (0.00)
From net realized gain on investments....................................... (0.00)
In excess of net investment income.......................................... (0.00)
Return of capital........................................................... (0.00)
From sources other than net investment income............................... (0.00)
-----------
Total distributions....................................................... (0.00)
-----------
Net asset value, end of period................................................ $ 11.24
-----------
-----------
Total investment return(d).................................................... (1.1)%(a)
-----------
-----------
Ratios and supplemental data:
Net assets, end of period (in 000's).......................................... $ 533
Ratio of net investment income to average net assets.......................... N/A(b)
Ratio of expenses to average net assets:
With expense reductions..................................................... N/A(b)
Without expense reductions.................................................. --%**
Ratio of interest expenses to average net assets.............................. N/A
Portfolio turnover rate+++.................................................... 418%
</TABLE>
- ------------------
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement by the Manager of Fund operating expenses of $0.01,
$0.04, $0.02 and 0.05 for the year ended October 31, 1991, 1990, 1989 and
1988, respectively. Without such reimbursements, the expense ratios would
have been 1.92%, 2.20%, 2.02% and 2.42% and the ratio of net investment
income to average net assets would have been 7.16%, 9.26%, 7.56% and 6.42%
for the year ended October 31, 1991, 1990, 1989 and 1988, respectively.
** Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Ratios are not meaningful due to short period of operation of Class B
shares.
(c) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(d) Total investment return does not include sales charges.
(e) Annualized.
N/A Not applicable.
Prospectus Page 10
<PAGE>
GT GLOBAL INCOME FUNDS
HIGH INCOME FUND
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------
OCTOBER 22, 1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
-------------------------------------- TO OCTOBER 31,
1996 1995 1994 (c) 1993 (c) 1992
-------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period...................................... $ 11.70 $ 12.56 $ 14.92 $ 11.43 $11.43
-------- -------- -------- -------- -------
Income from investment operations:
Net investment income................................................... 1.27 1.35 0.94 0.78 0.00
Net realized and unrealized gain (loss) on investments.................. 3.09 (1.09) (1.87) 3.92 0.00
-------- -------- -------- -------- -------
Net increase (decrease) from investment operations.................... 4.36 0.26 (0.93) 4.70 0.00
-------- -------- -------- -------- -------
Distributions:
From net investment income.............................................. (1.11) (1.03) (0.94) (0.78) (0.00)
From net realized gain on investments................................... (0.10) (0.03) (0.27) (0.00) (0.00)
In excess of net realized gain on investments........................... (0.00) (0.00) (0.22) (0.00) (0.00)
From sources other than net investment income........................... (0.00) (0.00) (0.00) (0.43) (0.00)
Return of capital....................................................... (0.00) (0.06) (0.00) (0.00) (0.00)
-------- -------- -------- -------- -------
Total distributions................................................... (1.21) (1.12) (1.43) (1.21) (0.00)
-------- -------- -------- -------- -------
Net asset value, end of period............................................ $ 14.85 $ 11.70 $ 12.56 $ 14.92 $11.43
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
Total investment return(e)................................................ 39.05% 2.81% (6.45)% 43.6% 0.0%(b)
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's)...................................... $178,318 $142,002 $167,974 $143,171 $ 207
Ratio of net investment income (loss) to average net assets............... 9.52% 11.85% 7.00% 6.4% N/A(d)
Ratio of expenses to average net assets................................... 1.69% 1.75% 1.57% 2.2% N/A(d)
Ratio of interest expense to average net assets........................... 0.04% N/A 0.22% N/A N/A
Portfolio turnover rate (f)............................................... 290% --% --% --% --%
</TABLE>
- ------------------
(a) Annualized.
(b) Not annualized.
(c) These selected per share data were calculated based upon weighted average
shares during the year.
(d) Ratios are not meaningful due to short period of operation.
(e) Total investment return does not include sales charges.
(f) The Fund invests only in the Portfolio and does not engage in securities
transactions. Accordingly, the portfolio turnover rates presented are for
the Portfolio.
N/A Not applicable.
Prospectus Page 11
<PAGE>
GT GLOBAL INCOME FUNDS
HIGH INCOME FUND
(CONTINUED)
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------
OCTOBER 22, 1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
-------------------------------------- TO OCTOBER 31,
1996 1995 1994 (c) 1993 (c) 1992
-------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period...................................... $ 11.69 $ 12.56 $ 14.90 $ 11.43 $11.43
-------- -------- -------- -------- -------
Income from investment operations:
Net investment income................................................... 1.17 1.27 0.86 0.70 0.00
Net realized and unrealized gain (loss) on investments.................. 3.09 (1.09) (1.85) 3.90 0.00
-------- -------- -------- -------- -------
Net increase (decrease) from investment operations.................... 4.26 0.18 (0.99) 4.60 0.00
-------- -------- -------- -------- -------
Distributions:
From net investment income.............................................. (1.03) (0.96) (0.86) (0.70) (0.00)
From net realized gain on investments................................... (0.09) (0.03) (0.27) (0.00) (0.00)
In excess of net realized gain on investments........................... (0.00) (0.00) (0.22) (0.00) (0.00)
From sources other than net investment income........................... (0.00) (0.00) (0.00) (0.43) (0.00)
Return of capital....................................................... (0.00) (0.06) (0.00) (0.00) (0.00)
-------- -------- -------- -------- -------
Total distributions................................................... (1.12) (1.05) (1.35) (1.13) (0.00)
-------- -------- -------- -------- -------
Net asset value, end of period............................................ $ 14.83 $ 11.69 $ 12.56 $ 14.90 $11.43
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
Total investment return(e)................................................ 38.16% 2.07% (6.99)% 42.6% 0.0%(b)
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's)...................................... $251,002 $214,897 $232,423 $127,035 $ 53
Ratio of net investment income (loss) to average net assets............... 8.87% 11.20% 6.35% 5.8% N/A(d)
Ratio of expenses to average net assets................................... 2.34% 2.40% 2.22% 2.8% N/A(d)
Ratio of interest expense to average net assets........................... 0.04% N/A 0.22% N/A N/A
Portfolio turnover rate (f)............................................... 290% --% --% --% --%
</TABLE>
- ------------------
(a) Annualized.
(b) Not annualized.
(c) These selected per share data were calculated based upon weighted average
shares during the year.
(d) Ratios are not meaningful due to short period of operation.
(e) Total investment return does not include sales charges.
(f) The Fund invests only in the Portfolio and does not engage in securities
transactions. Accordingly, the portfolio turnover rates presented are for
the Portfolio.
N/A Not applicable.
Prospectus Page 12
<PAGE>
GT GLOBAL INCOME FUNDS
ALTERNATIVE PURCHASE PLAN
- --------------------------------------------------------------------------------
DIFFERENCES BETWEEN THE CLASSES. The primary difference between the two classes
of each Fund's shares offered through this Prospectus lies in their sales charge
structures and ongoing expenses, as summarized below. Class A and Class B shares
of a Fund represent interests in the same Fund and have the same rights, except
that each class bears the separate expenses of its Rule 12b-1 distribution plan
and has exclusive voting rights with respect to such plan, and each class has a
separate exchange privilege. See "Management" and "How to Exchange Shares." Each
class has distinct advantages and disadvantages for different investors, and
investors should choose the class that better suits their circumstances and
objectives.
CLASS A SHARES. Class A shares of each Fund are sold at net asset value plus an
initial sales charge of up to 4.75% of the public offering price imposed at the
time of purchase. This initial sales charge is reduced or waived for certain
purchases. Purchases of $500,000 or more must be for Class A shares. Class A
shares of each Fund also bear annual service and distribution fees of up to
0.35% of the average daily net assets of that class.
CLASS B SHARES. Class B shares of each Fund are sold at net asset value with no
initial sales charge at the time of purchase. Therefore, the entire amount of an
investor's purchase payment is invested in that Fund. Class B shares bear annual
service and distribution fees of up to 1.00% of the average daily net assets of
that class, and Class B shareholders pay a contingent deferred sales charge of
up to 5% of the lesser of the original purchase price or the net asset value of
Class B shares at the time of redemption. The higher service and distribution
fees paid by the Class B shares of each Fund will cause that class to have a
higher expense ratio and to pay lower dividends per share than Class A shares of
the Fund.
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES. In deciding which class of
shares of a Fund to purchase, investors should consider the foregoing factors as
well as the following:
INTENDED HOLDING PERIOD. Over time, the cumulative expense of the 1.00% annual
service and distribution fees on a Fund's Class B shares will approximate or
exceed the expense of the applicable 4.75% maximum initial sales charge plus the
0.35% service and distribution fees on that Fund's Class A shares. For example,
if net asset value remains constant, the Class B shares' service and
distribution fees would be equal to the Class A shares' initial maximum sales
charge and service and distribution fees approximately seven years after
purchase. Thereafter, Class B shares would experience higher cumulative
expenses. Investors who expect to maintain their investment in a Fund over the
long-term but do not qualify for a reduced initial sales charge might elect the
Class A initial sales charge alternative because the indirect expense to the
shareholder of the accumulated service and distribution fees on the Class B
shares eventually will exceed the initial sales charge paid by the shareholder
plus the indirect expense to the shareholder of the accumulated service and
distribution fees of Class A shares. Class B investors, however, enjoy the
benefit of permitting all their dollars to work from the time the investments
are made. Any positive investment return on this additional invested amount
would partially or wholly offset the higher annual expenses borne by Class B
shares. Because the Funds' future returns cannot be predicted, however, there
can be no assurance that such a positive return will be achieved.
Finally, Class B shareholders pay a contingent deferred sales charge if they
redeem during the first six years after purchase, unless a sales charge waiver
applies. Investors expecting to redeem during this period should consider the
cost of the applicable contingent deferred sales charge in addition to the
annual Class B service and distribution fees, as compared with the cost of the
applicable initial sales charge and annual service and distribution fees
applicable to the Class A shares.
REDUCED SALES CHARGES. Class A share purchases of $50,000 or more and Class A
share purchases made under a Fund's reduced sales charge plans may be made at a
reduced initial sales charge. See "How to Invest" for a complete list of reduced
sales charges applicable to Class A purchases.
WAIVER OF SALES CHARGES. The entire initial sales charge on Class A shares of a
Fund is waived for
Prospectus Page 13
<PAGE>
GT GLOBAL INCOME FUNDS
certain eligible purchasers and these purchasers' entire purchase price would be
immediately invested in a Fund. Investors eligible for complete initial sales
charge waivers should purchase Class A shares. The contingent deferred sales
charge is waived for certain redemptions of Class B shares. A 1% contingent
deferred sales charge is imposed on certain redemptions of Class A shares on
which no initial sales charge was assessed.
Investors should understand that the contingent deferred sales charge on the
Class B shares and the initial sales charge on the Class A shares are both
intended to compensate GT Global and selling broker/dealers for their
distribution services. Broker/dealers may receive different levels of
compensation for selling a particular class of shares of a Fund.
See "How to Invest," "How to Redeem Shares," and "Management" for a more
complete description of the initial and contingent deferred sales charges,
service fees and distribution fees for the Class A and Class B shares of each
Fund and "Dividends, Other Distributions and Federal Income Taxation" and
"Calculation of Net Asset Value" for other differences between these two
classes.
ADVISOR CLASS SHARES. Advisor Class shares may be offered through a separate
prospectus to (a) trustees or other fiduciaries purchasing shares for employee
benefit plans which are sponsored by organizations which have at least 1,000
employees; (b) any account with assets of at least $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.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
GOVERNMENT INCOME FUND
The Government Income Fund seeks a high level of current income by investing
primarily in high quality debt securities of the U.S. and foreign governments,
their agencies and instrumentalities. The Fund's secondary objectives are
capital appreciation and protection of principal through active management of
its maturity structure and currency exposure.
At least 65% of the Fund's total assets normally are invested in debt
obligations issued or guaranteed by the U.S. or foreign governments (including
foreign states, provinces or municipalities) or their agencies, authorities or
instrumentalities. For purposes of this policy, the Fund considers debt
obligations of supranational entities organized or supported by several national
governments, such as the World Bank and the Asian Development Bank, to be
"government securities."
The Fund invests primarily in high quality government debt securities. "High
quality" debt securities are those rated in the top two ratings categories of
Moody's Investors Service, Inc. ("Moody's") or Standard and Poor's Ratings Group
("S&P"), or, if not rated, determined to be of comparable quality by the
Manager. A description of Moody's and S&P ratings is included in the Appendix to
this Prospectus.
The Fund currently contemplates that it will invest principally in obligations
of the United States, Canada, Japan, the Western European nations, New Zealand
and Australia, as well as in multinational currency units. Under normal market
conditions, the Fund invests in issues of not less than three different
countries; investments in the securities of any one country, other than the
United States, normally represent no more than 40% of the Fund's total assets.
The Fund will not invest in a foreign currency or in securities denominated in a
foreign currency if such currency is not at the time of investment considered by
the Manager to be fully exchangable into U.S. dollars (or a multinational
currency unit) without legal restriction.
Prospectus Page 14
<PAGE>
GT GLOBAL INCOME FUNDS
The Fund may also invest up to 35% of its total assets in: (1) foreign
government securities that are not high quality but are rated at least
"investment grade," i.e., rated within the four highest ratings categories of
Moody's or S&P or, if not rated, determined by the Manager to be of comparable
quality; (2) corporate debt obligations of U.S. or foreign issuers rated at
least investment grade by Moody's or S&P, including debt obligations convertible
into equity securities or having attached warrants or rights to purchase equity
securities; and (3) common stocks, preferred stocks and warrants to acquire such
securities, provided that the Fund will not invest more than 20% of its total
assets in such securities.
STRATEGIC INCOME FUND
The Strategic Income Fund primarily seeks high current income and secondarily
seeks capital appreciation.
The Fund invests in debt securities of issuers in: (1) the United States; (2)
developed foreign countries; and (3) emerging markets. The Fund selects debt
securities from those issued by governments, their agencies and
instrumentalities; central banks; and commercial banks and other corporate
entities. Debt securities in which the Fund may invest include bonds, notes,
debentures, and other similar instruments. The Fund normally invests at least
50% of its net assets in U.S. and foreign debt and other fixed income securities
that, at the time of purchase, are rated at least investment grade by Moody's or
S&P or, if not rated, determined by the Manager to be of comparable quality. No
more than 50% of the Fund's total assets may be invested in securities rated
below investment grade. Such securities involve a high degree of risk and are
predominantly speculative. They are the equivalent of high yield, high risk
bonds, commonly known as "junk bonds." The Fund may also invest in securities
that are in default as to payment of principal and/or interest.
The Fund's investments in emerging market securities may consist substantially
of Brady Bonds (see "General Policies -- Brady Bonds," below) and other
sovereign debt securities issued by emerging market governments that are traded
in the markets of developed countries or groups of developed countries. The
Manager may invest in debt securities of emerging market issuers that it
determines to be suitable investments for the Fund without regard to ratings.
Currently, the substantial majority of emerging market debt securities are
considered to have a credit quality below investment grade. The Fund also may
invest in below-investment grade debt securities of corporate issuers in the
United States and in developed foreign countries, subject to the overall 50%
limitation.
HIGH INCOME FUND
The High Income Fund primarily seeks high current income, and secondarily seeks
capital appreciation. The Fund seeks its objectives by investing all of its
investable assets in the Portfolio, which in turn seeks the same objectives as
the Fund by normally investing at least 65% of its total assets in debt
securities of issuers in emerging markets.
The Portfolio intends to invest in the following types of debt securities:
bonds, notes and debentures of emerging market governments; securities issued or
guaranteed by such governments' agencies or instrumentalities; securities issued
or guaranteed by the central banks of emerging market countries; and securities
issued by other banks and companies in such countries and securities denominated
in or indexed to the currencies of emerging markets. Under current market
conditions, the Portfolio expects its investments in emerging market securities
to consist substantially of Brady Bonds (see "General Policies -- Brady Bonds,"
below) and other sovereign debt securities.
The Portfolio may also invest up to 35% of its total assets in (1) equity
securities of issuers in emerging markets included in the list below under the
caption "Emerging Markets"; (2) equity and debt securities of issuers in
developed countries, including the United States; (3) securities of issuers in
emerging markets not included in the emerging markets list, if investing therein
becomes feasible and desirable subsequent to the date of this Prospectus; and
(4) cash and money market instruments. In evaluating investments in securities
of issuers in developed markets, the Manager will consider, among other things,
the business activities of the issuer in emerging markets and the impact that
developments in emerging markets are likely to have on the issuer's financial
condition.
Under normal circumstances, substantially all of the Portfolio's assets will be
invested in debt securities of both governmental and corporate issuers in
emerging markets. Emerging markets debt securities generally are considered to
have a credit quality below investment grade, as defined above. Lower quality
securities involve a high degree of risk and are predominantly speculative.
These debt securities are the equivalent of high yield, high risk bonds,
commonly known as "junk bonds." See "Risk Factors." Many emerging market debt
securities are
Prospectus Page 15
<PAGE>
GT GLOBAL INCOME FUNDS
not rated by U.S. ratings agencies such as Moody's and S&P. The Portfolio's
ability to achieve its investment objectives is thus more dependent on the
Manager's credit analysis. The Portfolio may invest in securities that are in
default as to payment of principal and/or interest.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, investors
should be aware that the High Income Fund, unlike mutual funds that directly
acquire and manage their own portfolios of securities, seeks to achieve its
investment objectives by investing all of its investable assets in the
Portfolio, which is a separate investment company. Since the Fund will invest
only in the Portfolio, the Fund's shareholders will acquire only an indirect
interest in the investments of the Portfolio. The High Income Fund may redeem
its investment from the Portfolio at any time, if the Board of Directors of the
Company determines that it is in the best interests of the Fund and its
shareholders to do so. A change in the Portfolio's investment objectives,
policies or limitations that is not approved by the Board or the shareholders of
the High Income 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. 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.
Should such a distribution occur, the Fund could incur brokerage fees or other
transaction costs in converting such securities to cash. Upon redemption, the
Board would consider what action might be taken, including the investment of all
the investable assets of the Fund in another pooled investment entity having
substantially the same investment objectives as the Fund or the retention by the
Fund of its own investment advisor to manage the Fund's assets in accordance
with the investment objectives, policies and limitations discussed herein with
respect to the Portfolio.
In addition to selling its interests to the Fund, the Portfolio may sell its
interests to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
all of its assets in the Portfolio, it would not be required to sell its shares
at the same public offering price as the Fund and may charge different sales
commissions. Therefore, investors in the Fund may experience different returns
from investors in another investment company which invests exclusively in the
Portfolio. As of the date of this Prospectus, the High Income Fund is the only
institutional investor in the Portfolio.
Investors in the Fund should be aware that the Funds' investment in the
Portfolio may be materially affected by the actions of large investors in the
Portfolio, if any. For example, as with all open-end investment companies, if a
large investor were to redeem its interest in the Portfolio, the Portfolio's
remaining investors could experience higher pro rata operating expenses, thereby
producing lower returns. As a result, the Portfolio's security holdings may
become less diverse, resulting in increased risk. Institutional investors in the
Portfolio that have a greater pro rata ownership interest in the Portfolio than
the Fund could have effective voting control over the operation of the
Portfolio. A change in the Portfolio's fundamental objectives, policies and
restrictions, which is not approved by the shareholders of the Fund, could
require the Fund to redeem its interest in the Portfolio. Any such redemption
could result in a distribution in kind of portfolio securities (as opposed to a
cash distribution) by the Portfolio. Should such a distribution occur, the Fund
could incur brokerage fees or other transaction costs in converting such
securities to cash. In addition, a distribution in kind could result in a less
diversified portfolio of investments for the Fund and could affect adversely the
liquidity of the Fund.
GENERAL POLICIES
TEMPORARY DEFENSIVE STRATEGIES. 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. Pursuant to such a defensive strategy,
the Government Income Fund, the Strategic Income Fund and the Portfolio
temporarily may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and/or invest up to 100% of their respective assets in high
quality debt securities or money market instruments of U.S. or foreign issuers.
In addition, for temporary defensive purposes, most or all of the Government
Income Fund's, the Strategic Income Fund's or the Portfolio's investments may be
made in the United States and denominated in U.S. dollars. To the extent the
Funds or the Portfolio employ a temporary defensive strategy, they will not be
invested so as to achieve directly their investment objectives.
Prospectus Page 16
<PAGE>
GT GLOBAL INCOME FUNDS
In addition, pending investment of proceeds from new sales of Fund shares or to
meet ordinary daily cash needs, the Government Income Fund, the Strategic Income
Fund and the Portfolio may hold cash (U.S. dollars, foreign currencies or
multinational currency units) and may invest in high quality foreign or domestic
money market instruments.
EMERGING MARKET SECURITIES. The Strategic Income Fund and the Portfolio consider
"emerging markets" to consist of all countries determined by the Manager to have
developing or emerging economies and markets. These countries generally include
every country in the world except the United States, Canada, Japan, Australia,
New Zealand and most countries located in Western Europe. The Strategic Income
Fund and the Portfolio will consider investment in the following emerging
markets:
<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>
The Strategic Income Fund and the Portfolio will not be invested in all such
markets at all times. Moreover, investing in some of those markets currently may
not be desirable or feasible, due to the lack of adequate custody arrangements,
overly burdensome repatriation requirements and similar restrictions, the lack
of organized and liquid securities markets, unacceptable political risks or for
other reasons.
As used in this Prospectus and the Statement of Additional Information, an
issuer in an emerging market is an entity: (i) for which the principal
securities trading market is an emerging market, as defined above; (ii) that
(alone or on a consolidated basis) derives 50% or more of its total revenue from
either goods produced, sales made or services performed in emerging markets; or
(iii) organized under the laws of, or with a principal office in, an emerging
market.
ASSET ALLOCATION. The Government Income Fund, the Strategic Income Fund and the
Portfolio each invests in debt obligations allocated among diverse markets and
denominated in various currencies, including U.S. dollars, or in multinational
currency units such as European Currency Units. The Funds are designed for
investors who wish to accept the risks entailed in such investments, which are
different from those associated with a portfolio consisting entirely of
securities of U.S. issuers denominated in U.S. dollars. The Government Income
Fund, the Strategic Income Fund and the Portfolio may purchase securities that
are issued by the government or a company or financial institution of one
country but denominated in the currency of another country (or a multinational
currency unit).
The Manager allocates the assets of the Government Income Fund, the Strategic
Income Fund and the Portfolio in securities of issuers in countries and in
currency denominations where the combination of fixed income market returns, the
price appreciation potential of fixed income securities and currency exchange
rate movements will present opportunities primarily for high current income and
secondarily for capital appreciation (and, in the case of the Government Income
Fund, secondarily for capital appreciation and protection of principal). In so
doing, the Manager intends to take full advantage of the different yield, risk
and return characteristics that investment in the fixed income markets of
different countries can provide for U.S. investors. Fundamental economic
strength, credit quality and currency and interest rate trends are the principal
determinants of the emphasis given to various country, geographic and industry
sectors within the Government Income Fund, the Strategic Income Fund and the
Portfolio. Securities held by the Government Income Fund, the Strategic Income
Fund and the Portfolio may be invested in without limitation as to maturity.
The Manager selects securities of particular issuers on the basis of its views
as to the best values then currently available in the marketplace. Such values
are a function of yield, maturity, issue classification and quality
characteristics, coupled with expectations regarding the local and world
economies, movements in the general level and term of
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interest rates, currency values, political developments and variations in the
supply of funds available for investment in the world bond market relative to
the demands placed upon it.
The Manager generally evaluates currencies on the basis of fundamental economic
criteria (e.g., relative inflation, interest rate levels and trends, growth rate
forecasts, balance of payments status and economic policies) as well as
technical and political data. The Manager may seek to protect a Fund against
such negative currency movements through the use of sophisticated investment
techniques. See "Options, Futures and Forward Currency Transactions" and "Swaps,
Caps, Floors and Collars."
According to the Manager, as of the date of this Prospectus, more than 50% of
the value of all outstanding government debt obligations throughout the world is
represented by obligations denominated in currencies other than the U.S. dollar.
Moreover, from time to time, the debt securities of issuers located outside the
United States have substantially outperformed the debt obligations of U.S.
issuers. Accordingly, the Manager believes that the Government Income Fund's and
the Strategic Income Fund's policy of investing in debt securities throughout
the world and the Portfolio's policy of investing in debt securities of issuers
in emerging markets may enable the achievement of results superior to those
produced by mutual funds with similar objectives to those of the Funds and the
Portfolio that invest solely in debt securities of U.S. issuers.
BRADY BONDS. The Strategic Income Fund and the Portfolio may invest in "Brady
Bonds," which are debt restructurings that provide for the exchange of cash and
loans for newly issued bonds. Brady Bonds have been issued by the countries of,
among others, Albania, Argentina, Brazil, Bulgaria, Costa Rica, Dominican
Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria, Philippines, Poland,
Russia, Uruguay, Venezuela and Vietnam and are expected to be issued by other
emerging market countries. As of the date of this Prospectus, the Strategic
Income Fund and the Portfolio are not aware of the occurrence of any payment
defaults on Brady Bonds. Investors should recognize, however, that Brady Bonds
have been issued only recently and, accordingly, do not have a long payment
history. In addition, Brady Bonds are often rated below investment grade.
The Strategic Income Fund and the Portfolio may invest in either collateralized
or uncollateralized Brady Bonds. U.S. dollar-denominated, collateralized Brady
Bonds, which may be fixed rate par bonds or floating rate discount bonds, are
collateralized in full as to principal by U.S. Treasury zero coupon bonds having
the same maturity as the bonds. Interest payments on such bonds generally are
collateralized by cash or securities in an amount that, in the case of fixed
rate bonds, is equal to at least one year of rolling interest payments or, in
the case of floating rate bonds, initially is equal to at least one year's
rolling interest payments based on the applicable interest rate at that time and
is adjusted at regular intervals thereafter.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Strategic Income Fund and the Portfolio
may invest in fixed and floating rate loans ("Loans") arranged through private
negotiations between a foreign entity and one or more financial institutions
("Lenders"). The majority of the Fund's and the Portfolio's investments in Loans
in emerging markets is expected to be in the form of participations in Loans
("Participations") and assignments of portions of Loans from third parties
("Assignments"). Participations typically will result in the Fund and/or the
Portfolio having a contractual relationship only with the Lender, not with the
borrower government. The Fund and/or the Portfolio will have the right to
receive payments of principal, interest and any fees to which it is entitled
only from the Lender selling the Participation and only upon receipt by the
Lender of the payments from the borrower. In connection with purchasing
Participations, the Fund and/or the Portfolio generally will have no right to
enforce compliance by the borrower with the terms of the loan agreement relating
to the loan ("Loan Agreement"), nor any rights of set-off against the borrower,
and the Fund and/or the Portfolio may not directly benefit from any collateral
supporting the Loan in which it has purchased the Participation. As a result,
the Fund and/or the Portfolio will assume the credit risk of both the borrower
and the Lender that is selling the Participation.
In the event of the insolvency of the Lender selling a Participation, the Fund
and/or the Portfolio may be treated as a general creditor of the Lender and may
not benefit from any set-off between the Lender and the borrower. The Fund
and/or the Portfolio will acquire Participations only if the Lender
interpositioned between the Fund and/or the Portfolio and the borrower is
determined by the Manager to be creditworthy. When the Fund and/or the Portfolio
purchases Assignments from Lenders, the Fund and/or the Portfolio will acquire
direct
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GT GLOBAL INCOME FUNDS
rights against the borrower on the Loan. However, since Assignments are arranged
through private negotiations between potential assignees and assignors, the
rights and obligations acquired by the Fund and/or the Portfolio as the
purchaser of an Assignment may differ from, and be more limited than, those held
by the assigning Lender.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Government Income Fund, the
Strategic Income Fund and the Portfolio may purchase debt securities on a
"when-issued" basis and may purchase or sell such securities on a "forward
commitment" basis in order to hedge against anticipated changes in interest
rates and prices. The price, which is generally expressed in yield terms, is
fixed at the time the commitment is made, but delivery and payment for the
securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Funds and the
Portfolio will purchase or sell when-issued securities and forward commitments
only with the intention of actually receiving or delivering the securities, as
the case may be. No income accrues on securities which have been purchased
pursuant to a forward commitment or on a when-issued basis prior to delivery of
the securities. If a Fund or the Portfolio disposes of the right to acquire a
when-issued security prior to its acquisition or disposes of its right to
deliver or receive against a forward commitment, it may incur a gain or loss. At
the time a Fund or the Portfolio enters into a transaction on a when-issued or
forward commitment basis, a segregated account consisting of cash or 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 a Fund or the Portfolio may incur a loss. The Government Income Fund
may invest up to 5% of its total assets in a combination of securities purchased
on a when-issued basis or with respect to which it has entered into forward
commitment agreements.
The Strategic Income Fund and the Portfolio may also sell securities on a "when,
as and if issued" basis for hedging purposes. Under such a transaction, the Fund
or the Portfolio is required to deliver at a future date a security it does not
presently hold, but which it has a right to receive if the security is issued.
Issuance of the security may not occur, in which case the Fund or Portfolio
would have no obligation to the other party, and would not receive payment for
the sale. Selling securities on a "when, as and if issued" basis may reduce risk
of loss to the extent that such a sale wholly or partially offsets unfavorable
price movements on the investments being hedged. However, such sales also limit
the amount the Fund or Portfolio can receive if the "when, as and if issued"
security is in fact issued.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Government
Income Fund may borrow from banks or may borrow through reverse repurchase
agreements and "roll" transactions in connection with meeting requests for the
redemption of Fund shares. The Government Income Fund also may borrow up to 5%
of its total assets for temporary or emergency purposes other than to meet
redemptions. However, the Government Income Fund will not borrow for investment
purposes, nor will the Fund purchase securities while borrowings are
outstanding.
Both the Strategic Income Fund and the Portfolio are authorized to borrow money
from banks in an amount up to 33 1/3% of its total assets (including the amount
borrowed), less all liabilities and indebtedness other than the borrowings and
may use the proceeds of such borrowings for investment purposes. The Strategic
Income Fund and the Portfolio will borrow for investment purposes only when the
Manager believes that such borrowings will benefit the Fund or the Portfolio,
respectively, after taking into account considerations such as the costs of the
borrowing and the likely investment returns on the securities purchased with the
borrowed monies.
Borrowing for investment purposes is known as leveraging, which is a speculative
practice. Such borrowing by the Strategic Income Fund and the Portfolio creates
the opportunity for increased net income and appreciation but, at the same time,
involves special risk considerations. For example, leveraging might exaggerate
changes in the net asset value of Fund shares and in the yield realized by the
Fund or the Portfolio. Although the principal amount of such borrowings will be
fixed, the Fund's and the Portfolio's assets may change in value during the time
the borrowing is outstanding. By leveraging the Fund or the Portfolio, changes
in net asset values, higher or lower, may be greater in degree than if leverage
was not employed. To the extent the income derived from the assets obtained with
borrowed funds exceeds the interest and other expenses that the Fund or the
Portfolio will have to pay, the Fund's or the Portfolio's net income will be
greater than if borrowing was not used. Conversely, if the income from the
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GT GLOBAL INCOME FUNDS
assets obtained with borrowed funds is not sufficient to cover the cost of
borrowing, the net income of the Fund or the Portfolio will be less than if
borrowing were not used, and therefore the amount available for distribution to
shareholders as dividends will be reduced. The Strategic Income Fund and the
Portfolio each expects that some of its borrowings may be made on a secured
basis.
In addition to the foregoing borrowings, the Strategic Income Fund and the
Portfolio each may borrow money for temporary or emergency purposes or payments
in an amount not exceeding 5% of the value of its total assets (not including
the amount borrowed) provided that the total amount borrowed by the Strategic
Income Fund or the Portfolio for any purpose does not exceed 33 1/3% of its
total assets.
The Funds and the Portfolio may also enter into reverse repurchase agreements
with a bank or recognized securities dealer, although the Strategic Income Fund
currently has no intention of doing so with respect to more than 5% of its total
assets. Under a reverse repurchase agreement, the Funds or the Portfolio would
sell securities and agree to repurchase them at a particular price at a future
date. At the time a Fund or the Portfolio enters into a reverse repurchase
agreement, it will establish and maintain a segregated account with an approved
custodian containing cash or liquid securities having a value not less than the
repurchase price, including accrued interest. Reverse repurchase agreements
involve the risk that the market value of the securities retained in lieu of
sale by a Fund or the Portfolio may decline below the price of the securities a
Fund or the Portfolio has sold but is obligated to repurchase. In the event the
buyer of securities under a reverse repurchase agreement files for bankruptcy or
becomes insolvent, such buyer or its trustee or receiver may receive an
extension of time to determine whether to enforce a Fund's or the Portfolio's
obligation to repurchase the securities, and a Fund's or the Portfolio's use of
the proceeds of the reverse repurchase agreement may effectively be restricted
pending such decision.
The Strategic Income Fund and the Portfolio also may enter into "dollar rolls,"
in which the Fund or the Portfolio sells fixed income securities for delivery in
the current month and simultaneously contracts to repurchase substantially
similar (same type, coupon and maturity) securities on a specified future date.
During the roll period, the Fund or the Portfolio would forego principal and
interest paid on such securities. The Fund or the Portfolio would be compensated
by the difference between the current sales price and the forward price for the
future purchase, as well as by the interest earned on the cash proceeds of the
initial sale. See "Investment Objectives and Policies" in the Statement of
Additional Information.
Reverse repurchase agreements and dollar rolls will be treated as borrowings and
will be deducted from the Strategic Income Fund's or the Portfolio's assets for
purposes of calculating compliance with the Fund's or the Portfolio's borrowing
limitation. See "Investment Limitations" in the Statement of Additional
Information.
SECURITIES LENDING. The Government Income Fund, the Strategic Income Fund and
the Portfolio may lend their respective portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows a Fund to retain
ownership of the securities loaned and, at the same time, earn additional income
that may be used to offset the Fund's custody fees. At all times a loan is
outstanding, each Fund and the Portfolio requires the borrower to maintain with
the Fund's or the Portfolio's custodian, collateral consisting of cash, U.S.
government securities, or certain irrevocable letters of credit equal to at
least the value of the borrowed securities, plus any accrued interest. Each Fund
and the Portfolio limits its loans of portfolio securities to an aggregate of
30% of the value of its total assets, measured at the time any such loan is
made. The risks in lending portfolio securities, as with other extensions of
secured credit, consist of possible delays in receiving additional collateral or
in recovery of the loaned securities and possible loss of rights in the
collateral should the borrower fail financially.
ZERO COUPON SECURITIES. The Strategic Income Fund and the Portfolio may invest
in certain zero coupon securities that are "stripped" U.S. Treasury notes and
bonds. They also may invest in zero coupon and other deep discount securities
issued by foreign governments and domestic and foreign corporations, including
certain Brady Bonds and other foreign debt and in payment-in-kind securities.
Zero coupon securities pay no interest to holders prior to maturity, and
payment-in-kind securities pay interest in the form of additional securities.
However, a portion of the original issue discount on zero coupon securities and
the "interest" on payment-in-kind securities will be included in the investing
Fund's or Portfolio's income. Accordingly, for a Fund to continue to qualify for
tax treatment as a regulated investment company and to avoid a certain excise
tax (see
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GT GLOBAL INCOME FUNDS
"Taxes" in the Statement of Additional Information), it may be required to
distribute an amount that is greater than the total amount of cash it actually
receives (or, in the case of the High Income Fund, its share of the total amount
of cash the Portfolio actually receives). These distributions must be made from
the Fund's (or, in the case of the High Income Fund, its, or its share of, the
Portfolio's) cash assets or, if necessary, from the proceeds of sales of
portfolio securities. The Fund or the Portfolio will not be able to purchase
additional income-producing securities with cash used to make such
distributions, and its current income ultimately may be reduced as a result.
Zero coupon and payment-in-kind securities usually trade at a deep discount from
their face or par value and will be subject to greater fluctuations of market
value in response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest in cash.
SYNTHETIC SECURITY POSITIONS. The Government Income Fund, the Strategic Income
Fund and the Portfolio may utilize combinations of futures on bonds and forward
currency contracts to create investment positions that have substantially the
same characteristics as bonds of the same type as those on which the futures
contracts are written. Investment positions of this type are generally referred
to as "synthetic securities."
For example, in order to establish a synthetic security position for a Fund or
the Portfolio that is comparable to owning a Japanese government bond, the
Manager might purchase futures contracts on Japanese government bonds in the
desired principal amount and purchase forward currency contracts for Japanese
Yen in an amount equal to the then current purchase price for such bonds in the
Japanese cash market, with each contract having approximately the same delivery
date.
The Manager might roll over the futures and forward currency contract positions
before taking delivery in order to continue the Fund's or the Portfolio's
investment position, or the Manager might close out those positions, thus
effectively selling the synthetic security. Further, the amount of each contract
might be adjusted in response to market conditions and the forward currency
contract might be changed in amount or eliminated in order to hedge against
currency fluctuations.
The Manager would create synthetic security positions for a Fund or the
Portfolio when it believes that it can obtain a better yield or achieve cost
savings in comparison to purchasing actual bonds or when comparable bonds are
not readily available in the market. Synthetic security positions are subject to
the risk that changes in the value of purchased futures contracts may differ
from changes in the value of the bonds that might otherwise have been purchased
in the cash market. Also, while the Manager believes that the cost of creating
synthetic security positions generally will be materially lower than the cost of
acquiring comparable bonds in the cash market, a Fund or the Portfolio will
incur transaction costs in connection with each purchase of a futures or forward
currency contract. The use of futures contracts and forward currency contracts
to create synthetic security positions also is subject to substantially the same
risks as those that exist when these instruments are used in connection with
hedging strategies. See "Options, Futures and Forward Currency Transactions"
below and "Options, Futures and Currency Strategies" in the Statement of
Additional Information.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Government Income Fund,
the Strategic Income Fund and the 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
Funds' or Portfolio's investment. The Strategic Income Fund and the Portfolio
also may enter into interest rate, currency and index swaps and purchase or sell
related caps, floors and collars and other similar instruments. See "Swaps,
Caps, Floors and Collars" below. These instruments are often referred to as
"derivatives," which may be defined as financial instruments whose performance
is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities). The Government Income Fund, the
Strategic Income Fund and the Portfolio may enter into such instruments up to
the full value of their portfolio assets. 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, the Government Income Fund, the Strategic Income Fund and the
Portfolio may enter into forward currency contracts for the purchase or sale of
a specified currency at a specified future date. Such contracts
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GT GLOBAL INCOME FUNDS
may involve the purchase or sale of a foreign currency against the U.S. dollar
or may involve two foreign currencies. The Government Income Fund, the Strategic
Income Fund and the Portfolio may enter into forward currency contracts either
with respect to specific transactions or with respect to the respective Fund's
or the Portfolio's portfolio positions. Each Fund and the 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, each Fund and the Portfolio may purchase and sell put and call
options on securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or the Portfolio or that the Manager intends to
include in the Fund's or the Portfolio's portfolio. The Funds and the Portfolio
also may purchase and sell put and call options on indices to hedge against
overall fluctuations in the securities markets generally or in a specific market
sector.
Further, the Funds and the Portfolio may sell index futures contracts and may
purchase put options or write call options on such futures contracts to protect
against a general market or market sector decline that could adversely affect
the Fund's or the Portfolio's portfolio. The Funds and the Portfolio also may
purchase index futures contracts and purchase call options or write put options
on such contracts to hedge against a general market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. A Fund or
the Portfolio may use interest rate futures contracts and options thereon to
hedge its portfolio against changes in the general level of interest rates.
SWAPS, CAPS, FLOORS AND COLLARS. The Strategic Income Fund and the Portfolio may
enter into interest rate, currency and index swaps, and purchase or sell related
caps, floors and collars and other derivative instruments. The Fund and the
Portfolio expect to enter into these transactions primarily to preserve a return
or spread on a particular investment or portion of its portfolio, to protect
against currency fluctuations, as a technique for managing the portfolio's
duration (I.E., the price sensitivity to changes in interest rates) or to
protect against any increase in the price of securities the Fund or the
Portfolio anticipates purchasing at a later date. The Fund and the Portfolio
intend to use these transactions as hedges, and neither will sell interest rate
caps or floors if it does not own securities or other instruments providing an
income stream roughly equivalent to what the Fund or the Portfolio may be
obligated to pay.
Interest rate swaps involve the exchange by the Fund or the Portfolio with
another party of their respective commitments to pay or receive interest (for
example, an exchange of floating rate payments for fixed rate payments) with
respect to a notional amount of principal. A currency swap is an agreement to
exchange cash flows on a notional amount based on changes in the values of the
reference indices.
The purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling the cap to the extent that a specified
index exceeds a predetermined interest rate. The purchase of an interest rate
floor entitles the purchaser to receive payments on a notional principal amount
from the party selling the floor to the extent that a specified index falls
below a predetermined interest rate or amount. A collar is a combination of a
cap and a floor that preserves a certain return within a predetermined range of
interest rates or values.
INDEXED COMMERCIAL PAPER. The Strategic Income Fund and the Portfolio may invest
without limitation in commercial paper which is indexed to certain specific
foreign currency exchange rates. The terms of such commercial paper provide that
its principal amount is adjusted upwards or downwards (but not below zero) at
maturity to reflect changes in the exchange rate between two currencies while
the obligation is outstanding. The Strategic Income Fund and the Portfolio will
purchase such commercial paper with the currency in which it is denominated and,
at maturity, will receive interest and principal payments thereon in that
currency, but the amount of principal payable by the issuer at maturity will
change in proportion to the change (if any) in the exchange rate between the two
specified currencies between the date the instrument is issued and the date the
instrument matures. While such commercial paper entails the risk of loss of
principal, the potential for realizing gains as a result of changes in foreign
currency exchange rates enables the Fund and the Portfolio to hedge against a
decline in the U.S. dollar value of investments denominated in foreign
currencies while seeking to provide an attractive money market rate of return.
The Fund and the Portfolio will not purchase such commercial paper for
speculation.
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GT GLOBAL INCOME FUNDS
OTHER INDEXED SECURITIES. The Government Income Fund, Strategic Income Fund and
the Portfolio may invest in certain other indexed securities, which are
securities whose prices are indexed to the prices of other securities,
securities indices, currencies, precious metals or other commodities, or other
financial indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is determined by
reference to a specific instrument or statistic. The performance of indexed
securities depends to a great extent on the performance of the security,
currency, or other instrument to which they are indexed, and may also be
influenced by interest rate changes in the United States and abroad. At the same
time, indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more volatile
than the underlying instruments. New forms of indexed securities continue to be
developed. Each Fund and Portfolio may invest in such securities to the extent
consistent with its investment objectives.
OTHER INFORMATION. Each Fund's investment objectives may not be changed without
the approval of a majority of the respective Fund's outstanding voting
securities. A "majority of the Fund's outstanding voting securities" means the
lesser of (i) 67% of the shares represented at a meeting at which more than 50%
of the outstanding shares are represented, or (ii) more than 50% of the
outstanding shares. In addition, each Fund has adopted certain investment
limitations which also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Each Fund's other investment policies described herein
and in the Statement of Additional Information may be changed by a vote of a
majority of the Company's Board of Directors without shareholder approval.
The approval of the High Income Fund and of other investors in the Portfolio, if
any, is not required to change the investment objectives, policies or
limitations of the Portfolio, unless otherwise specified. Written notice shall
be provided to shareholders of the High Income Fund thirty days prior to any
changes in the Portfolio's investment objectives.
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GT GLOBAL INCOME FUNDS
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that any Fund or the Portfolio will achieve its
investment objectives. The Funds' net asset value will fluctuate, reflecting
fluctuations in the market value of its portfolio positions and its net currency
exposure. The value of fixed income securities held by the Government Income
Fund, the Strategic Income Fund and the Portfolio generally fluctuates inversely
with interest rate movements. Longer term bonds held by the Government Income
Fund, the Strategic Income Fund or the Portfolio are subject to greater interest
rate risk.
Each Fund and the Portfolio is classified under the Investment Company Act of
1940 (the "1940 Act") as a "non-diversified" fund. As a result, the Government
Income Fund, the Strategic Income Fund and the Portfolio each will be able to
invest in a fewer number of issuers than if it were classified under the
Investment Company Act of 1940 (the "1940 Act") as a "diversified" fund. To the
extent that a Fund or the Portfolio invests in a smaller number of issuers, the
value of each Fund's shares may fluctuate more widely and the Funds and the
Portfolio may be subject to greater investment and credit risk with respect to
their portfolios.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally are not registered with the SEC, nor
are the issuers thereof usually subject to the SEC's reporting requirements.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available with respect to U.S. securities and
issuers. Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies. 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 Government Income and Strategic Income Funds'
and the Portfolio's interest and dividends from foreign issuers may be subject
to non-U.S. withholding taxes, thereby reducing their net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Government Income Fund, the Strategic Income Fund and the
Portfolio, political or social instability, or diplomatic developments which
could affect the investments of the Government Income Fund, the Strategic Income
Fund and the Portfolio in those countries. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, rate of savings
and capital reinvestment, resource self-sufficiency and balance of payments
positions.
CURRENCY RISK. Since the Government Income Fund, the Strategic Income Fund and
the Portfolio normally invest substantially in securities denominated in
currencies other than the U.S. dollar, and because they may hold foreign
currencies, they will be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Funds' shares, and also may affect the value of dividends and interest earned by
the Funds and gains and losses realized by the Funds. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and political data.
The exchange rates between the U.S. dollar and other currencies are determined
by supply and demand in the currency exchange markets, the international balance
of payments, governmental intervention, speculation and other economic and
political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
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GT GLOBAL INCOME FUNDS
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Strategic Income Fund and
the Portfolio should be considered speculative. Investors are strongly advised
to consider carefully the special risks involved in emerging markets, which are
in addition to the usual risks of investing in developed foreign markets around
the world.
Investing in emerging markets involves risks relating to potential political and
economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Strategic Income Fund or the Portfolio could lose its
entire investment in that market.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Strategic Income Fund or the Portfolio to make intended
securities purchases due to settlement problems could cause the Strategic Income
Fund or the Portfolio to forego attractive investment opportunities. Inability
to dispose of a portfolio security caused by settlement problems could result
either in losses to the Strategic Income Fund or the Portfolio due to subsequent
declines in value of the portfolio security or, if the Strategic Income Fund or
the Portfolio has entered into a contract to sell the security, could result in
possible liability to the purchaser.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Strategic Income Fund's or the
Portfolio's portfolio securities in such markets may not be readily available.
Section 22(e) of the 1940 Act permits a registered investment company to suspend
redemption of its shares for any period during which an emergency exists, as
determined by the SEC. Accordingly, when the Strategic Income Fund or the
Portfolio believes that appropriate circumstances warrant, it will promptly
apply to the SEC for a determination that an emergency exists within the meaning
of Section 22(e) of the 1940 Act. During the period commencing from the
Strategic Income Fund's or the Portfolio's identification of such conditions
until the date of SEC action, the portfolio securities of the Strategic Income
Fund or the Portfolio in the affected markets will be valued at fair value as
determined in good faith by or under the direction of the Company's Board of
Directors or the Portfolio's Board of Trustees.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Strategic Income Fund and the Portfolio
may have difficulty disposing of Assignments and Participations. The liquidity
of such securities is limited and, the Fund and the Portfolio anticipate that
such securities could be sold only to a limited number of institutional
investors. The lack of a liquid secondary market could have an adverse impact on
the value of such securities and on the Fund's and
Prospectus Page 25
<PAGE>
GT GLOBAL INCOME FUNDS
the Portfolio's ability to dispose of particular Assignments or Participations
when necessary to meet the Fund's and/or the Portfolio's liquidity needs or in
response to a specific economic event, such as a deterioration in the
creditworthiness of the borrower. The lack of a liquid secondary market for
Assignments and Participations also may make it more difficult for the Fund
and/or the Portfolio to assign a value to those securities for purposes of
valuing the Fund's or the Portfolio's portfolio and calculating its net asset
value.
SOVEREIGN DEBT. The Strategic Income Fund and the Portfolio may invest in
sovereign debt securities of emerging market governments, including Brady Bonds.
Investments in such securities involve special risks. The issuer of the debt or
the governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal or interest when due in accordance with
the terms of such debt. Periods of economic uncertainty may result in the
volatility of market prices of sovereign debt obligations and in turn a Fund's
net asset value, to a greater extent than the volatility inherent in domestic
fixed income securities.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which a
sovereign debtor may be subject. Emerging market governments could default on
their sovereign debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
abroad to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a sovereign debtor's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing sovereign debt could adversely affect the Fund's or the
Portfolio's investments. Emerging markets are faced with social and political
issues and some of them have experienced high rates of inflation in recent years
and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance governmental
programs, and may have other adverse social, political and economic
consequences. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their sovereign debt. Although the Manager intends to manage the Strategic
Income Fund and the Portfolio in a manner that will minimize the exposure to
such risks, there can be no assurance that adverse political changes will not
cause the Fund or the Portfolio to suffer a loss of interest or principal on any
of its holdings.
In recent years, some of the emerging market countries in which the Strategic
Income Fund and the Portfolio expect to invest have encountered difficulties in
servicing their sovereign debt obligations. Some of these countries have
withheld payments of interest and/or principal of sovereign debt. These
difficulties have also led to agreements to restructure external debt
obligations -- in particular, commercial bank loans, typically by rescheduling
principal payments, reducing interest rates and extending new credits to finance
interest payments on existing debt. In the future, holders of emerging market
sovereign debt securities may be requested to participate in similar
rescheduling of such debt. Certain emerging market countries are among the
largest debtors to commercial banks and foreign governments. Currently, Brazil,
Mexico and Argentina are the largest debtors among developing countries. At
times certain emerging market countries have declared moratoria on the payment
of principal and interest on external debt; such a moratorium is currently in
effect in certain emerging market countries. There is no bankruptcy proceeding
by which a creditor may collect in whole or in part sovereign debt on which an
emerging market government has defaulted.
The ability of emerging market governments to make timely payments on their
sovereign debt securities is likely to be influenced strongly by a country's
balance of trade and its access to trade and other international credits. A
country whose exports are concentrated in a few commodities
Prospectus Page 26
<PAGE>
GT GLOBAL INCOME FUNDS
could be vulnerable to a decline in the international prices of one or more of
such commodities. Increased protectionism on the part of a country's trading
partners could also adversely affect its exports. Such events could diminish a
country's trade account surplus, if any. To the extent that a country receives
payment for its exports in currencies other than hard currencies, its ability to
make hard currency payments could be affected.
Investors should also be aware that certain sovereign debt instruments in which
the Strategic Income Fund and the Portfolio may invest involve great risk. As
noted above, sovereign debt obligations issued by emerging market governments
generally are deemed to be the equivalent in terms of quality to securities
rated below investment grade by Moody's and S&P. Such securities are regarded as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations and involve
major risk exposure to adverse conditions. Some of such securities, with respect
to which the issuer currently may not be paying interest or may be in payment
default, may be comparable to securities rated D by S&P or C by Moody's. The
Strategic Income Fund and the Portfolio may have difficulty disposing of and
valuing certain sovereign debt obligations because there may be a limited
trading market for such securities. Because there is no liquid secondary market
for many of these securities, the Strategic Income Fund and the Portfolio
anticipate that such securities could be sold only to a limited number of
dealers or institutional investors.
LOWER QUALITY DEBT SECURITIES. Under normal market conditions the Strategic
Income Fund may invest up to 50% of its total assets in debt securities rated
below investment grade, and up to 100% of the Portfolio's total assets will be
so invested. Such investments involve a high degree of risk.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest quality debt that is not in default as to
principal or interest and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than higher quality securities with regard to a deterioration of general
economic conditions. These securities are the equivalent of high yield, high
risk bonds, commonly known as "junk bonds." As noted above, the Strategic Income
Fund and the Portfolio may invest in debt securities rated below C, which are in
default as to principal and/ or interest.
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit quality in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Appendix A" for a discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Strategic Income Fund or the Portfolio. If an issuer exercises
these provisions in a
Prospectus Page 27
<PAGE>
GT GLOBAL INCOME FUNDS
declining interest rate market, the Strategic Income Fund or the Portfolio may
have to replace the security with a lower yielding security, resulting in a
decreased return for investors. In addition, the Strategic Income Fund and the
Portfolio may have difficulty disposing of lower quality securities because
there may be a thin trading market for such securities. There may be no
established retail secondary market for many of these securities, and the
Strategic Income Fund and the Portfolio anticipate that such securities could be
sold only to a limited number of dealers or institutional investors. The lack of
a liquid secondary market also may have an adverse impact on market prices of
such instruments and may make it more difficult for the Strategic Income Fund
and the Portfolio to obtain accurate market quotations for purposes of valuing
the securities in the portfolios of the Strategic Income Fund and the Portfolio.
Adverse publicity and investor perceptions, whether or not based on fundamental
analysis, may also decrease the values and liquidity of lower quality
securities, especially in a thinly traded market. The Strategic Income Fund and
the Portfolio also may acquire lower quality debt securities during an initial
underwriting or may acquire lower quality debt securities which are sold without
registration under applicable securities laws. Such securities involve special
considerations and risks.
Factors having an adverse effect on the market value of lower rated securities
or their equivalents purchased by the Strategic Income Fund and the Portfolio
will adversely impact net asset value of the Strategic Income Fund and the High
Income Fund. See "Risk Factors" in the Statement of Additional Information. In
addition to the foregoing, such factors may include: (i) potential adverse
publicity; (ii) heightened sensitivity to general economic or political
conditions; and (iii) the likely adverse impact of a major economic recession.
The Strategic Income Fund and the Portfolio each also may incur additional
expenses to the extent it is required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings, and the Fund and the
Portfolio may have limited legal recourse in the event of a default. Debt
securities issued by governments in emerging markets can differ from debt
obligations issued by private entities in that remedies from defaults generally
must be pursued in the courts of the defaulting government, and legal recourse
is therefore somewhat diminished. Political conditions, in terms of a
government's willingness to meet the terms of its debt obligations, also are of
considerable significance. There can be no assurance that the holders of
commercial bank debt may not contest payments to the holders of debt securities
issued by governments in emerging markets in the event of default by the
governments under commercial bank loan agreements.
As of October 31, 1996, the Strategic Income Fund and the Portfolio had 78.8%
and 58.7%, respectively, of their total net assets in debt securities that
received a rating from Moody's and 19.6% and 39.7%, respectively, of their total
net assets in debt securities that were not so rated. In addition, the Strategic
Income Fund and the Portfolio had 1.6% and 1.6%, respectively, of their total
net assets in cash and net receivables. The Strategic Income Fund had the
following percentages of its total net assets invested in rated securities: Aaa
- -- 36.6%, Aa -- 15.6%, A -- 1.0%, Baa -- 1.5%, Ba -- 11.5%, B -- 12.6%, Caa --
0%, Ca -- 0%, C -- 0%. Included under the unrated category are securities
composing 26.2% of the Strategic Income Fund's total net assets which, while
unrated, have been determined by the Manager to be of comparable quality to
securities in the following rating categories: Baa -- 0%; Ba -- 10%; and B --
9.6%. The Portfolio had the following percentages of its total net assets
invested in rated securities: Aaa -- 2.7%, Aa -- .7%, A -- 3.6%, Baa -- 3.0%, Ba
- -- 20.2%, B -- 28.5%, Caa -- 0%, Ca -- 0%, C -- 0%. Included under the unrated
category are securities composing 39.7% of the Portfolio's total net assets
which have been determined by the Manager to be of comparable quality to
securities in the following rating categories: Baa -- 1.3%; Ba -- 18.0%; and B
- -- 20.4%. It should be noted that the allocation of the investments of the
Strategic Income Fund and the Portfolio by rating on any given date will vary
and should not be considered representative of the future portfolio composition
of the Strategic Income Fund or the Portfolio.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although each Fund and the
Portfolio is authorized to enter into options, futures and forward currency
transactions, the Funds and the Portfolio might not enter into any such
transactions. 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. 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;
Prospectus Page 28
<PAGE>
GT GLOBAL INCOME FUNDS
(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 Fund or 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 Fund or Portfolio to purchase or sell a portfolio security at a time when
it would otherwise be favorable for it to do so, or the possible need for a Fund
or Portfolio to sell a security at a disadvantageous time, due to the need for
the Fund or Portfolio to maintain "cover" or to set aside securities in
connection with hedging transactions; and (7) the possible need to defer closing
out of 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 Code. See
"Dividends, Other Distributions and Federal Income Taxation" herein and "Taxes"
in the Statement of Additional Information.
ILLIQUID SECURITIES. The Government Income Fund may invest up to 10% of its
total assets, and the Strategic Income Fund and the Portfolio up to 15% of their
net assets, in securities for which no readily available market exists,
so-called "illiquid securities." 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.
- --------------------------------------------------------------------------------
HOW TO INVEST
- --------------------------------------------------------------------------------
GENERAL. All purchase orders will be executed at the public offering price next
determined after the purchase order is received, which includes any applicable
sales charge for Class A shares. Orders received before the close of regular
trading on the New York Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern
time, unless weather, equipment failure or other factors contribute to an
earlier closing time) on any Business Day will be executed at the public
offering price for the applicable class of shares determined that day. A
"Business Day" is any day Monday through Friday on which the NYSE is open for
business. The minimum initial investment is $500 ($100 for IRAs and $25 for
custodial accounts under Code Section 403(b)(7) and other tax-qualified
employer-sponsored retirement accounts, if made under a systematic investment
plan providing for monthly or quarterly payments of at least that amount), and
the minimum for additional purchases is $100 (with a $25 minimum for IRAs, Code
Section 403(b)(7) custodial accounts and other tax-qualified employer-sponsored
retirement accounts, as mentioned above). THE FUNDS AND GT GLOBAL RESERVE THE
RIGHT TO REJECT ANY PURCHASE ORDER. 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."
WHEN PLACING PURCHASE ORDERS, INVESTORS SHOULD SPECIFY WHETHER THE ORDER IS FOR
CLASS A OR CLASS B SHARES OF A FUND. ALL PURCHASE ORDERS THAT FAIL TO SPECIFY A
CLASS WILL AUTOMATICALLY BE INVESTED IN CLASS A SHARES. PURCHASES OF $500,000 OR
MORE MUST BE FOR CLASS A SHARES.
PURCHASES THROUGH BROKER/DEALERS. Shares of the Funds may be purchased through
broker/dealers with which GT Global has entered into dealer agreements. Orders
received by such broker/dealers before the close of regular trading on the NYSE
on a Business Day will be effected that day, provided that such order is
transmitted to the Transfer Agent prior to its close of business on such day.
The broker/dealer will be responsible for forwarding the investor's order to the
Transfer Agent so that it
Prospectus Page 29
<PAGE>
GT GLOBAL INCOME FUNDS
will be received prior to such time. After an initial investment is made and a
shareholder account is established through a broker/dealer, at the investor's
option, subsequent purchases may be made directly through GT Global. See
"Shareholder Account Manual."
Broker/dealers that do not have dealer agreements with GT Global also may offer
to place orders for the purchase of shares. Purchases made through such
broker/dealers will be effected at the public offering price next determined
after the order is received by the Transfer Agent. Such a broker/ dealer may
charge the investor a transaction fee as determined by the broker/dealer. That
fee will be in addition to the sales charge payable by the investor with respect
to Class A shares, and may be avoided if shares are purchased through a broker/
dealer that has a dealer agreement with GT Global or directly through GT Global.
PURCHASES THROUGH THE DISTRIBUTOR. Investors may purchase shares and open an
account directly through GT Global, the Fund's distributor by completing and
signing an Account Application accompanying this Prospectus. Investors should
mail to the Transfer Agent the completed Account Application indicating the
class of shares together with a check to cover the purchase in accordance with
the instructions provided in the Shareholder Account Manual. Purchases will be
executed at the public offering price next determined after the Transfer Agent
has received the Account Application and check. Subsequent investments do not
need to be accompanied by an application.
Investors also may purchase shares of the Funds through GT Global by bank wire.
Bank wire purchases will be effected at the next determined public offering
price after the bank wire is received. A wire investment is considered received
when the Transfer Agent is notified that the bank wire has been credited to the
Funds. The investor is responsible for providing prior telephone or facsimile
notice to the Transfer Agent that a bank wire is being sent. An investor's bank
may charge a service fee for wiring money to the Funds. The Transfer Agent
currently does not charge a service fee for facilitating wire purchases, but
reserves the right to do so in the future. Investors desiring to open an account
by bank wire should call the Transfer Agent at the appropriate toll free number
provided in the Shareholder Account Manual to obtain an account number and
detailed instructions.
CERTIFICATES. Physical certificates representing a Fund's shares will not be
issued unless a written request is submitted to the Transfer Agent. Shares of a
Fund are recorded on a register by the Transfer Agent, and shareholders who do
not elect to receive certificates have the same rights of ownership as if
certificates had been issued to them. Redemptions and exchanges by shareholders
who hold certificates may take longer to effect than similar transactions
involving non-certificated shares because the physical delivery and processing
of properly executed certificates is required. ACCORDINGLY, THE FUNDS AND GT
GLOBAL RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PURCHASING CLASS A SHARES
Each Fund's public offering price for Class A shares is the next determined net
asset value per share (see "Calculation of Net Asset Value") plus a sales charge
determined in accordance with the following schedule.
<TABLE>
<CAPTION>
SALES CHARGE AS PERCENTAGE OF
AMOUNT OF DEALER
PURCHASE ------------------------------ REALLOWANCE AS
AT THE PUBLIC OFFERING NET PERCENTAGE OF THE
OFFERING PRICE PRICE INVESTMENT OFFERING PRICE
- ---------------- ------------- --------------- -------------------
<S> <C> <C> <C>
Less than
$50,000....... 4.75% 4.99% 4.25%
$50,000 but less
than
$100,000...... 4.00% 4.17% 3.50%
$100,000 but
less than
$250,000...... 3.00% 3.09% 2.75%
$250,000 but
less than
$500,000...... 2.00% 2.04% 1.75%
$500,000 or
more.......... 0.00% 0.00% *
<FN>
- ------------------
* GT Global will pay the following commissions to broker/ dealers that
initiate and are responsible for purchases by any single purchaser of Class
A shares of $500,000 or more in the aggregate: 1.00% of the purchase amount
up to $3 million, plus 0.50% on the excess over $3 million. For purposes of
determining the appropriate commission to be paid in connection with the
transaction, GT Global will combine purchases made by a broker/dealer on
behalf of a single client so that the broker/dealer's commission, as
outlined above, will be based on the aggregate amount of such client's
share purchases over a rolling twelve month period from the date of the
transaction.
</TABLE>
All shares purchased without a sales charge based on the purchase equalling at
least $500,000 will be subject to a contingent deferred sales charge for the
first year after their purchase equal to 1% of the lower of the original
purchase price or the net asset value of such shares at the time of redemption.
See "Contingent Deferred Sales Charge -- Class A Shares."
Prospectus Page 30
<PAGE>
GT GLOBAL INCOME FUNDS
From time to time, GT Global may reallow to broker/ dealers the full amount of
the sales charge on Class A shares or may pay out additional amounts to
broker/dealers who sell Class A shares. In some instances, GT Global may offer
these reallowances or additional payments only to broker/dealers that have sold
or may sell significant amounts of Class A shares. To the extent that GT Global
reallows the full amount of the sales charge to broker/dealers, such
broker/dealers may be deemed to be underwriters under the Securities Act of
1933, as amended. Commissions also may be paid to broker/ dealers and other
financial institutions that initiate purchases of at least $500,000 made
pursuant to sales charge waivers (i) and (vii), described below under "Sales
Charge Waivers -- Class A Shares."
The following purchases may be aggregated for purposes of determining the
"Amount of Purchase":
(a) Individual purchases on behalf of a single purchaser, the purchaser's spouse
and their children under the age of 21, including purchases in connection with
an employee benefit plan or plans exclusively for the benefit of such
individual(s), such as an IRA, individual plans under Code Section 403(b) or a
self-employed individual retirement plan ("Keogh Plan") and purchases made by a
company controlled by such individual(s).
(b) Individual purchases by a trustee or other fiduciary purchasing shares for a
single trust estate or a single fiduciary account, including an employee benefit
plan (such as employer-sponsored pension, profit-sharing and stock bonus plans,
including plans under Code Section 401(k), and medical, life and disability
insurance trusts) other than a plan described in "(a)" above; and
(c) Individual purchases by a trustee or other fiduciary purchasing shares
concurrently for two or more employee benefit plans of a single employer or of
employers affiliated with each other (again excluding an employee benefit plan
described in "(a)" above).
SALES CHARGE WAIVERS -- CLASS A SHARES. Class A shares are sold at net asset
value without imposition of sales charges when investments are made by the
following classes of investors:
(i) Trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations that have at least 100 but less than 1,000
employees, and trustees or other fiduciaries purchasing shares for employee
benefit plans which are sponsored by organizations with collective retirement
plan assets of $500,000 or more and have less than 100 employees, and purchases
of at least $500,000 by trustees or other fiduciaries of employee benefit plans
with collective retirement plan assets of $100 million or more.
(ii) Current or retired Trustees, Directors and officers of the investment
companies for which the Manager serves as investment manager and/or
administrator; employees or retired employees of the companies composing
Liechtenstein Global Trust or affiliated companies of Liechtenstein Global
Trust; the children, siblings and parents of the persons in the foregoing
categories; and trusts primarily for the benefit of such persons.
(iii) Registered representatives or full-time employees of broker/dealers that
have entered into dealer agreements with GT Global, and the children, siblings
and parents of such persons, and employees of financial institutions that
directly, or through their affiliates, have entered into dealer agreements with
GT Global (or that otherwise have an arrangement with respect to sales of Fund
shares with a broker/dealer that has entered into a dealer agreement with GT
Global) and the children, siblings and parents of such employees.
(iv) Companies exchanging shares with or selling assets to one or more of the GT
Global Mutual Funds pursuant to a merger, acquisition or exchange offer.
(v) Shareholders of any of the GT Global Mutual Funds as of April 30, 1987 who
since that date continually have owned shares of one or more of the GT Global
Mutual Funds.
(vi) Purchases made through the automatic investment of dividends and other
distributions paid by any of the other GT Global Mutual Funds.
(vii) Registered investment advisers, trust companies and bank trust departments
exercising DISCRETIONARY investment authority with respect to the money to be
invested in the GT Global Mutual Funds provided that the aggregate amount
invested pursuant to this sales charge waiver is at least $500,000, and further
provided that such money is not eligible to be invested in the Advisor Class.
(viii) Clients of administrators of tax-qualified employee benefit plans which
have entered into agreements with GT Global.
(ix) Retirement plan participants who borrow from their retirement accounts by
redeeming GT Global Mutual Fund shares and subsequently repay such loans via a
purchase of Fund shares.
Prospectus Page 31
<PAGE>
GT GLOBAL INCOME FUNDS
(x) Retirement plan participants who receive distributions from a tax-qualified
employer-sponsored retirement plan which is invested in GT Global Mutual Funds,
the proceeds of which are reinvested in Fund shares.
(xi) Accounts not eligible for the Advisor Class as to which a financial
institution or broker/dealer charges an account management fee, provided the
financial institution or broker/dealer has entered into an agreement with GT
Global regarding such accounts.
(xii) Certain former AMA Investment Advisers' shareholders who became
shareholders of the GT Global Health Care Fund in October 1989, and who have
continuously held shares in the GT Global Mutual Funds since that time.
(xiii) An investor purchasing shares of a Fund with redemption proceeds from a
registered management investment company that is not one of the GT Global Mutual
Funds, on which the investor was subject to a front-end sales charge or a
contingent deferred sales charge.
REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in a Fund
have a one-time privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of the Fund and/or one or more of the other GT Global Mutual Funds. The
Transfer Agent must receive from the investor or the investor's broker within
180 days after the date of the redemption both a written request for
reinvestment and a check not exceeding the amount of the redemption proceeds.
The reinstatement purchase will be effected at the net asset value per share
next determined after such receipt. Gain on the redemption is taxable
notwithstanding exercise of the reinvestment privilege. See "Dividends, Other
Distributions and Federal Income Taxation -- Taxes."
REDUCED SALES CHARGE PLANS -- CLASS A SHARES. Class A shares may be purchased at
reduced sales charges either through the Right of Accumulation or under a Letter
of Intent. For more details on these plans, investors should contact their
brokers or the Transfer Agent.
RIGHT OF ACCUMULATION. Pursuant to the Right of Accumulation, investors are
permitted to purchase shares of the Funds at the sales charge applicable to the
total of (a) the dollar amount then being purchased plus (b) the dollar amount
of the investor's concurrent purchases of the other GT Global Mutual Funds
(other than GT Global Dollar Fund) plus (c) the price of all shares of GT Global
Mutual Funds (other than shares of GT Global Dollar Fund not acquired by
exchange) already held by the investor. To receive the Right of Accumulation, at
the time of purchase investors must give their brokers, the Transfer Agent or GT
Global sufficient information to permit confirmation of qualification. THE
FOREGOING RIGHT OF ACCUMULATION APPLIES ONLY TO CLASS A SHARES OF THE FUNDS AND
OTHER GT GLOBAL MUTUAL FUND (OTHER THAN GT GLOBAL DOLLAR FUND).
LETTER OF INTENT. In executing a Letter of Intent ("LOI") an investor indicates
an aggregate investment amount he or she intends to invest in the Class A shares
of the Funds and the Class A shares of other GT Global Mutual Funds (other than
GT Global Dollar Fund) in the following thirteen months. The LOI is included as
part of the Account Application located at the end of this Prospectus. The sales
charge applicable to that aggregate amount then becomes the applicable sales
charge on all purchases made concurrently with the execution of the LOI and in
the thirteen months following that execution. If an investor executes an LOI
within 90 days of a prior purchase of GT Global Mutual Fund Class A shares
(other than shares of GT Global Dollar Fund), the prior purchase may be included
under the LOI and an appropriate adjustment, if any, with respect to the sales
charges paid by the investor in connection with the prior purchase will be made,
based on the then-current net asset value(s) of the pertinent Fund(s).
If at the end of the thirteen month period covered by the LOI the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the reduced rate and the
sales charges applicable to the purchases actually made. Shares having a value
equal to 5% of the amount specified in the LOI will be held in escrow during the
thirteen month period (while remaining registered in the investor's name) and
are subject to redemption to assure any necessary payment to GT Global of a
higher applicable sales charge.
For purposes of an LOI, any registered investment adviser, trust company or bank
trust department which exercises investment discretion and which intends within
thirteen months to invest $500,000 or more, can be treated as a single
purchaser, provided further that such entity places all purchase and redemption
orders. Such entities should be prepared to establish their qualification
Prospectus Page 32
<PAGE>
GT GLOBAL INCOME FUNDS
for such treatment. THE FOREGOING LOI WILL APPLY ONLY TO CLASS A SHARES OF THE
FUNDS AND SHARES OF ANY GT GLOBAL MUTUAL FUND THAT OFFERS A SINGLE CLASS OF
SHARES (OTHER THAN GT GLOBAL DOLLAR FUND).
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES. Purchases of Class A shares
of $500,000 or more may be made without a sales charge. If a shareholder within
one year after the date of purchase redeems any Class A shares that were
purchased without a sales charge by reason of a purchase of $500,000 or more, a
contingent deferred sales charge of 1% of the lower of the original purchase
price or the net asset value of such shares at the time of redemption will be
charged. Class A shares will not be subject to the contingent deferred sales
charge to the extent that the value of such shares represents: (1) reinvestment
of dividends or other distributions or (2) shares redeemed more than one year
after their purchase. Such shares purchased without a sales charge may be
exchanged for Class A shares of another GT Global Mutual Fund (other than GT
Global Dollar Fund) without the imposition of a contingent deferred sales
charge, although the contingent deferred sales charge described above will apply
to the redemption of the shares acquired through an exchange. For federal income
tax purposes, the amount of the contingent deferred sales charge will reduce the
gain or increase the loss, as the case may be, on the amount realized on
redemption. The amount of any contingent deferred sales charge will be paid to
GT Global. The waivers set forth under "Contingent Deferred Sales Charge
Waivers" apply to redemptions of Class A shares upon which a contingent deferred
sales charge would otherwise be imposed.
PURCHASING CLASS B SHARES
Each Fund's public offering price for Class B shares is the next determined net
asset value per share. See "Calculation of Net Asset Value." No initial sales
charge is imposed. A contingent deferred sales charge, however, is imposed on
certain redemptions of Class B shares. Because Class B shares are sold without
an initial sales charge, the Fund receives the full amount of the investor's
purchase payment.
Class B shares will not be subject to a contingent deferred sales charge to the
extent that the value of such shares represents: (1) reinvestment of dividends
or other distributions or (2) shares redeemed more than six years after their
purchase. Redemptions of most other Class B shares will be subject to a
contingent deferred sales charge. See "Contingent Deferred Sales Charge
Waivers." The amount of any applicable contingent deferred sales charge will be
calculated by multiplying the lesser of the original purchase price or the net
asset value of such shares at the time of redemption by the applicable
percentage shown in the table below.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE OF THE
LESSER OF NET ASSET VALUE AT
REDEMPTION OR THE ORIGINAL
REDEMPTION DURING PURCHASE PRICE
- ------------------------------ -----------------------------
<S> <C>
1st Year Since Purchase....... 5%
2nd Year Since Purchase....... 4%
3rd Year Since Purchase....... 3%
4th Year Since Purchase....... 3%
5th Year Since Purchase....... 2%
6th year Since Purchase....... 1%
Thereafter.................... 0%
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it will
be assumed that the redemption is made first of shares acquired pursuant to the
reinvestment of dividends and distributions; then of shares purchased seven
years or more prior to the redemption; and finally, of shares held for the
longest period of time within the applicable six-year period. For shares
acquired in an exchange, the length of the holding period will be measured from
the date of original purchase.
For example, assume an investor purchased 100 shares at $10 per share for a cost
of $1,000. Subsequently, the shareholder acquired 15 additional shares through
dividend reinvestment. During the second year after the purchase, the investor
decided to redeem $500 of his or her investment. Assuming at the time of the
redemption a net asset value of $11 per share, the value of the investor's
shares would be $1,265 (115 shares at $11 per share). The contingent deferred
sales charge would not be applied to the value of the reinvested dividend
shares. Therefore, the 15 shares currently valued at $165.00 would be redeemed
without a contingent deferred sales charge. The number of shares needed to fund
the remaining $335.00 of the redemption would equal 30.455. Using the lower of
cost or market price to determine the contingent deferred sales charge the
original purchase price of $10.00 per share would be used. The contingent
deferred sales charge calculation would therefore be 30.455 shares times $10.00
per share at a contingent deferred sales charge rate of 4% (the applicable rate
in the second year after purchase) for a total contingent deferred sales charge
of $12.18.
Prospectus Page 33
<PAGE>
GT GLOBAL INCOME FUNDS
For federal income tax purposes, the amount of the contingent deferred sales
charge will reduce the gain or increase the loss, as the case may be, on the
amount realized on redemption. The amount of any contingent deferred sales
charge will be paid to GT Global.
CONTINGENT DEFERRED
SALES CHARGE WAIVERS
The contingent deferred sales charge will be waived for: (1) exchanges, as
described below; (2) redemptions in connection with each Fund's systematic
withdrawal plan not in excess of 12% of the value of the account annually; (3)
total or partial redemptions made within one year following the death or
disability of a shareholder; (4) minimum required distributions made in
connection with a GT Global IRA, Keogh Plan or custodial account under Section
403(b) of the Code or other retirement plan following attainment of age 70 1/2;
(5) total or partial redemptions resulting from a distribution following
retirement in the case of a tax-qualified employer-sponsored retirement plan;
(6) when a redemption results from a tax-free return of an excess contribution
pursuant to Section 408(d)(4) or (5) of the Code or from the death or disability
of the employee; (7) a one-time reinvestment in Class B shares of a Fund within
180 days of a prior redemption; (8) redemptions pursuant to a Fund's right to
liquidate a shareholder's account involuntarily; (9) redemptions pursuant to
distributions from a tax-qualified employer-sponsored retirement plan, which is
invested in GT Global Mutual Funds, which are permitted to be made without
penalty pursuant to the Code (other than tax-free rollovers or transfers of
asset) and the proceeds of which are reinvested in GT Global Mutual Funds; (10)
redemptions made in connection with participant-directed exchanges between
options in an employer-sponsored benefit plan; (11) redemptions made for the
purpose of providing cash to fund a loan to a participant in a tax-qualified
retirement plan; (12) redemptions made in connection with a distribution from
any retirement plan or account that is permitted in accordance with the
provisions of Section 72(t)(2) of the Code, and the regulations promulgated
thereunder; (13) redemptions made in connection with a distribution from any
retirement plan or account that involves the return of an excess deferral amount
pursuant to Section 401(k)(8) or Section 402(g)(2) of the Code or the return of
excess aggregate contributions pursuant to Section 401(m)(6) of the Code; (14)
redemptions made in connection with a distribution from a qualified
profit-sharing or stock bonus plan described in Section 401(k) of the Code to a
participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code upon
hardship of the covered employee (determined pursuant to Treasury Regulation
Section 1.401(k)-1(d)(2)); and (15) redemptions made by or for the benefit of
certain states, counties or cities, or any instrumentalities, departments or
authorities thereof where such entities are prohibited or limited by applicable
law from paying a sales charge or commission.
PROGRAMS APPLICABLE TO
CLASS A SHARES AND CLASS B SHARES
AUTOMATIC INVESTMENT PLAN. Investors may purchase either Class A or Class B
shares of a Fund through the GT Global Automatic Investment Plan. Under this
Plan, an amount specified by the shareholder of $100 or more (or $25 for IRAs,
Code Section 403(b)(7) custodial accounts and other tax-qualified
employer-sponsored retirement accounts) on a monthly or quarterly basis will be
sent to the Transfer Agent from the investor's bank for investment in the Fund.
Participants in the Automatic Investment Plan should not elect to receive
dividends or other distributions from a Fund in cash. A sales charge will be
applied to each automatic monthly purchase of Class A Fund shares in an amount
determined in accordance with the Right of Accumulation privilege described
above. To participate in the Automatic Investment Plan, investors should
complete the appropriate portion of the Supplemental Application provided at the
end of this Prospectus. Investors should contact their brokers or GT Global for
more information.
DOLLAR COST AVERAGING PROGRAM. Investors may purchase either Class A or Class B
shares of a Fund through the GT Global Dollar Cost Averaging Program whereby a
shareholder invests the same dollar amount each month. Accordingly, the investor
purchases more shares when a Fund's net asset value is relatively low and fewer
shares when a Fund's net asset value is relatively high. This can result in a
lower average cost-per-share than if the shareholder followed a less systematic
approach. Dollar cost averaging does not assure a profit and does not protect
against loss in declining markets. Because such a program involves continuous
investment in securities regardless of fluctuating price levels of such
securities, investors should consider their financial ability to continue
purchases when prices are declining.
Prospectus Page 34
<PAGE>
GT GLOBAL INCOME FUNDS
A participant in the GT Global Dollar Cost Averaging Program first designates
the size of his or her monthly investment in a Fund ("Monthly Investment") after
participation in the Program begins. The Monthly Investment must be at least
$1,000. The investor then will make an initial investment of at least $10,000 in
the GT Global Dollar Fund. Thereafter, each month an amount equal to the
specified Monthly Investment automatically will be redeemed from the GT Global
Dollar Fund and invested in Fund shares. A sales charge will be applied to each
automatic monthly purchase of Class A Fund shares in an amount determined in
accordance with the Right of Accumulation privilege described above. To
participate in the Dollar Cost Averaging Program, investors should complete the
Dollar Cost Averaging Application provided at the end of this Prospectus.
Investors should contact their brokers or GT Global for more information.
PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
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(es) 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. Shareholders participating in
the Program may also participate in the Right of Accumulation, Letter of Intent
and Dollar Cost Averaging programs. Certain broker/dealers may charge a fee for
establishing accounts relating to the Program. To participate in the Portfolio
Rebalancing Program, investors should complete the Portfolio Rebalancing Program
Application at the end of this Prospectus. Investors should contact their
broker/dealers or GT Global for more information.
Prospectus Page 35
<PAGE>
GT GLOBAL INCOME FUNDS
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Shares of each Fund may be exchanged for shares of the same class 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. EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER REALIZING
A GAIN OR LOSS, AS THE CASE MAY BE, FOR TAX PURPOSES. See "Dividends, Other
Distributions and Federal Income Taxation -- Taxes." In addition to the Funds,
the GT Global Mutual Funds currently include:
-- GT GLOBAL WORLDWIDE GROWTH FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND
-- GT GLOBAL AMERICA 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 DOLLAR FUND
Up to four exchanges each year per Fund may be made without charge. A $7.50
service charge will be imposed on each subsequent exchange. If a shareholder
does not surrender all of his or her shares in an exchange, the remaining
balance in the shareholder's account after the exchange must be at least $500.
Exchange requests received in good order by the Transfer Agent before the close
of regular trading on the NYSE on any Business Day will be processed at the net
asset value calculated on that day. The terms of the exchange offer may be
modified at any time, on 60 days' prior written notice.
An investor interested in making an exchange should contact his broker/dealer or
the Transfer Agent to request the prospectus of the other GT Global Mutual
Fund(s) being considered. Certain brokers may charge a fee for handling
exchanges.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to his or
her broker/dealer or to the Transfer Agent by telephone at the appropriate toll
free number provided in the Shareholder Account Manual. Exchange orders will be
accepted by telephone provided that the exchange involves only uncertificated
shares on deposit in the shareholder's account or for which certificates 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.
EXCHANGES BY MAIL. Exchange orders should be sent by mail to the investor's
broker/dealer or to the Transfer Agent at the address set forth in the
Shareholder Account Manual.
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 reserves 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 reserves 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, the Funds and GT Global reserve the right to reject
any purchase order.
Prospectus Page 36
<PAGE>
GT GLOBAL INCOME FUNDS
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Shares of each Fund may be redeemed at their net asset value (subject to any
applicable contingent deferred sales charge for Class B shares or, in limited
circumstances, Class A shares) and redemption proceeds will be sent within seven
days of the execution of a redemption request. If a redeeming shareholder owns
both Class A and Class B shares of a Fund, the Class A shares will be redeemed
first unless the shareholder specifically requests otherwise.
REDEMPTIONS THROUGH BROKER/DEALERS. Shareholders with accounts at broker/dealers
that sell shares of a Fund may submit redemption requests to such
broker/dealers. If the shares are held in the broker/dealer's "street name," the
redemption must be made through the broker/dealer. Broker/ dealers may honor a
redemption request either by repurchasing shares from a redeeming shareholder at
the net asset value next determined after the broker/dealer receives the request
or by forwarding such requests to the Transfer Agent (see "How to Redeem Shares
- -- Redemptions Through the Transfer Agent"). Redemption proceeds normally will
be paid by check or, if offered by the broker/dealer, credited to the
shareholder's brokerage account at the election of the shareholder.
Broker/Dealers may impose a service charge for handling redemption transactions
placed through them and may have other requirements concerning redemptions.
Accordingly, shareholders should contact their broker/dealers for more details.
REDEMPTIONS THROUGH THE TRANSFER AGENT. Redemption requests may be transmitted
to the Transfer Agent by telephone or by mail, in accordance with the
instructions provided in the Shareholder Account Manual. Redemptions will be
effected at the net asset value next determined after the Transfer Agent has
received the request in good order and any required supporting documentation
(less any applicable contingent deferred sales charge for Class B shares or, in
limited circumstances, Class A shares). Redemption requests will not require a
signature guarantee if the redemption proceeds are to be sent either: (i) to the
redeeming shareholder at the shareholder's address of record as maintained by
the Transfer Agent, provided the shareholder's address of record has not been
changed within the preceding thirty days; or (ii) directly to a pre-designated
bank, savings and loan or credit union account ("Pre-Designated Account"). ALL
OTHER REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institution.
A notary public is not an acceptable guarantor. A shareholder with questions
concerning a Fund's signature guarantee requirement should contact the Transfer
Agent.
Shareholders may qualify to have redemption proceeds sent to a Pre-Designated
Account by completing the appropriate section of the Account Application at the
end of this Prospectus. Shareholders with Pre-Designated Accounts should request
that redemption proceeds be sent either by bank wire or by check. The minimum
redemption amount for a bank wire is $1,000. Shareholders requesting a bank wire
should allow two business days from the time the redemption request is effected
for the proceeds to be deposited in the shareholder's Pre-Designated Account.
See "How to Redeem Shares -- Other Important Redemption Information."
Shareholders may change their Pre-Designated Accounts only by a letter of
instruction to the Transfer Agent containing all account signatures, each of
which must be guaranteed. The Transfer Agent currently does not charge a bank
wire service fee for each wire redemption sent, but reserves the right to do so
in the future. 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.
Prospectus Page 37
<PAGE>
GT GLOBAL INCOME FUNDS
Shareholders automatically have telephone privileges to authorize redemptions.
The Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine 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.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may participate in the GT Global Systematic Withdrawal Plan. A
participating shareholder will receive proceeds from monthly, quarterly or
annual redemptions of Fund shares with respect to either Class A or Class B
shares. No contingent deferred sales charge will be imposed on redemptions made
under the Systematic Withdrawal Plan. The minimum withdrawal amount is $100. The
amount or percentage a participating shareholder specifies to be redeemed may
not, on an annualized basis, exceed 12% of the value of the account, as of the
time the shareholder elects to participate in the Systematic Withdrawal Plan. To
participate in the Systematic Withdrawal Plan, investors should complete the
appropriate portion of the Supplemental Application provided at the end of this
Prospectus. Investors should contact their broker/ dealers or the Transfer Agent
for more information. With respect to Class A shares, participation in the
Systematic Withdrawal Plan concurrent with purchases of Class A shares of the
Fund may be disadvantageous to investors because of the sales charges involved
and possible tax implications, and therefore is discouraged. In addition,
shareholders who participate in the Systematic Withdrawal Plan should not elect
to reinvest dividends or other distributions in additional Fund shares.
CHECKWRITING -- GOVERNMENT INCOME FUND -- CLASS A SHARES. Class A shareholders
of Government Income Fund may redeem their Government Income Fund shares by
writing checks, a supply of which may be obtained through the Transfer Agent,
against their Government Income Fund accounts. The minimum check amount is $300.
When the check is presented to the Transfer Agent for payment, the Transfer
Agent will cause the Government Income Fund to redeem a sufficient number of
Class A shares to cover the amount of the check. This procedure enables the
shareholder to continue receiving dividends on those shares until such time as
the check is presented to the Transfer Agent for payment. Cancelled checks are
not returned. However, such shareholders may obtain photocopies of their
cancelled checks upon request. If a shareholder does not own sufficient Class A
shares to cover a check, the check will be returned to the payee marked
"nonsufficient funds." Checks written in amounts less than $300 also will be
returned. The Government Income Fund and the Transfer Agent reserve the right to
terminate or modify the checkwriting service at any time or to impose a service
charge in connection with it.
Because the aggregate amount of Government Income Fund Class A shares owned by a
shareholder is likely to change each day, shareholders should not attempt to
redeem all of their Government Income Fund shares held in their accounts by
using the check redemption procedure. Charges may be imposed for specially
imprinted checks, business checks, copies of cancelled checks, stop payment
orders, checks returned "nonsufficient funds" and checks returned because they
are written for less than $300. These charges will be paid by redeeming
automatically an appropriate number of Government Income Fund Class A shares.
Shareholders of Government Income Fund Class A shares who are interested in
checkwriting should obtain the necessary forms by calling the Transfer Agent at
the number provided in the Shareholder Account Manual. Checkwriting generally is
not available to persons who hold Government Income Fund Class A shares in tax-
deferred retirement plan accounts.
Prospectus Page 38
<PAGE>
GT GLOBAL INCOME FUNDS
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 broker/dealer or the Transfer Agent.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone, or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after the date the request is executed. Requests for redemption which are
subject to any special conditions or which specify a future or past effective
date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which a Fund has not yet
received good payment, the Fund may delay payment of redemption proceeds until
it has assured itself that good payment has been collected for the purchase of
the shares. In the case of purchases by check it can take up to 10 business days
to confirm that the check has cleared and good payment has been received.
Redemption proceeds will not be delayed when shares have been paid for by wire
or when the investor's account holds a sufficient number of shares for which
funds already have been collected.
A Fund may redeem the shares of any shareholder whose account is reduced to less
than $500 in net asset value through redemptions or other action by the
shareholder. Written notice will be given to the shareholder at least 60 days
prior to the date fixed for such redemption, during which time the shareholder
may increase his or her holdings to an aggregate amount of $500 or more (with a
minimum purchase of $100).
For additional information on how to redeem shares, see the Shareholder Account
Manual in this Prospectus.
Prospectus Page 39
<PAGE>
GT GLOBAL INCOME FUNDS
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Shareholders are encouraged to place purchase, exchange and redemption orders
through their brokers. Shareholders also may place such orders directly through
the Transfer Agent in accordance with this Manual. See "How to Invest;" "How to
Make Exchanges;" "How to Redeem Shares;" and "Dividends, Other Distributions,
and Federal Income Taxation -- Taxes" for more information.
Each Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send the completed Account Application (if initial purchase) or letter stating
Fund name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global
P.O. Box 7345
San Francisco, California 94120-7345
INVESTMENTS BY BANK WIRE
An investor opening a new account should call 1-800-223-2138 to obtain an
account number. WITHIN SEVEN DAYS OF PURCHASE SUCH AN INVESTOR MUST SEND A
COMPLETED ACCOUNT APPLICATION CONTAINING THE INVESTOR'S CERTIFIED TAXPAYER
IDENTIFICATION NUMBER TO GT GLOBAL AT THE ADDRESS PROVIDED ABOVE UNDER
"INVESTMENTS BY MAIL." Wire instructions must state Fund name, class of shares,
shareholder's registered name and account number. Bank wires should be sent
through the Federal Reserve Bank Wire System to:
WELLS FARGO BANK, N.A.
ABA 121000248
Attn: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, amount of
exchange, name of the GT Global Mutual Fund exchanging into, shareholder's
registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT Global at 1-800-223-2138
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the above
instructions but send to the following address:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call GT Global at 1-800-223-2138.
Prospectus Page 40
<PAGE>
GT GLOBAL INCOME FUNDS
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
The Funds calculate net asset value as of the close of normal trading on the
NYSE (currently 4:00 p.m., Eastern time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. Each
Fund's net asset value per share is computed by determining the value of its
total assets (which, in the case of the High Income Fund, is the value of its
proportionate share of the total assets of the Portfolio) subtracting all of its
liabilities, and dividing the result by the total number of shares outstanding
at such time. Net asset value is determined separately for each class of shares
of each Fund.
Long-term debt obligations held by a Fund or the Portfolio are valued at the
mean of representative quoted bid and asked prices for such securities or, if
such prices are not available, at prices for securities of comparable maturity,
quality and type; however, when 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. Equity securities are valued at the last
sale price on the exchange or in the OTC market in which such securities are
primarily traded, as of the close of business on the day the securities are
being valued, or, lacking any sales, at the last available bid price. When
market quotations for futures and options positions held by a Fund or the
Portfolio are readily available, those positions are valued based upon such
quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under the
direction of the Company's Board of Directors or the Portfolio's Board of
Trustees. Securities and other assets quoted in foreign currencies are valued in
U.S. dollars based on the prevailing exchange rates on that day.
Each Fund's or the Portfolio's portfolio securities, from time to time, may be
listed primarily on foreign exchanges or OTC dealer markets that may trade on
days when the NYSE is closed (such as Saturday). As a result, the net asset
values of a Fund's shares may be significantly affected by such trading on days
when shareholders have no access to that Fund.
The different service and distribution fees borne by each class of shares will
result in different net asset values and dividends. The per share net asset
value of the Class B shares of a Fund generally will be lower than that of the
Class A shares of that Fund because of the higher service and distribution fees
borne by the Class B shares. The per share net asset value of the Advisor Class
shares of a Fund generally will be higher than that of the Class A and Class B
shares of that Fund because of the absence of any service and distribution fees
applicable to the Advisor Class shares. It is expected, however, that the net
asset value per share of the classes of a Fund will tend to converge immediately
after the payment of dividends, which will differ by approximately the amount of
the service and distribution fee accrual differential between the classes.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. Each Fund declares and pays monthly dividends
from its net investment income, if any, which includes accrued interest, earned
discount (including both original issue and market discounts) and dividends less
applicable expenses. Each Fund also annually distributes substantially all of
its realized net short-term capital gain (the excess of short-term capital gains
over short-term capital losses), net capital gain (the excess of net long-term
capital gain over
Prospectus Page 41
<PAGE>
GT GLOBAL INCOME FUNDS
net short-term capital loss) and net gains from foreign currency transactions,
if any. Each Fund may make an additional dividend or other distribution if
necessary to avoid a 4% excise tax on certain undistributed income and gain.
Dividends and other distributions paid by each Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Class B shares of a Fund will be lower than the per
share income dividends on Class A shares of that Fund as a result of the higher
service and distribution fees applicable to Class B shares; and the per share
income dividends on both such classes of shares of a Fund will be lower than the
per share income dividends on the Advisor Class shares of that Fund as a result
of the absence of any service and distribution fees applicable to Advisor Class
shares. SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Fund shares of the distributing class (or in shares of the
corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional shares are made at net asset value without
imposition of a sales charge. IF NO ELECTION IS MADE BY A SHAREHOLDER, ALL
DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY REINVESTED IN ADDITIONAL
FUND SHARES OF THE DISTRIBUTING CLASS. Reinvestments in another GT Global Mutual
Fund may only be directed to an account with the identical shareholder
registration and account number. These elections may be changed by a shareholder
at any time; to be effective with respect to a distribution, the shareholder or
the shareholder's broker must contact the Transfer Agent by mail or telephone at
least 15 Business Days prior to the payment date. THE FEDERAL INCOME TAX
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. The 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
Prospectus Page 42
<PAGE>
GT GLOBAL INCOME FUNDS
"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 (which normally
includes any initial sales charge paid on Class A shares). An exchange of Fund
shares for shares of another GT Global Mutual Fund (including another Fund)
generally will have similar tax consequences. However, special tax rules apply
when a shareholder (1) disposes of Class A shares of a Fund through a redemption
or exchange within 90 days after purchase and (2) subsequently acquires Class A
shares of that Fund or any other GT Global Mutual Fund on which an initial sales
charge normally is imposed without paying that sales charge due to the
reinstatement privilege or exchange privilege. In these cases, any gain on the
disposition of the original Class A shares will be increased, or loss decreased,
by the amount of the sales charge paid when the shares were acquired, and that
amount will increase the adjusted basis of the shares subsequently acquired. In
addition, if shares of a Fund are purchased within 30 days before or after
redeeming other shares of that Fund (regardless of class) at a loss, all or a
part of the loss will not be deductible and instead will increase the basis of
the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors are therefore urged to consult their
tax advisers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors and the Portfolio's Board of Trustees have
overall responsibility for the operation of the Funds and the Portfolio,
respectively, and have approved contracts with various financial organizations
to provide, among other things, day to day management services required by the
Funds and the Portfolio. See "Directors, Trustees, and Executive Officers" in
the Statement of Additional Information for a complete description of the
Directors of each of the Funds and the Trustees of the Portfolio.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by Chancellor LGT
Asset Management, Inc. (the "Manager") as the Government Income Fund's, the
Strategic Income Fund's and the Portfolio's investment manager and administrator
include, but are not limited to, determining the composition of the investment
portfolio of the Government Income Fund, the Strategic Income Fund and the
Portfolio and placing orders to buy, sell or hold particular securities. In
addition, the Manager provides the following administration services to the
Funds and the Portfolio: furnishing corporate officers and clerical staff;
providing office space, services and equipment; and supervising all matters
relating to the Government Income Fund's, the Strategic Income Fund's and the
Portfolio's operation.
The Government Income Fund and the Strategic Income Fund each pays the Manager
administration fees computed daily and payable monthly, based on their
respective average daily net assets, for such services at the annualized rate of
.725% on the first $500 million, .70% on the next $1 billion, .675% on the next
$1 billion, and .65% on amounts thereafter. The High Income Fund pays
administration fees, directly to the Manager at the annualized rate of 0.25% of
the Fund's average daily net assets. In addition, the Fund bears its pro rata
portion of the investment management and administration fees paid by the
Portfolio to the Manager. The Portfolio pays such fees, based on the average
daily net assets of the Portfolio, directly to the Manager at the annualized
rate of .475% on the first $500 million, .45% on the next $1 billion, .425% on
Prospectus Page 43
<PAGE>
GT GLOBAL INCOME FUNDS
the next $1 billion and .40% on amounts thereafter, plus 2% of the Portfolio's
total investment income as stated in the Portfolio's Statement of Operations,
calculated in accordance with generally accepted accounting principles, adjusted
daily for currency revaluations, on a marked to market basis, of the Portfolio's
assets; provided, however, that during any fiscal year this amount shall not
exceed 2% of the Portfolio's total investment income calculated in accordance
with generally accepted accounting principles. These rates are higher than those
paid by most mutual funds. Each Fund pays all expenses not assumed by the
Manager, GT Global or any other agents. The Manager and GT Global have
undertaken to limit the expenses of the Class A and Class B shares of the
Government Income Fund and the Strategic Income Fund (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the maximum annual
level of 1.85% and 2.50% of the average daily net assets of such Funds' Class A
and Class B shares, respectively. The Manager and GT Global have undertaken to
limit the expenses of the Class A and Class B shares of the High Income Fund
(and such Fund's pro-rata portion of the Portfolio's expenses) to the maximum
annual level of 2.20% and 2.85% of the average daily net assets of such Fund's
Class A and Class B shares, respectively. This undertaking may be changed or
eliminated in the future.
The Manager also serves as each Fund'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 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 Capital 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.
Prospectus Page 44
<PAGE>
GT GLOBAL INCOME FUNDS
The investment professionals primarily responsible for the portfolio management
of the Government Income Fund, the Strategic Income Fund and the Portfolio are
as follows:
GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Cheng-Hock Lau Portfolio Manager since Portfolio Manager for the Manager since 1996. Mr. Lau has been Chief
New York 1996 Investment Officer for Developed Market Debt for the Manager since
November 1996, and was a Senior Portfolio Manager for
global/international fixed income for the Manager from July 1995 to
November 1996. Prior to October 31, 1996, Mr. Lau was an employee
of Chancellor Capital. Prior thereto, Mr. Lau was a Senior Vice
President and Senior Portfolio Manager for Fiduciary Trust Company
International from 1993 to 1995, and Vice President at Bankers
Trust Company from 1991 to 1993.
Simon Nocera Portfolio Manager since Chief Investment Officer for Emerging Market Debt for the Manager
San Francisco 1996 since January 1996. Mr. Nocera has been a Portfolio Manager and
Economist for the Manager since 1992. From 1991 to 1992, Mr. Nocera
was Senior Vice President and Director for Global Fixed Income
Research at the Putnam Companies.
Robert F. Allen Portfolio Manager since Portfolio Manager for the Manager since 1989.
San Francisco 1989
STRATEGIC INCOME FUND
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Simon Nocera Portfolio Manager since Chief Investment Officer for Emerging Market Debt for the Manager
San Francisco 1992 since January 1996. Mr. Nocera has been a Portfolio Manager and
Economist for the Manager since 1992. From 1991 to 1992, Mr. Nocera
was Senior Vice President and Director for Global Fixed Income
Research at the Putnam Companies.
Cheng-Hock Lau Portfolio Manager since Portfolio Manager for the Manager since 1996. Mr. Lau has been Chief
New York 1996 Investment Officer for Developed Market Debt for the Manager since
November 1996, and was a Senior Portfolio Manager for
global/international fixed income for the Manager from July 1995 to
November 1996. Prior to October 31, 1996, Mr. Lau was an employee
of Chancellor Capital. Prior thereto, Mr. Lau was a Senior Vice
President and Senior Portfolio Manager for Fiduciary Trust Company
International from 1993 to 1995, and Vice President at Bankers
Trust Company from 1991 to 1993.
HIGH INCOME PORTFOLIO
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO LAST FIVE YEARS
- ------------------------ ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Simon Nocera Portfolio Manager since Chief Investment Officer for Emerging Market Debt for the Manager
San Francisco Portfolio inception in since January 1996. Mr. Nocera has been a Portfolio Manager and
1992 Economist for the Manager since 1992. From 1991 to 1992, Mr. Nocera
was Senior Vice President and Director for Global Fixed Income
Research at the Putnam Companies.
</TABLE>
Prospectus Page 45
<PAGE>
GT GLOBAL INCOME FUNDS
Prior to October 31, 1996, Mr. Lau was an employee of Chancellor Capital.
In placing orders for the Government Income Fund's, Strategic Income Fund's and
the Portfolio's 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 for the Fund 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 or the Portfolio 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 each Fund's Class A
and Class B shares. Like the Manager, GT Global is a subsidiary of Liechtenstein
Global Trust with offices at 50 California Street, 27th Floor, San Francisco,
California 94111. As distributor, GT Global collects the sales charges imposed
on purchases of Class A shares and any contingent deferred sales charges that
may be imposed on certain redemptions of Class A and Class B shares. GT Global
reallows a portion of the sales charge on Class A shares to broker/dealers that
have sold such shares in accordance with the schedule set forth above under "How
to Invest." In addition, GT Global pays a commission equal to 4.00% of the
amount invested to broker/dealers who sell Class B shares. A commission with
respect to Class B shares is not paid on exchanges or certain investments in
Class B shares.
GT Global, at its own expense, may provide additional promotional incentives to
brokers that sell shares of the Funds and/or shares of the other GT Global
Mutual Funds. In some instances additional compensation or promotional
incentives may be offered to brokers that have sold or may sell significant
amounts of shares during specified periods of time. Such compensation and
incentives may include, but are not limited to, cash, merchandise, trips and
financial assistance to brokers in connection with preapproved conferences or
seminars, sales or training programs for invited sales personnel, payment for
travel expenses (including meals and lodging) incurred by sales personnel and
members of their families or other invited guests to various locations for such
seminars or training programs, seminars for the public, advertising and sales
campaigns regarding one or more of the GT Global Mutual Funds, and/or other
events sponsored by the broker. In addition, GT Global makes ongoing payments to
brokerage firms, financial institutions (including banks) and others that
facilitate the administration and servicing of shareholder accounts.
Under a plan of distribution adopted by the Company's Board of Directors
pursuant to Rule 12b-1 under the 1940 Act, with respect to each Fund's Class A
shares ("Class A Plan"), each Fund may pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to a separate plan of distribution adopted with respect to each Fund's
Class B shares ("Class B Plan"), each Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred by GT Global in excess of 1.00% annually may be carried forward for
reimbursement in subsequent years as long as that Plan continues in effect.
GT Global's service and distribution expenses covered by the Plans include the
payment of commissions; the cost of any additional compensation paid by GT
Global to broker/dealers; the costs of printing and mailing to prospective
investors prospectuses and other materials relating to the Funds; the costs of
developing, printing, distributing and publishing advertisements and other sales
literature; and allocated costs relating to GT Global's distribution activities,
including, among other things, employee salaries, bonuses and other overhead
expenses. In addition, its expenses under the Class B Plan include payment of
initial sales commissions to broker/dealers and interest
Prospectus Page 46
<PAGE>
GT GLOBAL INCOME FUNDS
on any unreimbursed amounts carried forward thereunder.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. Banks and broker/ dealer affiliates of banks also may
execute dealer agreements with GT Global for the purpose of selling shares of
the Fund. If a bank were prohibited from so acting, its shareholder clients
would be permitted to remain shareholders, and alternative means for continuing
the servicing of such shareholders would be sought. It is not expected that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences.
- --------------------------------------------------------------------------------
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
Investment Plan, Systematic Withdrawal Plan, and automatic dividend reinvestment
program may be provided quarterly. Shortly after the end of each Fund's fiscal
year on October 31 and fiscal half-year on April 30 of each year, shareholders
receive an annual and a semiannual report, respectively. In addition, the
federal income status of distributions made by the Fund to shareholders are
reported after the end of each calendar year on Form 1099-DIV. 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 the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, each class of shares of a Fund has
exclusive voting rights with respect to its distribution plan. The shares of the
Company's funds will be voted in the aggregate on all other matters, such as the
election of Directors and ratification of the Board of Directors' selection of
the Company's independent accountants.
Normally there will be no annual meeting of shareholders of the Company in any
year, except as required under the 1940 Act. The Company would be required to
hold a shareholders' meeting in the event that at any time less than a majority
of the Directors holding office had been elected by shareholders. Directors
shall continue to hold office until their successors are elected and have
qualified. Shares of the Company's funds do not have cumulative voting rights,
which means that the holders of a majority of the shares voting for the election
of Directors can elect all the Directors. A Director may be removed upon a
majority vote of the shareholders qualified to vote in the election.
Shareholders holding 10% of the Company's outstanding voting shares may call a
meeting of shareholders for the purpose of voting upon the question of removal
of any Director or for any other purpose. The 1940 Act requires the Company to
assist shareholders in calling such a meeting.
Pursuant to the Company's Articles of Incorporation, it may issue six billion
shares. Of this number, 300 million shares have been classified as shares of the
Strategic Income Fund and the High Income Fund; 100 million shares of each Fund
have been classified as Class A and Class B shares, respectively. In addition,
500 million shares have been classified as shares of Government Income Fund; 200
million shares have each been classified as Class A and Class B shares,
respectively. Moreover, 100 million shares have been classified as Advisor
Prospectus Page 47
<PAGE>
GT GLOBAL INCOME FUNDS
Class shares of each Fund. This amount may be increased from time to time in the
discretion of the Board of Directors. Each share of a Fund represents an
interest in that Fund only, has a par value of $0.0001 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and other distributions out of the income earned and
gain realized on the assets belonging to the Fund as may be declared at the
discretion of the Board of Directors. Each Class A, Class B and Advisor Class
share of a Fund is equal as to earnings, assets and voting privileges, except as
noted above, and each class bears the expenses, if any, related to the
distribution of its shares. Shares of each Fund when issued are fully paid and
nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a trust under the
laws of the state of New York. The Portfolio's Declaration of Trust provides
that the High Income Fund and other entities investing in the Portfolio (E.G.,
other investment companies, insurance company separate accounts and common and
commingled trust funds), if any, will each be liable for all obligations of the
Portfolio. However, the Directors of the Company believe that the risk of the
High Income Fund incurring financial loss on account of such liability is
limited to circumstances in which both inadequate insurance existed and the
Portfolio itself was unable to meet its obligations, and that neither the High
Income Fund nor its shareholders will be exposed to a material risk of liability
by reason of the High Income Fund's investing in the Portfolio. Any information
received from the Portfolio in the Portfolio shareholder report will be provided
to the High Income Fund's shareholders.
Whenever the High Income Fund is requested to vote on any proposal of the
Portfolio, the High Income Fund will hold a meeting of Fund shareholders and
will cast its vote as instructed by Fund shareholders. 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 50 California Street,
27th Floor, San Francisco, California 94111.
PERFORMANCE INFORMATION. The Funds, from time to time, may include information
on their investment results and/or comparisons of their investment results to
various unmanaged indices or results of other mutual funds or groups of mutual
funds in advertisements, sales literature or reports furnished to present or
prospective shareholders. Investors should be aware that as of October 22, 1992,
the investment objectives of the Strategic Income Fund were changed from
long-term high capital appreciation, primarily and moderate income, secondarily,
to primarily high current income and secondarily capital appreciation. In
addition, the investment policies and limitations of the Strategic Income Fund
were modified.
In such materials, each Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of each Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of 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 the Fund. Standardized Return
assumes reinvestment of all dividends and other distributions.
In addition, in order to more completely represent each Fund's performance or
more accurately compare such performance to other measures of investment return,
each Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation); it
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without taking the effect of sales charges into
account will be higher than data including the effect of such charges.
Each Fund also may refer in advertising and promotional materials to its yield,
which will fluctuate over time. A Fund's yield shows the rate of income that it
earns on its investments, expressed as a percentage of the public offering price
of its shares. A Fund calculates yield by determining the interest income it
earned from its portfolio investments
Prospectus Page 48
<PAGE>
GT GLOBAL INCOME FUNDS
for a specified thirty-day period (net of expenses), dividing such income by the
average number of shares outstanding, and expressing the result as an annualized
percentage based on the public offering price at the end of that thirty-day
period. Yield accounting methods differ from the methods used for other
accounting purposes. Accordingly, a Fund's yield may not equal the dividend
income actually paid to investors or the income reported in its financial
statements. Yield is calculated separately for each class of shares of each
Fund.
Each Fund's performance data will reflect past performance and will not
necessarily be indicative of future results. A Fund's investment results will
vary from time to time depending upon market conditions, the composition of its
portfolio and its operating expenses. These factors and possible differences in
calculation methods should be considered when comparing a Fund's investment
results with those published for other investment companies, other investment
vehicles and unmanaged indices. Each Fund's results also should be considered
relative to the risks associated with its investment objectives and policies.
See "Investment Results" in the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of the Manager and GT Global, a subsidiary of
Liechtenstein Global Trust, and maintains its offices at California Plaza, 2121
N. California Boulevard, Suite 450, Walnut Creek, California 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is custodian of each Fund's and the Portfolio's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company, the Funds and
the Portfolio. Kirkpatrick & Lockhart LLP also acts as counsel to the Manager,
GT Global and the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and each Fund's and the Portfolio's
independent accountants are Coopers & Lybrand L.L.P., One Post Office Square,
Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. conducts an annual audit
of each Fund and the Portfolio, assist in the preparation of each Fund's and the
Portfolio's federal and state income tax returns and consult with the Company,
each Fund and the Portfolio as to matters of accounting, regulatory filings, and
federal and state income taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 49
<PAGE>
GT GLOBAL INCOME FUNDS
APPENDIX A
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued by
various entities from "Aaa" to "C". Investment grade ratings are the first four
categories:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear somewhat
larger.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa -- Medium-grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Ba -- Have speculative elements and their future cannot be considered as
well-assured. Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B -- Generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small.
Caa -- Poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca -- Speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
C -- Lowest rated class of bonds. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities that are not rated as a
matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published in
Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
Prospectus Page 50
<PAGE>
GT GLOBAL INCOME FUNDS
generic rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the Company ranks in the lower end of its generic
rating category.
STANDARD & POOR'S RATINGS GROUP ("S&P") rates the securities debt of various
entities in categories ranging from "AAA" to "D" according to quality.
Investment grade ratings are the first four categories:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal although
it is somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" are
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of this
obligation. "BB" indicates the lowest degree of speculation and "C" the
highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
BB -- Has less near-term vulnerability to default than other speculative
issues; however, it faces major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The "BB" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "BBB-" rating.
B -- Has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
CCC -- Has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The "CCC" rating category
is also used for debt subordinated to senior debt that is assigned an actual
or implied "B" or "B-" rating.
CC -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC" rating.
C -- Typically applied to debt subordinated to senior debt which is
assigned an actual or implied "CCC-" debt rating. The "C" rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1 -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The "D" rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper having a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the
Prospectus Page 51
<PAGE>
GT GLOBAL INCOME FUNDS
following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structure with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2 have a strong
ability for repayment of senior short-term debt obligations. This normally will
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging from
"A1" for the highest quality obligations to "D" for the lowest. Issues in the
"A" category are delineated with numbers 1, 2, and 3 to indicate the relative
degree of safety. A-1 -- This highest category indicates that the degree of
safety regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics will be denoted with a plus sign (+)
designation. A-2 -- Capacity for timely payments on issues with this designation
is satisfactory; however, the relative degree of safety is not as high as for
issues designated "A-1."
Prospectus Page 52
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 53
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 54
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 55
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 56
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
P.O. Box 7345 ACCOUNT APPLICATION
SAN FRANCISCO, CA 94120-7345
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (Account No.: --------------------------------------)
</TABLE>
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies)
and date of trust instrument. Registration for Uniform Gifts/Transfers to
Minors accounts should be in the name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
------------------------------------ --------------------------------------------------------------------------------
Owner Social Security Number / / or Tax I.D. Number / / (Check applicable box)
------------------------------------ If more than one owner, social security number or taxpayer identification number
Co-owner 1 should be provided for first owner listed. If a purchase is made under Uniform Gift/
------------------------------------ Transfer to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)-----------------------------------------
( )
---------------------------------------------------------------------- ---------------------------
Street Address Home Telephone
( )
---------------------------------------------------------------------- ---------------------------
City, State, Zip Code Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund
selected. Checks should be made payable to "GT GLOBAL."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A Shares or
/ /Class B Shares (Not available for purchases of $500,000 or more or, except
for investors participating in the Portfolio Rebalancing Program, for the
GT Global Dollar Fund).
If a class share box is not checked, your investment will be made in Class A
shares.
<TABLE>
<S> <C> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA MID CAP GROWTH FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 23 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 01 / / GT GLOBAL DOLLAR FUND $
---------- ----------
03 / / GT GLOBAL EUROPE GROWTH FUND $
----------
CHECKWRITING PRIVILEGE
Checkwriting privilege available on Class A shares of GT Global Dollar Fund and GT Global Government Income Fund.
/ / Check here if desired. You will be sent a book of checks.
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS TOTAL INITIAL INVESTMENT: $
----------
All capital gains and dividend distributions will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions AND
dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund: Fund Name ------------------------------------------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right, power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF
THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND I/WE AGREE TO
ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE ACCOUNT
WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION PRIVILEGES
DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS ATTACHED AND
AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS,
INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS' TRANSFER AGENT, THEIR
OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS OR DAMAGES ARISING OUT
OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC INSTRUCTIONS REASONABLY BELIEVED
TO BE GENUINE, INCLUDING ANY SUCH LOSS OR DAMAGES DUE TO NEGLIGENCE ON THE
PART OF SUCH ENTITIES. THE INVESTOR(S) CERTIFIES(Y) AND AGREE(S) THAT THE
CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS AND RESTRICTIONS CONTAINED HEREIN
WILL CONTINUE UNTIL GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. OR THE FUNDS'
TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR REVOCATION. ANY CHANGE
IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME CASES, AS DESCRIBED IN
THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
UNDER PENALTIES OF PERJURY, I CERTIFY THAT THE TAXPAYER IDENTIFICATION
NUMBER ("NUMBER") PROVIDED ON THIS FORM IS MY (OR MY EMPLOYER'S, TRUST'S,
MINOR'S OR OTHER PAYEE'S) TRUE, CORRECT AND COMPLETE NUMBER AND MAY BE
ASSIGNED TO ANY NEW ACCOUNT OPENED UNDER THE EXCHANGE PRIVILEGE. I FURTHER
CERTIFY THAT I AM (OR THE PAYEE WHOSE NUMBER IS GIVEN IS) NOT SUBJECT TO
BACKUP WITHHOLDING BECAUSE: (A) I AM (OR THE PAYEE IS) EXEMPT FROM BACKUP
WITHHOLDING; (B) THE INTERNAL REVENUE SERVICE (THE "I.R.S.") HAS NOT NOTIFIED
ME THAT I AM (OR THE PAYEE IS) SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A
FAILURE TO REPORT ALL INTEREST OR DIVIDENDS; OR (C) THE I.R.S. HAS NOTIFIED ME
THAT I AM (THE PAYEE IS) NO LONGER SUBJECT TO BACKUP WITHHOLDING;
OR, / / I AM (THE PAYEE IS) SUBJECT TO BACKUP WITHHOLDING.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
THE I.R.S. DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT
OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
<TABLE>
<S> <C>
-----------------------------------------------------------
Date
X X
--------------------------------------------------------- ----------------------------------------------------------
X X
--------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ACCOUNT PRIVILEGES
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized By completing the following section, redemptions
Agent, if any, named below, hereby authorize the which exceed $1,000 may be wired or mailed to a
Transfer Agent of the GT Global Mutual Funds, to Pre-Designated Account at your bank. (Wiring
honor any telephone, telex or telegraphic instructions may be obtained from your bank.) A
instructions reasonably believed to be authentic bank wire service fee may be charged.
for redemption and/or exchange between a similar
class of shares of any of the Funds distributed --------------------------------------------------
by GT Global, Inc. Name of Bank
SPECIAL PURCHASE AND REDEMPTION PLANS --------------------------------------------------
/ / I have completed and attached the Bank Address
Supplemental Application for:
/ / AUTOMATIC INVESTMENT PLAN --------------------------------------------------
/ / SYSTEMATIC WITHDRAWAL PLAN Bank A.B.A Number Account Number
OTHER
/ / I/We owned shares of one or more Funds --------------------------------------------------
distributed by GT Global, Inc. as of April Names(s) in which Bank Account is Established
30, 1987 and since that date continuously A corporation (or partnership) must also submit a
have owned shares of such Funds. Attached is "Corporate Resolution" (or "Certificate of
a schedule showing the numbers of each of Partnership") indicating the names and titles of
my/our Shareholder Accounts. Officers authorized to act on its behalf.
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES
/ / I/We qualify for the Right of Accumulation sales charge discount
described in the Prospectus and Statement of Additional Information of
the Fund purchased.
/ / I/We own shares of more than one Fund distributed by GT Global. Listed
below are the numbers of each of my/our Shareholder Accounts.
/ / The registration of some of my/our shares differs from that shown on this
Application. Below are the account number(s) and registration(s) in each
case.
LIST OF OTHER GT GLOBAL MUTUAL FUND ACCOUNTS:
<TABLE>
<CAPTION>
<S> <C>
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
Account Numbers Account Registrations
</TABLE>
LETTER OF INTENT -- CLASS A SHARES
/ / I agree to the terms of the Letter of Intent set forth below. Although I
am not obligated to do so, it is my intention to invest over a
thirteen-month period in Class A shares of one or more of the GT Global
Mutual Funds in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
When a shareholder signs a Letter of Intent in order to qualify for a reduced
sales charge, Class A shares equal to 5% (in no case in excess of 1/2 of 1%
after an aggregate of $500,000 has been purchased under the Letter) of the
dollar amount specified in this Letter will be held in escrow in the
Shareholder's Account out of the initial purchase (or subsequent purchases, if
necessary) by GT Global, Inc. All dividends and other distributions will be
credited to the Shareholder's Account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
thirteen-month period, the purchaser will remit to GT Global, Inc. the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If this difference is not paid within twenty days after written request
by GT Global, Inc. or the shareholder's Authorized Agent, the appropriate
number of escrowed shares will be redeemed to pay such difference. If the
proceeds from this redemption are inadequate, the purchaser will be liable to
GT Global, Inc. for the balance still outstanding. The Letter of Intent may be
revised upward at any time during the thirteen-month period, and such a
revision will be treated as a new Letter, except that the thirteen-month
period during which the purchase must be made will remain unchanged. Exchange
requests involving escrowed shares must specifically reference those shares.
Exchanges of escrowed shares may be delayed to allow for the extra processing
required.
Any questions relating to this Letter of Intent should be directed to GT
Global, 50 California Street, 27th Floor, San Francisco, CA 94111.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Account Application for the purchase of Class A shares
including such shares purchased under a Right of Accumulation or Letter of
Intent or for the purchase of Class B shares in accordance with the terms of
our Dealer Agreement with GT Global, Inc. and with the Prospectus and
Statement of Additional Information of each Fund purchased. We agree to notify
GT Global, Inc. of any purchases properly made under a Letter of Intent or
Right of Accumulation.
<TABLE>
<CAPTION>
<S> <C>
---------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
---------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Number Representative's Name
( )
- -----------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
X
- -----------------------------------------------------------------------------------------------------------------------
Investment Dealer's Authorized Signature Title
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS SUPPLEMENTAL APPLICATION
P.O. Box 7345 SPECIAL INVESTMENT AND
SAN FRANCISCO, CA 94120-7345 WITHDRAWAL OPTIONS
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
ACCOUNT REGISTRATION
Please supply the following information exactly as it appears on the Fund's records.
- --------------------------------------------------------- ---------------------------------------------------------
Fund Name Account Number
- ---------------------------------------------------------- ----------------------------------------------------------
Owner's Name Co-Owner 1
- ---------------------------------------------------------- ----------------------------------------------------------
Co-Owner 2 Telephone Number
- ---------------------------------------------------------- ----------------------------------------------------------
Street Address Social Security or Tax I.D. Number
- ----------------------------------------------------------
City, State, Zip Code
Resident of / / U.S. / / Other ------------------
AUTOMATIC INVESTMENT PLAN / / YES / / NO
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to debit my/our personal checking account on
the designated dates in order to purchase / / Class A shares or / / Class B shares of the Fund indicated at the top of
this Supplemental Application at the applicable public offering price determined on that day.
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 1st day of the month in which you wish investments
to begin.)
Amount of each debit (minimum $100) $
-------------------------------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan
Application.
</TABLE>
- --------------------------------------------------------------------------------
[LOGO]
<TABLE>
<S> <C>
GT GLOBAL MUTUAL FUNDS AUTOMATIC INVESTMENT PLAN
</TABLE>
<TABLE>
<S> <C> <C> <C>
BANK AUTHORIZATION
- ------------------------- ------------------------------ ------------
Bank Name Bank Address Bank Account Number
I/We authorize you, the above named bank, to debit my/our account for amounts drawn by the Transfer Agent of the GT
Global Mutual Funds, acting as my agent. I/We agree that your rights in respect to each withdrawal shall be the same as
if it were a check drawn upon you and signed by me/us. This authority shall remain in effect until I/we revoke it in
writing and you receive it. I/We agree that you shall incur no liability when honoring any such debit.
I/We further agree that you will incur no liability to me if you dishonor any such withdrawal. This will be so even
though such dishonor results in the forfeiture of investment.
- --------------------------------------------------------- ---------------------------------------------------------
Account Holder's Name Joint Account Holder's Name
X X
- ------------------------------------ -------------- ------------------------------------ --------------
Account Holder's Signature Date Joint Account Holder's Signature Date
</TABLE>
(OVER)
<PAGE>
<TABLE>
<S> <C> <C> <C>
SYSTEMATIC WITHDRAWAL PLAN / / YES / / NO
MINIMUM REQUIREMENTS: $10,000 INITIAL ACCOUNT BALANCE AND $100 MINIMUM PERIODIC PAYMENT.
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to redeem the necessary number of / / Class A
or / / Class B shares from my/our GT Global Account on the designated dates in order to make the following periodic
payments:
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 18th day of the month in which you wish withdrawals
to begin.)
Maximum annual withdrawal of 12% of initial account balance for shares subject to a contingent deferred sales charge.
Withdrawals in excess of 12% of the initial account balance annually may result in assessment of a contingent deferred
sales charge, as described in the applicable Fund's prospectus.
Amount of each check ($100 minimum): $ -----------------
Please make checks payable to: --------------------------------------------------------------------------------------
(TO BE COMPLETED ONLY IF Recipient
REDEMPTION PROCEEDS TO BE PAID --------------------------------------------------------------------------------------
TO OTHER THAN ACCOUNT HOLDER Street Address
OF RECORD OR MAILED TO ADDRESS --------------------------------------------------------------------------------------
OTHER THAN ADDRESS OF RECORD) City, State, Zip Code
NOTE: If recipient of checks is not the registered shareholder, signature(s) below must be guaranteed. A corporation
(or partnership) must also submit a "Corporate Resolution" (or "Certification of Partnership") indicating the names
and titles of Officers authorized to act on its behalf.
AGREEMENT AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions
contained herein will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any
change or revocation. Any change in these instructions must be in writing with all signatures guaranteed (if
applicable).
- ----------------------------------------------------------
Date
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock
exchange; (4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary
public is NOT an acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature
guarantee requirement should contact the Transfer Agent.
</TABLE>
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
To: Bank Named on the Reverse
In consideration of your compliance with the request and authorization of the
depositor(s) named on the reverse, the Transfer Agent of the GT Global Mutual
Funds hereby agrees:
1. To indemnify and hold you harmless from any loss you may incur because of the
payment by you and of any debit by the Transfer Agent to its own order on the
account of such depositor(s) and received by you in the regular course of
business for payment, or arising out of the dishonor by you of any debit,
provided there are sufficient funds in such account to pay the same upon
presentation.
2. To defend at its own expense any action which might be brought by any
depositor or any other persons because of your actions taken pursuant to the
above mentioned request or in any manner arising by reason of your participation
in connection with such request.
<PAGE>
[LOGO]
GT Global Mutual Funds 415 392 6181
Fifty California Street
27th Floor
SAN FRANCISCO, CA
94111-4624
GT GLOBAL DOLLAR COST AVERAGING PROGRAM
<TABLE>
<S> <C>
Between: GT Global, Inc.
General Distributor of
The GT Global Mutual Funds
Fifty California Street, 27th Floor
San Francisco, California 94111
415 392 6181; 800 824 1580
and: Company -------------------------------------------------------------------
Address --------------------------------------------------------------------
Phone ---------------------------- Fax ----------------------------
</TABLE>
You have entered into either a Dealer Agreement or a Bank and
Bank-Affiliated Dealer Agreement (each an "Agreement") pursuant to which we
agreed to sell to you Class A and Class B shares of the mutual funds that now or
hereafter may be included in the GT Global Mutual Funds (collectively the
"Funds"; individually a "Fund") or a Bank and Bank-Affiliated Dealer Agreement
pursuant to which you agreed to sell such shares issued by the Funds as agent
for your customers. This Supplement to the Agreement is for the purpose of
establishing contractual terms between us with respect to the GT Global Dollar
Cost Averaging Program ("Program"). All capitalized terms used in this
Supplement and not otherwise defined shall have the same meanings assigned to
them as in the Agreement. All terms of the Agreement shall remain in full force
and effect unless specifically modified or suspended by the terms of this
Supplement.
1. You agree to make available to your customers the Program as described
from time to time in the then current Prospectus of any Fund. We will
provide you with reasonable amounts of literature and an account application
covering the Program.
2. A customer participating in the Program will designate the size of his or
her monthly Funds' investment ("Monthly Amount") as well as the total
amount he or she expects to invest over a 24-month period after participation in
the Program begins ("Total Amount"). A sales charge will be applied to each
automatic monthly purchase of Fund Class A shares in an amount determined in
accordance with the Fund's Right of Accumulation privilege. We will pay you a
commission if you are an agent, or we will pay you an agency commission if you
are a bank or bank-affiliated dealer. This commission will be equal to the
dealer compensation schedule that would be paid if the Total Amount the
participating shareholder expects to invest in the 24 months under the Program
were invested, instead, in the Fund at one time. You agree to pass through to
your broker(s) or registered representative(s) a portion of this commission in
accordance with your established compensation arrangement.
3. If a customer discontinues participation in the Program or otherwise
fails to invest the Total Amount as provided in the customer's Program
agreement, and the selling representative is still employed by you, you agree to
repay to us the portion of the commission applicable to any amount not invested
by the customer. If the selling representative is not employed by you, you agree
to repay us an amount equal to the portion of the commission paid that was
retained by your firm.
4. You acknowledge that all payments due to you under this Supplement are
subject to the limitations contained in each Fund's Prospectus and may be
varied or discontinued at any time.
<PAGE>
5. This Supplement shall be binding upon receipt by us in San Francisco,
California, of a counterpart hereof duly accepted and signed by you.
6. Either of us may cancel this Supplement at any time by written notice to
the other, except that Section 3 shall still remain in effect.
7. All communications to us should be sent to the address below. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you on Page 1.
Accepted:
<TABLE>
<S> <C>
Company ---------------------------------- GT Global, Inc.
Address ------------------------------------ Fifty California Street, 27th Floor
Address ------------------------------------ San Francisco, California 94111
Phone ------------------------------------- 415-392-6181; 800-824-1580
Fax ---------------------------------------- 415-445-7566
By: ---------------------------------------- By: /s/ WILLIAM J. GUILFOYLE
Signature ----------------------------------------
William J. Guilfoyle
---------------------------------------- Date: --------------------------------------
Print Name & Date
</TABLE>
DCALR702.085
May 1996
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global, Inc.
P.O. Box 7345 DOLLAR COST
SAN FRANCISCO, CA 94120-7345 AVERAGING APPLICATION
800 223 2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / CORPORATION / / TRUST / / UTMA/UGMA / / OTHER
1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / IRA ACCOUNT / / ACCOUNT REVISION:
APPLICATION ATTACHED (ACCOUNT NO.:
----------------)
</TABLE>
NOTE: Joint tenant registration will be as "joint tenants with rights of
survivorship" unless otherwise specified. Trust registrations should specify
name of trustee(s), beneficiary(ies) and date of trust instrument.
Registration for Uniform Transfers/Gifts to Minors should be in the name of
one custodian and one minor and include the state under which the
custodianship is created (using the minor's social security number).
<TABLE>
<S> <C> <C> <C>
/ / / / / / - / / / / - / / / / / / / / OR / / / / - / / / / / / / / / / / / / /
---------------------------------------------------------------------------------------------------------------------------------
Owner Check appropriate box / / Social Security Number
or / / Tax I.D. Number
-------------------------------------- --------------------------------------------------------------------
Co-owner 1
-------------------------------------- --------------------------------------------------------------------
Co-owner 2 Home Telephone
-------------------------------------- --------------------------------------------------------------------
Street Address Business Telephone
-------------------------------------- --------------------------------------------------------------------
City, State, Zip Code Resident of / / U.S. / / Specify Other
</TABLE>
2. FUND SELECTION
TOTAL INITIAL INVESTMENT $
----------------------------- ($10,000 MINIMUM). The initial investment will
be made without imposition of any sales charge in the GT Global Dollar Fund.
Method of payment / / check or / / bank wire. Make checks and bank wires
payable to "GT Global." Do not send currency. Bank wires should be sent
through the Federal Reserve Bank wire system to: Wells Fargo Bank, NA,
ABA#121000248. ATTN: GT Global AC-4023-050701 (Stating Fund Name,
Shareholder's Registered Name and Account Number)
ALL GT GLOBAL MUTUAL FUNDS ISSUE TWO CLASSES OF SHARES. Class A shares are
sold with an initial sales charge while Class B shares are sold without an
initial sales charge but are subject to higher expense levels and to a
contingent deferred sales charge payable on certain redemptions. Please read
the prospectus of the applicable GT Global Mutual Fund carefully before you
invest.
MONTHLY TRANSFERS: Each month, GT Global Dollar Fund shares will be
redeemed and either Class A or Class B shares of the designated GT Global
Mutual Fund(s) will be purchased including the applicable sales charge, if
any, in the amounts indicated below ($1,000 minimum aggregate per month):
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / CLASS A SHARES
OR / / CLASS B SHARES
/ / New Account / / Existing Account #
-------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
FUND NAME MONTHLY FUND NAME MONTHLY
AMOUNT AMOUNT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 03 / / GT GLOBAL EUROPE GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 18 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional shares 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>
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Dollar Cost Averaging Application for the purchase of
Class A shares including shares purchased under Right of Accumulation or
Letter of Intent, or for the purchase of Class B shares in accordance with
the terms of our Dealer Agreement with GT Global, Inc., and the Prospectus
and Statement of Additional Information for each Fund. We agree to notify GT
Global, Inc., of any purchases properly made under a Letter of Intent or
Right of Accumulation. Class B shares are not available for Right of
Accumulation or Letter of Intent.
<TABLE>
<S> <C>
--------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
- --------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Name Representative's Number
- -----------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
-------------------------------------------------------------
Investment Dealer's Authorized Signature and Title GT Global Use: DLR------------ BR ------------ Rep
--------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
IRA INSTRUCTIONS
To open an IRA Dollar Cost Averaging account:
Read the GT Global IRA Disclosure Statement carefully.
Complete both this Dollar Cost Averaging Application and the GT Global IRA Application. Shareholder is to sign
both forms.
Mail completed applications with a check to GT Global.
3. AGREEMENT AND SIGNATURES
I/We authorize GT Global, Inc., to transfer shares from my/our GT Global Dollar Fund account, established
hereby, to purchase shares in the other GT Global Mutual Fund(s) and the class indicated on the reverse side of
this application. I/We understand that these transfers will occur on the 15th day of each month, or the prior
business day, and will continue until the funds in my/our GT Global Dollar Fund account fall below the transfer
amount, or until I/we terminate the Dollar Cost Averaging Program in writing. I/We further understand that
monthly purchases of the Class A shares of the other GT Global Mutual Fund(s) indicated will be subject to
applicable sales charges, and that the Class B shares purchased may be subject to a contingent deferred sales
charge when redeemed, as described in the Prospectus of each Fund purchased.
By the execution of this Application(s) I/we represent and warrant that I/we have full right, power, and
authority and am/are of legal age in my/our state(s) of residence to make the investment applied for pursuant to
this Application. The person(s), if any, signing on behalf of the investors 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(s). I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF THE GT GLOBAL MUTUAL FUND(S)
IN WHICH I/WE AM/ARE INVESTING.
I/We and my/our assigns and successors understand and agree that the account will be subject to the
telephone exchange and telephone redemption privilege described in the current Prospectus of the GT Global
Mutual Fund(s) in which I/we am/are investing 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 and their officers and
employees will not be liable for any loss or damages arising out of any such telephone, telex, or telegraph
instructions reasonably believed to be genuine, including any such loss due to negligence on the part of any
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., 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 are guaranteed.
Please indicate the number of signatures required to process written redemption
requests: / / one / / two / / three / / four
(If you do not indicate the number of required signatures, ALL account owners must sign 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 either because: (a) I am (or the payee is) exempt from
backup withholding; (b) the Internal Revenue Service ("IRS") 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 IRS has
notified me that I am (or the payee is) no longer subject to backup withholding OR; / / I am (the payee is)
subject to backup withholding.
Note:
Dollar Cost Averaging accounts held in the GT Global Dollar Fund have the following privilege restrictions:
Check writing, telephone redemptions and exchanges. The other GT Global Mutual Funds which receive the monthly
Dollar Cost Averaging transfers enjoy all regular account privileges, including telephone redemptions and
exchanges.
The Dollar Cost Averaging program does not assure a profit and does not protect against loss in declining
markets. Because such a program involves continuous investment in securities regardless of fluctuating price
levels of such securities, you should consider your financial ability to continue purchases through periods of
low price levels.
- ------------------------------------------------------- -------------------------------------------------------
Date For GT Global Use Only
X X
- ------------------------------------------------------- -------------------------------------------------------
X X
- ------------------------------------------------------- -------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
SAN FRANCISCO, CA
94111-4624
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION EXISTING
SHAREHOLDER ACCOUNT NUMBER
</TABLE>
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 same name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
-------------------------------------- / // // // // // // // // /
Owner Social Security Number / / or Tax I.D. Number "TIN" / / (Check applicable box) If
- -------------------------------------- more than one owner social security number or taxpayer identification number should
Co-owner 1 be provided for first owner listed. If a purchase is made under Uniform Gift/Transfer
- -------------------------------------- to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)---------------------------
-------------------------------------- Failure to provide TIN will result in 31% withholding on redemptions and exchanges.
Street Address ( ) ( )
- -------------------------------------- ------------------------------- -------------------------------
City, State, Zip Code Home Telephone Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund selected
for Class A and Class B shares.
Checks should be made payable to "GT Global."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A
Shares / / Class B Shares or / / Advisor Class Advisor Class shares are
sold through a different prospectus than Class A and Class B shares, are not
sold directly to the general public and only available through certain
employee benefit plans, financial institutions and other entities that have
entered into specific agreements with GT Global, Inc. Special account
requirements apply to Advisor Class shares. Please see an Advisor Class
prospectus for complete information.
If a class share box is not checked, your investment will be made in Class A
shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per fund.
<TABLE>
<S> <C> <C> <C> <C>
07 GT GLOBAL WORLDWIDE GROWTH FUND ---------- 13 GT GLOBAL LATIN AMERICA GROWTH FUND ----------
05 GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 24 GT GLOBAL AMERICA SMALL CAP GROWTH FUND ----------
16 GT GLOBAL EMERGING MARKETS FUND ---------- 06 GT GLOBAL AMERICA GROWTH FUND ----------
11 GT GLOBAL HEALTH CARE FUND ---------- 23 GT GLOBAL AMERICA VALUE FUND ----------
15 GT GLOBAL TELECOMMUNICATIONS FUND ---------- 04 GT GLOBAL JAPAN GROWTH FUND ----------
19 GT GLOBAL INFRASTRUCTURE FUND ---------- 10 GT GLOBAL GROWTH & INCOME FUND ----------
17 GT GLOBAL FINANCIAL SERVICES FUND ---------- 09 GT GLOBAL GOVERNMENT INCOME FUND ----------
21 GT GLOBAL NATURAL RESOURCES FUND ---------- 08 GT GLOBAL STRATEGIC INCOME FUND ----------
22 GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 18 GT GLOBAL HIGH INCOME FUND ----------
02 GT GLOBAL NEW PACIFIC GROWTH FUND ---------- 01 GT GLOBAL DOLLAR FUND ----------
03 GT GLOBAL EUROPE GROWTH FUND ----------
Rebalance frequency - check one
/ / Monthly / / Quarterly / / Semi annual / / Total percentage must equal 100%.
Annual
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains distributions and dividends will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions and
dividends in cash.
Investment will be split according to allocation.
</TABLE>
<TABLE>
<S> <C>
AGREEMENTS AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any change or revocation. ANY
CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING WITH ALL SIGNATURES GUARANTEED (IF APPLICABLE).
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock exchange;
(4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary public is NOT an
acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature guarantee requirement should
contact the Transfer Agent.
</TABLE>
<PAGE>
GT GLOBAL INCOME FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, 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 CHANCELLOR LGT ASSET
MANAGEMENT, INC., G.T. INVESTMENT FUNDS, INC., GT GLOBAL GOVERNMENT INCOME
FUND, GT GLOBAL STRATEGIC INCOME FUND, GT GLOBAL HIGH INCOME FUND, GLOBAL
HIGH INCOME PORTFOLIO, OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
INCPR703 MC
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS -- MARCH 1, 1997
- --------------------------------------------------------------------------------
GT GLOBAL GROWTH & INCOME FUND ("FUND") seeks long-term capital appreciation
together with current income. The Fund invests in a global portfolio of both
equity and debt securities, in such relative proportions as deemed most
appropriate by the Fund's investment manager, Chancellor LGT Asset Management,
Inc. (the "Manager"), in view of then-current economic and market conditions.
There can be no assurance that the Fund will achieve its investment objective.
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.
This Prospectus sets forth concisely information an investor should know before
investing and should be read carefully and retained for future reference. A
Statement of Additional Information, dated March 1, 1997, has been filed with
the Securities and Exchange Commission ("SEC") and, as supplemented or amended
from time to time, is incorporated herein by reference. The Statement of
Additional Information is available without charge by writing to the Fund at 50
California Street, San Francisco, California 94111, or by calling (800)
824-1580.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
An investment in the Fund offers the following advantages:
/ / Professional Management by a Leading Manager with Offices in the World's
Major Markets
/ / Low $500 Minimum Investment
/ / Alternative Purchase Plan
/ / Automatic Dividend and Other Distribution Reinvestment at No Additional
Sales Charge
/ / Exchange Privileges with the Corresponding Classes of the Other GT Global
Mutual Funds
/ / Reduced Sales Charge Plans
/ / Dollar Cost Averaging Program
/ / Automatic Investment Plan
/ / Systematic Withdrawal Plan
FOR FURTHER INFORMATION, CALL
(800) 824-1580 OR CONTACT YOUR FINANCIAL 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 GROWTH & INCOME FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 6
Alternative Purchase Plan................................................................. 8
Investment Objective and Policies......................................................... 9
How to Invest............................................................................. 13
How to Make Exchanges..................................................................... 20
How to Redeem Shares...................................................................... 21
Shareholder Account Manual................................................................ 23
Calculation of Net Asset Value............................................................ 24
Dividends, Other Distributions and Federal Income Taxation................................ 24
Management................................................................................ 26
Other Information......................................................................... 29
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus.
<TABLE>
<S> <C> <C>
The Fund: The Fund is a non-diversified series of G.T. Investment Funds, Inc.
Investment Objective: The Fund seeks long-term capital appreciation together with
current income.
Principal Investments: The Fund invests primarily in blue-chip equity securities and high
quality government bonds of issuers located in the United States
and throughout the world.
Principal Risk Factors: There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its portfolio holdings. The
value of debt securities held by the Fund generally fluctuates
inversely with interest rate movements. Certain investment grade
debt securities may possess speculative qualities.
The Fund 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 differ favorably or unfavorably from the U.S.
economy. Changes in foreign currency exchange rates will affect
the Fund's net asset value, earnings and gains and losses realized
on sales of securities. Securities of foreign companies may be
less liquid and their prices more volatile than those of
securities of comparable U.S. companies.
The Fund may engage in certain foreign currency, options and
futures transactions to attempt to hedge against the overall level
of investment and currency risk associated with its present or
planned investments. Such transactions involve certain risks and
transaction costs.
See "Investment Objective and Policies."
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."
Alternative Purchase Plan: Investors may select Class A or Class B shares, each subject to
different expenses and a different sales charge structure.
Class A Shares: Offered at net asset value plus any applicable sales charge
(maximum is 4.75% of public offering price) and subject to service
and distribution fees at the annualized rate of up to 0.35% of the
average daily net assets of the Class A shares.
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Class B Shares: Offered at net asset value (a maximum contingent deferred sales
charge of 5% of the lesser of the shares' net asset value or the
original purchase price is imposed on certain redemptions made
within six years of date of purchase) and subject to service and
distribution fees at the annualized rate of up to 1.00% of the
average daily net assets of the Class B shares.
Shares Available Through: Class A and Class B shares of the Fund's common stock are
available through broker/dealers that have entered into agreements
to sell shares with the Fund's distributor, GT Global, Inc. ("GT
Global"). Shares also may be acquired directly through GT Global
or through exchanges of shares of the other GT Global Mutual
Funds, which are open-end management investment companies advised
and/or administered by the Manager. See "How to Invest" and
"Shareholder Account Manual."
Exchange Privileges: Shares of a class of the Fund may be exchanged without a sales
charge for shares of the corresponding class of other GT Global
Mutual Funds. See "How to Make Exchanges" and "Shareholder Account
Manual."
Redemptions: Shares may be redeemed either through broker/dealers or the Fund's
transfer agent, GT Global Investor Services, Inc. ("Transfer
Agent"). See "How to Redeem Shares" and "Shareholder Account
Manual."
Dividends and Other Dividends are paid quarterly from net investment income; other
Distributions: distributions are paid annually from net short-term capital gain,
net capital gain and net gains from foreign currency transactions,
if any.
Reinvestment: Dividends and other distributions may be reinvested automatically
in Fund shares of the distributing class or in shares of the
corresponding class of other GT Global Mutual Funds without a
sales charge.
First Purchase: $500 minimum ($100 for individual retirement accounts ("IRAs") and
reduced amounts for certain other retirement plans).
Subsequent Purchases: $100 minimum (reduced amounts for IRAs and certain other
retirement plans).
Net Asset Value: Class A and Class B shares are quoted daily in the financial
section of most newspapers.
Other Features:
Class A Shares: Letter of Intent Dollar Cost Averaging Program
Quantity Discounts Automatic Investment Plan
Right of Accumulation Systematic Withdrawal Plan
Reinstatement Privilege Portfolio Rebalancing Program
Class B Shares: Reinstatement Privilege Automatic Investment Plan
Systematic Withdrawal Plan Dollar Cost Averaging Program
Portfolio Rebalancing Program
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transactions costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following tables (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
----------- -----------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases of shares (as a % of offering price)............................. 4.75% None
Sales charges on reinvested distributions to shareholders.......................................... None None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)............................................................................................ None 5.0%
Redemption charges................................................................................. None None
Exchange Fees:
-- On first four exchanges each year............................................................. None None
-- On each additional exchange................................................................... $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees...................................................... 0.97% 0.97%
12b-1 distribution and service fees................................................................ 0.35% 1.00%
Other expenses..................................................................................... 0.34% 0.34%
----------- -----------
Total Fund Operating Expenses........................................................................ 1.66% 2.31%
----------- -----------
----------- -----------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (4)........................................................................ $64 $ 98 $135 $238
Class B Shares:
Assuming a complete redemption at end of period (5)................................... $74 $103 $145 $268
Assuming no redemption................................................................ $24 $ 73 $125 $268
</TABLE>
- ------------------
(1) THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies. THE "HYPOTHETICAL
EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUND'S
ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. The tables and the
assumption in the example of a 5% annual return are required by regulation
of the SEC applicable to all mutual funds. The 5% annual return is not a
prediction of and does not represent the Fund's projected or actual
performance.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase; the charge generally
declines by 1% annually thereafter, reaching zero after six years. See "How
to Invest."
(3) Expenses are based on the Fund's fiscal year ended October 31, 1996. "Other
expenses" include custody, transfer agent, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. The Fund also offers Advisor Class shares
to certain categories of investors. See "Alternative Purchase Plan." Advisor
Class shares are not subject to 12b-1 distribution and service fees.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes payment of the applicable contingent deferred sales charge.
Prospectus Page 5
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed financial information concerning income and
capital changes for one share of each class of shares of the Fund offered
through this Prospectus 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 also is included in the Statement
of Additional Information.
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SEPTEMBER 25,
1990 (COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS) TO
---------------------------------------------------------------- OCTOBER 31,
1996 1995 1994 1993(A) 1992 1991 1990
-------- -------- -------- -------- ------- ------- ------------------
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.25 $ 4.77 $ 4.76
-------- -------- -------- -------- ------- ------- -------
Income from investment operations:
Net investment income................. 0.22 0.24 0.22 0.24* 0.21* 0.27* 0.01*
Net realized and unrealized gain
(loss) on investments................ 0.82 0.13 (0.03) 1.05 0.10 0.47 --
-------- -------- -------- -------- ------- ------- -------
Net increase (decrease) from
investment
operations......................... 1.04 0.37 0.19 1.29 0.31 0.74 0.01
-------- -------- -------- -------- ------- ------- -------
Distributions:
From net investment income............ (0.24) (0.22) (0.21) (0.24) (0.14) (0.26) --
From net realized gain on
investments.......................... (0.04) (0.01) (0.06) -- (0.14) -- --
From sources other than net investment
income............................... -- -- -- (0.04) -- -- --
-------- -------- -------- -------- ------- ------- -------
Total distributions................. (0.28 (0.23) (0.27) (0.28) (0.28) (0.26) --
-------- -------- -------- -------- ------- ------- -------
Net asset value, end of period.......... $ 7.11 $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.25 $ 4.77
-------- -------- -------- -------- ------- ------- -------
-------- -------- -------- -------- ------- ------- -------
Total investment return (e)............. 16.80% 6.27% 3.14% 25.1% 5.9% 15.68% 0.2%(b)
-------- -------- -------- -------- ------- ------- -------
-------- -------- -------- -------- ------- ------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $286,203 $284,069 $317,847 $251,428 $27,754 $71,376 $9,486
Ratio of net investment income to
average net assets..................... 3.17% 3.85% 3.30% 3.3%* 4.1%* 5.0%* 2.9%*(c)
Ratio of expenses to average net assets:
With expense reductions............... 1.59% 1.70% 1.67% 1.8%* 1.9%* 1.9%* 0.6%*(c)
Without expense reductions............ 1.66% 1.74% --%(f) --%(f) --%(f) --%(f) --%(f)
Portfolio turnover rate+++.............. 39% 83% 117% 24% 53% 46% none
Average commision rate per share paid on
portfolio transactions+++.............. $ 0.0139 N/A N/A N/A N/A N/A N/A
<FN>
- ------------------
+ All capital shares issued and outstanding as of October 21, 1992 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 $0.005,
$0.02, $0.03 and $0.01 for the years ended October 31, 1993, 1992, 1991 and
for the period from September 25, 1990 to October 31, 1990, respectively.
Without such reimbursements, the expense ratios would have been 1.93%,
2.20%, 2.46% and 2.40% and the net investment income to average net assets
would have been 3.20%, 3.70%, 4.40% and 1.04% for the years ended October
31, 1993, 1992, 1991 and for the period from September 25, 1990 to October
31, 1990, respectively.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the year.
(b) Not annualized.
(c) Annualized.
(d) Ratios not meaningful due to short period of operation of Class B shares.
(e) Total investment return does not include sales charges.
(f) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
N/A Not applicable.
</TABLE>
Prospectus Page 6
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
CLASS B++
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OCTOBER 22,
YEAR ENDED OCTOBER 31, 1992 TO
---------------------------------------- OCTOBER 31,
1996 1995 1994 1993(A) 1992(A)
-------- -------- -------- -------- -----------
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.29
-------- -------- -------- -------- -----------
Income from investment operations:
Net investment income................. 0.17 0.20 0.18 0.20** 0.01
Net realized and unrealized gain
(loss) on investments................ 0.82 0.13 (0.03) 1.05 (0.02)
-------- -------- -------- -------- -----------
Net increase (decrease) from
investment operations.............. 0.99 0.33 0.15 1.25 (0.01)
-------- -------- -------- -------- -----------
Distributions:
From net investment income............ (0.20) (0.18) (0.17) (0.20) --
From net realized gain on
investments.......................... (0.03) (0.01) (0.06) -- --
From sources other than net investment
income............................... -- -- -- (0.04) --
-------- -------- -------- -------- -----------
Total distributions................. (0.23) (0.19) (0.23) (0.24) --
-------- -------- -------- -------- -----------
Net asset value, end of period.......... $ 7.11 $ 6.35 $ 6.21 $ 6.29 $ 5.28
-------- -------- -------- -------- -----------
-------- -------- -------- -------- -----------
Total investment return (e)............. 16.06% 5.57% 2.48% 24.3% (0.2)%(b)
-------- -------- -------- -------- -----------
-------- -------- -------- -------- -----------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $383,966 $356,796 $359,242 $150,768 $ 280
Ratio of net investment income to
average net assets..................... 2.52% 3.20% 2.65% 2.6%** N/A(d)
Ratio of expenses to average net assets:
With expense reductions............... 2.24% 2.35% 2.32% 2.5%** N/A(d)
Without expense reductions............ 2.31% 2.39% --%(f) --%(f) --%(d)(f)
Portfolio turnover rate+++.............. 39% 83% 117% 24% 53%
Average commission rate per share paid
on portfolio transactions+++........... $ 0.0139 N/A N/A N/A N/A
<FN>
- ------------------
++ Commencing October 22, 1992 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.
* Includes reimbursement by the Manager of Fund operating expenses of $0.005,
$0.02, $0.03 and $0.01 for the years ended October 31, 1993, 1992, 1991 and
for the period from September 25, 1990 to October 31, 1990, respectively.
Without such reimbursements, the expense ratios would have been 1.93%,
2.20%, 2.46% and 2.40% and the net investment income to average net assets
would have been 3.20%, 3.70%, 4.40% and 1.04% for the years ended October
31, 1993, 1992, 1991 and for the period from September 25, 1990 to October
31, 1990, respectively.
** Includes reimbursement by the Manager of Fund operating expenses of $0.005.
Without such reimbursements, the expense ratio would have been 2.6%, and
the net investment income to average net assets would have been 2.5%.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the year.
(b) Not annualized.
(c) Annualized.
(d) Ratios not meaningful due to short period of operation of Class B shares.
(e) Total investment return does not include sales charges.
(f) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
N/A Not applicable.
</TABLE>
Prospectus Page 7
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
ALTERNATIVE PURCHASE PLAN
- --------------------------------------------------------------------------------
DIFFERENCES BETWEEN THE CLASSES. The primary difference between the two classes
of the Fund's shares offered through this Prospectus lies in their sales charge
structures and ongoing expenses, as summarized below. Class A and Class B shares
of the Fund represent interests in the same Fund and have the same rights,
except that each class bears the separate expenses of its Rule 12b-1
distribution plan and has exclusive voting rights with respect to such plan, and
each class has a separate exchange privilege. See "Management" and "How to
Exchange Shares." Each class has distinct advantages and disadvantages for
different investors, and investors should choose the class that better suits
their circumstances and objectives.
CLASS A SHARES. Class A shares are sold at net asset value plus an initial sales
charge of up to 4.75% of the public offering price imposed at the time of
purchase. This initial sales charge is reduced or waived for certain purchases.
Purchases of $500,000 or more must be for Class A shares. Class A shares of the
Fund also bear annual service and distribution fees of up to 0.35% of the
average daily net assets of that class.
CLASS B SHARES. Class B shares are sold at net asset value with no initial sales
charge at the time of purchase. Therefore, the entire amount of an investor's
purchase payment is invested in the Fund. Class B shares bear annual service and
distribution fees of up to 1.00% of the average daily net assets of that class,
and Class B shareholders pay a contingent deferred sales charge of up to 5% of
the lesser of the original purchase price or the net asset value of such shares
at the time of redemption. The higher service and distribution fees paid by the
Class B shares of the Fund should cause that class to have a higher expense
ratio and to pay lower per share dividends than Class A shares of the Fund.
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES. In deciding which class of
shares of the Fund to purchase, investors should consider the foregoing factors
as well as the following:
INTENDED HOLDING PERIOD. Over time, the cumulative expense of the 1.00% annual
service and distribution fees on the Class B shares will approximate or exceed
the expense of the applicable 4.75% maximum initial sales charge plus the 0.35%
service and distribution fees on the Class A shares. For example, if net asset
value remains constant, the Class B shares' aggregate service and distribution
fees would be equal to the Class A shares' initial maximum sales charge and
service and distribution fees approximately seven years after purchase.
Thereafter, Class B shares would experience higher cumulative expenses.
Investors who expect to maintain their investment in the Fund over the long-term
but do not qualify for a reduced initial sales charge, might elect the Class A
initial sales charge alternative because the indirect expense to the shareholder
of the accumulated service and distribution fees on the Class B shares
eventually will exceed the initial sales charge paid by the shareholder plus the
indirect expense to the shareholder of the accumulated distribution fees of
Class A shares. Class B investors, however, enjoy the benefit of permitting all
their dollars to work from the time the investments are made. Any positive
investment return on this additional invested amount would partially or wholly
offset the higher annual expenses borne by Class B shares. Because the Funds'
future returns cannot be predicted, however, there can be no assurance that such
a positive return will be achieved.
Finally, Class B shareholders pay a contingent deferred sales charge if they
redeem during the first six years after purchase, unless a sales charge waiver
applies. Investors expecting to redeem during this period should consider the
cost of the applicable contingent deferred sales charge in addition to the
annual Class B service and distribution fees, as compared with the cost of the
applicable initial sales charge and the annual service and distribution fees
applicable to the Class A shares.
REDUCED SALES CHARGES. Class A share purchases of $50,000 or more and Class A
share purchases made under the Fund's reduced sales charge plans may be made at
a reduced initial sales charge. See "How to Invest" for a complete list of
reduced sales charges applicable to Class A purchases.
WAIVER OF SALES CHARGES. The entire initial sales charge on Class A shares of
the Fund is waived for certain eligible purchasers and these purchasers' entire
purchase price would be immediately invested in the Fund. Investors eligible for
complete
Prospectus Page 8
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
initial sales charge waivers should purchase Class A shares. The contingent
deferred sales charge is waived for certain redemptions of Class B shares. A 1%
contingent deferred sales charge is imposed on certain redemptions of Class A
shares on which no initial sales charge was assessed.
Investors should understand that the contingent deferred sales charge on the
Class B shares and the initial sales charge on the Class A shares are both
intended to compensate GT Global and selling broker/dealers for their
distribution services. Broker/dealers may receive different levels of
compensation for selling a particular class of shares of the Fund.
See "How to Invest," "How to Redeem Shares," and "Management" for a more
complete description of the initial and contingent deferred sales charges,
service fees and distribution fees for Class A and Class B shares of the Fund
and "Dividends, Other Distributions and Federal Income Taxation" and
"Calculation of Net Asset Value" for other differences between these two
classes.
ADVISOR CLASS SHARES. Advisor Class shares are offered through a separate
prospectus to (a) trustees or other fiduciaries purchasing shares for employee
benefit plans that are sponsored by organizations that 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; (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.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term capital appreciation together with
current income. The Fund seeks its objective by investing in a global portfolio
of both equity and debt securities, allocated among diverse international
markets. There is no assurance that the Fund's investment objective will be
achieved.
At least 65% of the Fund's total assets normally will be invested in a
combination of blue-chip equity securities and high quality government bonds.
The Fund considers an equity security to be "blue chip" if: (i) during the
issuer's most recent fiscal year the security offered an above average dividend
yield relative to the latest reported dividend yield on the Morgan Stanley
Capital International World Index; AND (ii) the total equity market
capitalization of the issuer is at least $1 billion. Government bonds are deemed
to be high quality if at the time of the Fund's investment they are rated within
one of the two highest ratings categories of Moody's Investors Service, Inc.
("Moody's") or by Standard and Poor's Ratings Group ("S&P"), or, if not rated,
are deemed to be of equivalent quality in the judgment of the Manager.
Up to 35% of the Fund's total assets may be invested in other equity securities
and investment grade government and corporate debt obligations which the Manager
believes will assist the Fund in achieving its objective. "Investment grade"
debt securities are those rated within one of the four highest ratings
categories of Moody's or S&P, or, if not rated, deemed to be of equivalent
quality in the judgment of the Manager.
Equity securities which the Fund may purchase include common stocks, preferred
stocks and warrants to acquire such stocks and other equity securities.
Government bonds that the Fund may purchase include debt obligations issued or
guaranteed by the United States or foreign governments (including foreign
states, provinces or municipalities) or their agencies, authorities or
instrumentalities and debt obligations of supranational entities organized or
supported by several national governments, such as the World Bank and the Asian
Development Bank. The debt obligations held by the Fund may include debt
obligations convertible into equity securities or having attached warrants or
rights to purchase equity securities. The Fund may purchase securities that are
issued
Prospectus Page 9
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
by the government or a corporation or financial institution of one nation but
denominated in the currency of another nation (or a multinational currency
unit).
According to the Manager, as of the date of this Prospectus, more than 50% of
the total equity market capitalization worldwide is represented by non-U.S.
equity securities, and more than 50% of the value of all outstanding government
debt obligations throughout the world is represented by obligations denominated
in currencies other than the U.S. dollar. Moreover, from time to time the equity
and debt securities of issuers located outside the United States have
substantially outperformed the equity and debt securities of U.S. issuers.
Accordingly, the Manager believes that the Fund's policy of investing in a
global portfolio of equity and debt securities may enable the achievement of
long-term results superior to those produced by mutual funds with similar
objectives to that of the Fund that invest solely in U.S. equity and debt
securities.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. Consistent with the Fund's
investment objective, the Manager employs a conservative investment style in
managing the Fund's assets. In so doing the Manager attempts to limit volatility
and risk to capital. The Manager allocates the Fund's assets among securities of
countries and in currency denominations where opportunities for meeting the
Fund's investment objective are expected to be the most attractive. The Manager
attempts to identify those countries and industries where economic and political
factors are likely to produce above-average growth rates and to further identify
companies in such countries and industries that are best positioned and managed
to benefit from these factors.
The Fund currently contemplates that it will invest principally in securities of
issuers in the United States, Canada, Japan, Western Europe, New Zealand and
Australia. The Fund may invest substantially in securities denominated in one or
more currencies. Under normal conditions, the Fund invests in issuers of not
less than three different countries and issuers of any one country, other than
the United States, will represent no more than 40% of the Fund's total assets.
The relative proportions of equity and debt securities held by the Fund at any
one time will vary, depending upon the Manager's assessment of global political
and economic conditions and the relative strengths and weaknesses of the world
equity and debt markets. To enable the Fund to respond to general economic
changes and market conditions around the world, the Fund is authorized to invest
up to 100% of its total assets in either equity securities or debt securities.
In selecting equity securities for investment, the Manager attempts to identify
and acquire only securities it deems to represent high or improving investment
quality. Securities representing high investment quality generally will include
those of well-known, established and successful issuers that the Manager
believes will continue to be successful in the future. Securities representing
improving investment quality may include those of an issuer that has improved
its sales or earnings or of an issuer the balance sheet and financial condition
of which is improving. The Manager seeks to avoid investing in equity securities
that appear overly speculative or risky, even if they have attractive features
or investment potential.
In evaluating debt securities considered for the Fund, the Manager analyzes
their yield, maturity, issue classification and quality characteristics, coupled
with expectations regarding local and world economies, movements in the general
level and term of interest rates, currency values, political developments, and
variations in the supply of funds available for investment in the world bond
market relative to the demands placed upon it. There are no limitations on the
maximum or minimum maturities of the debt securities considered by the Fund or
on the average weighted maturity of the debt portion of the Fund's portfolio.
Should the rating of a debt security be revised while such security is owned by
the Fund, the Manager will evaluate what action, if any, is appropriate with
respect to such security.
The Manager generally evaluates currencies on the basis of fundamental economic
criteria (e.g., relative inflation and interest rate levels and trends, growth
rate forecasts, balance of payments status and economic policies) as well as
technical and political data. The Fund may seek to protect itself against
negative currency movements by engaging in hedging techniques through the use of
options, futures and forward currency contracts.
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, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and/or invest any portion or
all of its assets in high quality money
Prospectus Page 10
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
market instruments of U.S. or foreign issuers. In addition, for temporary
defensive purposes, most or all of the Fund's investments may be made in the
United States and denominated in U.S. dollars. To the extent the Fund adopts a
temporary defensive posture, it will not be invested so as to directly achieve
its investment objective. In addition, pending investment of proceeds from new
sales of Fund shares or in order to meet ordinary daily cash needs, the Fund may
hold cash (U.S. dollars, foreign currencies or multinational currency units) and
may invest in foreign or domestic high quality money market instruments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of Fund
shares. The Fund also may borrow up to 5% of its total assets for temporary or
emergency purposes other than to meet redemptions. The Fund may borrow up to
33 1/3% of its total assets. However, the Fund will not purchase securities
while borrowings in excess of 5% of the Fund's total assets are outstanding. Any
borrowing by the Fund may cause greater fluctuation in the value of its shares
than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows the Fund to
retain ownership of the securities loaned and, at the same time, earn additional
income that may be used to offset the Fund's custody fees. The Fund 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 Fund's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable letters of credit equal
to at least 100% of 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.
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 Fund's net investment income from foreign issuers may be subject
to non-U.S. withholding taxes, thereby reducing the Fund's net investment
income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Fund, political or social instability, or diplomatic or
economic developments which could affect the Fund's investments in those
countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, rate of savings and capital reinvestment, resource
self-sufficiency and balance of payments positions. Investments in foreign
government securities involve special risks, including the risk that the
government issuers may be unable or unwilling to repay principal and interest
when due.
The Fund will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. To attempt to increase
return, the Fund may write call options on securities. This strategy will be
employed only when, in the opinion of the Manager, the size of the premium the
Fund receives for writing the option is adequate to
Prospectus Page 11
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
compensate the Fund against the risk that appreciation in the underlying
security may not be fully realized if the option is exercised. The Fund also is
authorized to write put options to attempt to enhance return, although it does
not have the current intention of so doing.
The Fund may also use forward currency contracts, futures contracts, options on
securities, options on currencies, options on indices and options on futures
contracts to attempt to hedge against the overall level of investment and
currency risk normally associated with the Fund's investments. These instruments
are often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency, or an index of securities). The
Fund may enter into such instruments up to the full value of its portfolio
assets. See "Options, Futures and Currency Strategies" in the Statement of
Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar, or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to the
Fund's portfolio positions. The Fund also may purchase and sell put and call
options on currencies, futures contracts on currencies and options on such
futures contracts to hedge the Fund's portfolio against movements in exchange
rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Manager intends to include in the Fund's
portfolio. The Fund also may purchase and sell put and call options on stock
indices to hedge against overall fluctuations in the securities markets or in a
specific market sector.
Further, the Fund may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or a specific market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general market or market sector advance and thereby attempt to lessen the cost
of future securities acquisitions. Similarly, the Fund may use interest rate
futures contracts and options thereon to hedge the debt portion of its portfolio
against changes in the general level of interest rates.
Although the Fund is authorized to enter into options, futures and forward
currency transactions, the Fund 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
and movements in interest rates and currency markets; (2) imperfect correlation,
or even no correlation, between movements in the price of forward contracts,
options, futures contracts or options thereon and movements in the price of the
currency or security hedged or used for cover; (3) the fact that the skills and
techniques needed to trade options, futures contracts and options thereon or to
use forward currency contracts are different from those needed to select the
securities in which the Fund invests; (4) the lack of assurance that a liquid
secondary market will exist for any particular option, futures contract or
option thereon at any particular time; (5) the possible loss of principal under
certain conditions; (6) the possible inability of the Fund to purchase or sell a
portfolio security at a time when it would otherwise be favorable for it to do
so, or the possible need for the Fund to sell a security at a disadvantageous
time, due to the need for the Fund to maintain "cover" or to set aside
securities in connection with hedging transactions; and (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.
OTHER POLICIES AND RISKS. The Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its portfolio positions. Equity securities,
particularly common stocks, generally represent the most junior position in an
issuer's capital structure, and entitle holders to an interest in the assets of
an issuer, if any, remaining after all more senior claims have been satisfied.
In addition, the value of debt securities held by the Fund generally will
fluctuate with changes in the perceived creditworthiness of the issuers of such
securities and movements in interest rates. Investment grade
Prospectus Page 12
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
debt securities rated Baa by Moody's are described by Moody's as having
speculative characteristics, and therefore may be affected by economic
conditions and changes in the circumstances of their issuers to a greater extent
than higher rated bonds.
The Fund may invest up to 10% of its net assets in illiquid securities and other
securities for which no readily available market exists. The Fund may also
invest up to 5% of its total assets in a combination of securities purchased on
a when-issued basis or with respect to which it has entered into forward
commitment agreements.
The Fund is classified under the Investment Company Act of 1940, as amended
("1940 Act") as a "non-diversified" fund. As a result, the Fund will be able to
invest in a fewer number of issuers than if it were classified under the 1940
Act as a "diversified" fund. To the extent that the Fund invests in a smaller
number of issuers, the value of the Fund's shares may fluctuate more widely and
the Fund may be subject to greater investment and credit risk with respect to
its portfolio.
OTHER INFORMATION. The Fund's investment objective may not be changed without
the approval of a majority of the Fund's outstanding voting securities. A
"majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this Prospectus
and in the Statement of Additional Information may be changed by a vote of a
majority of the Company's Board of Directors without shareholder approval. The
Fund's policies regarding lending, and the percentage of Fund assets that may be
committed to borrowing, are fundamental policies and may not be changed without
shareholder approval.
- --------------------------------------------------------------------------------
HOW TO INVEST
- --------------------------------------------------------------------------------
GENERAL. All purchase orders will be executed at the public offering price next
determined after the purchase order is received, which includes any applicable
sales charge for Class A shares. Orders received before the close of regular
trading on the New York Stock Exchange ("NYSE") (currently 4:00 P.M. Eastern
time, unless weather, equipment failure or other factors contribute to an
earlier closing time) on any Business Day will be executed at the public
offering price for the applicable class of shares determined that day. A
"Business Day" is any day Monday through Friday on which the NYSE is open for
business. The minimum initial investment is $500 ($100 for IRAs and $25 for
custodial accounts under Code Section 403(b)(7) and other tax-qualified
employer-sponsored retirement accounts, if made by such investors under a
systematic investment plan providing for monthly or quarterly payments of at
least that amount), and the minimum for additional purchases is $100 (with a $25
minimum for IRAs, Code Section 403(b)(7) custodial accounts and other
tax-qualified employer-sponsored retirement accounts, as mentioned above). THE
FUND AND GT GLOBAL RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER AND TO SUSPEND
THE OFFERING OF SHARES FOR A PERIOD OF TIME. In particular, the Fund 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."
WHEN PLACING PURCHASE ORDERS, INVESTORS SHOULD SPECIFY WHETHER THE ORDER IS FOR
CLASS A OR CLASS B SHARES OF THE FUND. ALL PURCHASE ORDERS THAT FAIL TO SPECIFY
A CLASS WILL AUTOMATICALLY BE INVESTED IN CLASS A SHARES. PURCHASES OF $500,000
OR MORE MUST BE FOR CLASS A SHARES.
PURCHASES THROUGH BROKER/DEALERS. Shares of the Fund may be purchased through
broker/dealers with which GT Global has entered into dealer agreements. Orders
received by such broker/dealers before the close of regular trading on the NYSE
on a Business Day will be effected that day, provided that such order is
transmitted to the Transfer Agent prior to its close of business on such day.
The
Prospectus Page 13
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
broker/dealer will be responsible for forwarding the investor's order to the
Transfer Agent so that it will be received prior to such time. After an initial
investment is made and a shareholder account is established through a
broker/dealer, at the investor's option, subsequent purchases may be made
directly through GT Global. See "Shareholder Account Manual."
Broker/dealers that do not have dealer agreements with GT Global also may offer
to place orders for the purchase of shares. Purchases made through such
broker/dealers will be effected at the public offering price next determined
after the order is received by the Transfer Agent. Such a broker/ dealer may
charge the investor a transaction fee as determined by the broker/dealer. That
fee will be in addition to the sales charge payable by the investor with respect
to Class A shares, and may be avoided if shares are purchased through a broker/
dealer that has a dealer agreement with GT Global or directly through GT Global.
PURCHASES THROUGH THE DISTRIBUTOR. Investors may purchase shares and open an
account directly through GT Global, the Fund's distributor, by completing and
signing an Account Application accompanying this Prospectus. Investors should
mail to the Transfer Agent the completed Application together with a check to
cover the purchase in accordance with the instructions provided in the
Shareholder Account Manual. Purchases will be executed at the public offering
price next determined after the Transfer Agent has received the Account
Application and check. Subsequent investments do not need to be accompanied by
an application.
Investors also may purchase shares of the Fund through GT Global by bank wire.
Bank wire purchases will be effected at the next determined public offering
price after the bank wire is received. A wire investment is considered received
when the Transfer Agent is notified that the bank wire has been credited to the
Fund. The investor is responsible for providing prior telephonic or facsimile
notice to the Transfer Agent that a bank wire is being sent. An investor's bank
may charge a service fee for wiring money to the Fund. The Transfer Agent
currently does not charge a service fee for facilitating wire purchases, but
reserves the right to do so in the future. Investors desiring to open an account
by bank wire should call the Transfer Agent at the appropriate toll-free number
provided in the Shareholder Account Manual to obtain an account number and
detailed instructions.
CERTIFICATES. Physical certificates representing the Fund's shares will not be
issued unless a written request is submitted to the Transfer Agent. Shares of
the Fund are recorded on a register by the Transfer Agent, and shareholders who
do not elect to receive certificates have the same rights of ownership as if
certificates had been issued to them. Redemptions and exchanges by shareholders
who hold certificates may take longer to effect than similar transactions
involving non-certificated shares because the physical delivery and processing
of properly executed certificates is required. ACCORDINGLY, THE FUND AND GT
GLOBAL RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PURCHASING CLASS A SHARES
The Fund's public offering price for Class A shares is the next determined net
asset value per share (see "Calculation of Net Asset Value") including any sales
charge determined in accordance with the following schedule:
<TABLE>
<CAPTION>
SALES CHARGE AS PERCENTAGE OF DEALER
AMOUNT OF REALLOWANCE AS
PURCHASE ------------------------------ PERCENTAGE OF
AT THE PUBLIC OFFERING NET THE OFFERING
OFFERING PRICE PRICE INVESTMENT PRICE
- ---------------- ------------- --------------- -------------------
<S> <C> <C> <C>
Less than
$50,000....... 4.75% 4.99% 4.25%
$50,000 but less
than
$100,000...... 4.00% 4.17% 3.50%
$100,000 but
less than
$250,000...... 3.00% 3.09% 2.75%
$250,000 but
less than
$500,000...... 2.00% 2.04% 1.75%
$500,000 or
more.......... 0.00% 0.00% *
</TABLE>
- ------------------
* GT Global will pay the following commissions to broker/ dealers that
initiate and are responsible for purchases by any single purchaser of Class
A shares of $500,000 or more in the aggregate: 1.00% of the purchase amount
up to $3 million, plus 0.50% on the excess over $3 million. For purposes of
determining the appropriate commission to be paid in connection with the
transaction, GT Global will combine purchases made by a broker/dealer on
behalf of a single client so that the broker/dealer's commission, as
outlined above, will be based on the aggregate amount of such client's share
purchases over a rolling twelve month period from the date of the
transaction.
All shares purchased without a sales charge based on the aggregate purchase
amount equalling at least $500,000 will be subject to a contingent deferred
sales charge, for the first year after their purchase equal to 1% of the lower
of the original purchase price or the net asset value of such shares at the time
of redemption. See "Contingent Deferred Sales Charge -- Class A Shares."
From time to time, GT Global may reallow to broker/ dealers the full amount of
the sales charge or may
Prospectus Page 14
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
pay out additional amounts to broker/dealers who sell Class A shares. In some
instances, GT Global may offer these reallowances or additional payments only to
broker/dealers that have sold or may sell significant amounts of Class A shares.
To the extent that GT Global reallows the full amount of the sales charge to
broker/dealers, such broker/dealers may be deemed to be underwriters under the
Securities Act of 1933, as amended. Commissions also may be paid to
broker/dealers and other financial institutions that initiate purchases made
pursuant to sales charge waivers (i) and (vii), described below under "Sales
Charge Waivers -- Class A Shares."
The following purchases may be aggregated for purposes of determining the
"Amount of Purchase":
(a) Individual purchases on behalf of a single purchaser, the purchaser's spouse
and their children under the age of 21 years including purchases in connection
with an employee benefit plan or plans exclusively for the benefit of such
individual(s), such as an IRA, individual Code Section 403(b) plan or
single-participant, self-employed individual retirement plan ("Keogh Plan") and
purchases made by a company controlled by such individual(s);
(b) Individual purchases by a trustee or other fiduciary purchasing shares for a
single trust estate or a single fiduciary account, including an employee benefit
plan (such as employer-sponsored pension, profit-sharing and stock bonus plans,
including plans under Code Section 401(k), and medical, life and disability
insurance trusts) other than a plan described in "(a)" above;
and
(c) Individual purchases by a trustee or other fiduciary purchasing shares
concurrently for two or more employee benefit plans of a single employer or of
employers affiliated with each other (again excluding an employee benefit plan
described in "(a)" above).
SALES CHARGE WAIVERS -- CLASS A SHARES. Class A shares are sold at net asset
value without imposition of sales charges when investments are made by the
following classes of investors:
(i) Trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations that have at least 100 but less than 1,000
employees, and trustees or other fiduciaries purchasing shares for employee
benefit plans which are sponsored by organizations with collective retirement
plan assets of $500,000 or more and have less than 100 employees, and purchases
of at least $500,000 by trustees or other fiduciaries of employee benefit plans
with collective retirement plan assets of $100 million or more.
(ii) Current or retired Trustees, Directors and officers of the investment
companies for which the Manager serves as investment manager and/or
administrator; employees or retired employees of the companies composing
Liechtenstein Global Trust or affiliated companies of Liechtenstein Global
Trust; the children, siblings and parents of the persons in the foregoing
categories; and trusts primarily for the benefit of such persons.
(iii) Registered representatives or full-time employees of broker/dealers that
have entered into dealer agreements with GT Global, and the children, siblings
and parents of such persons, and employees of financial institutions that
directly, or through their affiliates, have entered into dealer agreements with
GT Global (or that otherwise have an arrangement with respect to sales of Fund
shares with a broker/dealer that has entered into a dealer agreement with GT
Global) and the children, siblings and parents of such employees.
(iv) Companies exchanging shares with or selling assets to one or more of the GT
Global Mutual Funds pursuant to a merger, acquisition or exchange offer.
(v) Shareholders of any of the GT Global Mutual Funds as of April 30, 1987 who
since that date continually have owned shares of one or more of the GT Global
Mutual Funds.
(vi) Purchases made through the automatic investment of dividends and other
distributions paid by any of the other GT Global Mutual Funds.
(vii) Registered investment advisers, trust companies and bank trust departments
exercising DISCRETIONARY investment authority with respect to the money to be
invested in the GT Global Mutual Funds provided that the aggregate amount
invested pursuant to this sales charge waiver is at least $500,000, and further
provided that such money is not eligible to be invested in the Advisor Class.
(viii) Clients of administrators of tax-qualified employee benefit plans which
have entered into agreements with GT Global.
(ix) Retirement plan participants who borrow from their retirement accounts by
redeeming GT Global Mutual Fund shares and subsequently repay such loans via a
purchase of Fund shares.
Prospectus Page 15
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
(x) Retirement plan participants who receive distributions from a tax-qualified
employer-sponsored retirement plan which is invested in GT Global Mutual Funds,
the proceeds of which are reinvested in Fund shares.
(xi) Accounts not eligible for the Advisor Class as to which a financial
institution or broker/dealer charges an account management fee, provided the
financial institution or broker/dealer has entered into an agreement with GT
Global regarding such accounts.
(xii) Certain former AMA Investment Advisers' shareholders who became
shareholders of the GT Global Health Care Fund in October 1989, and who have
continuously held shares in the GT Global Mutual Funds since that time.
(xiii) An investor purchasing shares of the Fund with redemption proceeds from a
registered management investment company that is not one of the GT Global Mutual
Funds, on which the investor was subject to a front-end sales charge or a
contingent deferred sales charge.
REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in the
Fund have a one-time privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of the Fund and/or one or more of the other GT Global Mutual Funds. The
Transfer Agent must receive from the investor or the investor's broker within
180 days after the date of the redemption both a written request for
reinvestment and a check not exceeding the amount of the redemption proceeds.
The reinstatement purchase will be effected at the net asset value per share
next determined after such receipt. Gain on the redemption is taxable
notwithstanding exercise of the reinvestment privilege. See "Dividends, Other
Distributions and Federal Income Taxation -- Taxes."
REDUCED SALES CHARGE PLANS -- CLASS A SHARES. Class A shares of the Fund may be
purchased at reduced sales charges either through the Right of Accumulation or
under a Letter of Intent. For more details on these plans, investors should
contact their broker/dealers or the Transfer Agent.
RIGHT OF ACCUMULATION. Pursuant to the Right of Accumulation, investors are
permitted to purchase shares of the Fund at the sales charge applicable to the
total of (a) the dollar amount then being purchased plus (b) the dollar amount
of the investor's concurrent purchases of other GT Global Mutual Funds (other
than GT Global Dollar Fund) plus (c) the price of all shares of GT Global Mutual
Funds (other than shares of GT Global Dollar Fund not acquired by exchange)
already held by the investor. To receive the Right of Accumulation, at the time
of purchase investors must give their brokers, the Transfer Agent or GT Global
sufficient information to permit confirmation of qualification. THE FOREGOING
RIGHT OF ACCUMULATION APPLIES ONLY TO CLASS A SHARES OF THE FUND AND OTHER GT
GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
LETTER OF INTENT. In executing a Letter of Intent ("LOI") an investor indicates
an aggregate investment amount he or she intends to invest in the Class A shares
of the Fund and the Class A shares of other GT Global Mutual Funds (other than
GT Global Dollar Fund) in the following thirteen months. The LOI is included as
part of the Account Application located at the end of this Prospectus. The sales
charge applicable to that aggregate amount then becomes the applicable sales
charge on all purchases made concurrently with the execution of the LOI and in
the thirteen months following that execution. If an investor executes an LOI
within 90 days of a prior purchase of GT Global Mutual Fund Class A shares
(other than shares of GT Global Dollar Fund), the prior purchase may be included
under the LOI and an appropriate adjustment, if any, with respect to the sales
charges paid by the investor in connection with the prior purchase will be made,
based on the then-current net asset value(s) of the pertinent Fund(s).
If at the end of the thirteen month period covered by the LOI the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the reduced rate and the
sales charges applicable to the purchases actually made. Shares having a value
equal to 5% of the amount specified in the LOI will be held in escrow during the
thirteen month period (while remaining registered in the investor's name) and
are subject to redemption to assure any necessary payment to GT Global of a
higher applicable sales charge.
For purposes of an LOI, any registered investment adviser, trust company or bank
trust department which exercises investment discretion and which intends within
thirteen months to invest $500,000 or more can be treated as a single purchaser,
provided further that such entity places all purchase and redemption orders.
Such entities should be prepared to establish their qualification
Prospectus Page 16
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
for such treatment. THE FOREGOING LOI APPLIES ONLY TO CLASS A SHARES OF THE FUND
AND OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES. Purchases of Class A shares
of $500,000 or more may be made without a sales charge. If a shareholder within
one year after the date of purchase redeems any Class A shares that were
purchased without a sales charge by reason of a purchase of $500,000 or more, a
contingent deferred sales charge of 1% of the lower of the original purchase
price or the net asset value of such shares at the time of redemption will be
charged. Class A shares will not be subject to the contingent deferred sales
charge to the extent that the value of such shares represents (1) reinvestment
of dividends or other distributions or (2) shares redeemed more than one year
after their purchase. Such shares purchased without a sales charge may be
exchanged for Class A shares of another GT Global Mutual Fund (other than GT
Global Dollar Fund) without the imposition of a contingent deferred sales
charge, although the contingent deferred sales charge described above will apply
to the redemption of the shares acquired through an exchange. The waivers set
forth under "Contingent Deferred Sales Charge Waivers" below apply to
redemptions of Class A shares upon which a contingent deferred sales charge
would otherwise be imposed. For federal income tax purposes, the amount of the
contingent deferred sales charge will reduce the gain or increase the loss, as
the case may be, on the amount realized on redemption. The amount of any
contingent deferred sales charge will be paid to GT Global.
PURCHASING CLASS B SHARES
Each Fund's public offering price for Class B shares of the Fund is the next
determined net asset value per share. See "Calculation of Net Asset Value." No
initial sales charge is imposed. A contingent deferred sales charge, however, is
imposed on certain redemptions of Class B shares. Because Class B shares are
sold without an initial sales charge, the Fund receives the full amount of the
investor's purchase payment.
Class B shares will not be subject to a contingent deferred sales charge to the
extent that the value of such shares represents: (1) reinvestment of dividends
or other distributions or (2) shares redeemed more than six years after their
purchase. Redemptions of most other Class B shares will be subject to a
contingent deferred sales charge. See "Contingent Deferred Sales Charge
Waivers." The amount of any applicable contingent deferred sales charge will be
calculated by multiplying the lesser of the original purchase price or the net
asset value of such shares at the time of redemption by the applicable
percentage shown in the table below:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE OF THE
LESSER OF NET ASSET VALUE AT
REDEMPTION
OR THE ORIGINAL
REDEMPTION DURING PURCHASE PRICE
- ------------------------------ -----------------------------
<S> <C>
1st Year Since Purchase....... 5%
2nd Year Since Purchase....... 4%
3rd Year Since Purchase....... 3%
4th Year Since Purchase....... 3%
5th Year Since Purchase....... 2%
6th year Since Purchase....... 1%
Thereafter.................... 0%
</TABLE>
In determining whether a contingent deferred sales charge is applicable. It will
be assumed that the redemption is made first of shares acquired pursuant to the
reinvestment of dividends and distributions; then of shares purchased seven
years or more prior to the redemption; and finally, of shares held for the
longest period of time within the applicable six-year period. For shares
acquired in an exchange, the length of the holding period will be measured from
the date of original purchase.
For example, assume an investor purchased 100 shares at $10 per share for a cost
of $1,000. Subsequently, the shareholder acquired 15 additional shares through
dividend reinvestment. During the second year after the purchase the investor
decided to redeem $500 of his or her investment. Assuming at the time of the
redemption a net asset value of $11 per share, the value of the investor's
shares would be $1,265 (115 shares at $11 per share). The contingent deferred
sales charge would not be applied to the value of the reinvested dividend
shares. Therefore, the 15 shares currently valued at $165.00 would be redeemed
without a contingent deferred sales charge. The number of shares needed to fund
the remaining $335.00 of the redemption would equal 30.455. Using the lower of
cost or market price to determine the contingent deferred sales charge the
original purchase price of $10.00 per share would be used. The contingent
deferred sales charge calculation would therefore be 30.455 shares times $10.00
per share at a contingent deferred sales charge rate of 4% (the applicable rate
in the second year after purchase) for a total contingent deferred sales charge
of $12.18.
For federal income tax purposes, the amount of the contingent deferred sales
charge will reduce the
Prospectus Page 17
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
gain or increase the loss, as the case may be, on the amount realized on
redemption. The amount of any contingent deferred sales charge will be paid to
GT Global.
CONTINGENT DEFERRED
SALES CHARGE WAIVERS
The contingent deferred sales charge will be waived for (1) exchanges, as
described below; (2) redemptions in connection with the Fund's systematic
withdrawal plan not in excess of 12% of the value of the account annually; (3)
total or partial redemptions made within one year following the death or
disability of a shareholder; (4) minimum required distributions made in
connection with a GT Global IRA, Keogh Plan or custodial account under Section
403(b) of the Code or other retirement plan following attainment of age 70 1/2;
(5) total or partial redemptions resulting from a distribution following
retirement in the case of a tax-qualified employer-sponsored retirement plan;
(6) when a redemption results from a tax-free return of an excess contribution
pursuant to Section 408(d)(4) or (5) of the Code or from the death or disability
of the employee; (7) a one-time reinvestment in Class B shares of the Fund
within 180 days of a prior redemption; and (8) redemptions pursuant to the
Fund's right to liquidate a shareholder's account involuntarily; (9) redemptions
pursuant to distributions from a tax-qualified employer-sponsored retirement
plan, which is invested in GT Global Mutual Funds, which are permitted to be
made without penalty pursuant to the Code (other than tax-free rollovers or
transfers of assets) and the proceeds of which are reinvested in GT Global
Mutual Funds; (10) redemptions made in connection with participant-directed
exchanges between options in an employer-sponsored benefit plan; (11)
redemptions made for the purpose of providing cash to fund a loan to a
participant in a tax-qualified retirement plan; (12) redemptions made in
connection with a distribution from any retirement plan or account that is
permitted in accordance with the provisions of Section 72(t)(2) of the Code, and
the regulations promulgated thereunder; (13) redemptions made in connection with
a distribution from any retirement plan or account that involves the return of
an excess deferral amount pursuant to Section 401(k)(8) or Section 402(g)(2) of
the Code or the return of excess aggregate contributions pursuant to Section
401(m)(6) of the Code; (14) redemptions made in connection with a distribution
(from a qualified profit-sharing or stock bonus plan described in Section 401(k)
of the Code) to a participant or beneficiary under Section 401(k)(2)(B)(IV) of
the Code upon hardship of the covered employee determined pursuant to Treasury
Regulation Section 1.401(k)-1(d)(2); and (15) redemptions made by or for the
benefit of certain states, counties or cities, or any instrumentalities,
departments or authorities thereof, where such entities are prohibited or
limited by applicable law from paying a sales charge or commission.
PROGRAMS APPLICABLE TO CLASS A SHARES AND CLASS B SHARES
AUTOMATIC INVESTMENT PLAN. Investors may purchase either Class A or Class B
shares of the Fund through the GT Global Automatic Investment Plan. Under this
Plan, an amount specified by the shareholder of $100 or more ($25 or more for
IRAs, Code Section 403(b)(7) custodial accounts and other tax-qualified
employer-sponsored retirement accounts) on a monthly or quarterly basis will be
sent to the Transfer Agent from the investor's bank for investment in the Fund.
Participants in the Automatic Investment Plan should not elect to receive
dividends or other distributions from the Fund in cash. A sales charge will be
applied to each automatic monthly purchase of Class A Fund shares in an amount
determined in accordance with the Right of Accumulation privilege described
above. To participate in the Automatic Investment Plan, investors should
complete the appropriate portion of the Supplemental Application provided at the
end of this Prospectus. Investors should contact their brokers or GT Global for
more information.
DOLLAR COST AVERAGING PROGRAM. Investors may purchase either Class A or Class B
shares of a Fund through GT Global Dollar Cost Averaging Program whereby a
shareholder invests the same dollar amount each month; accordingly, the investor
purchases more shares when the Fund's net asset value is relatively low and
fewer shares when the Fund's net asset value is relatively high. This can result
in a lower average cost-per-share than if the shareholder followed a less
systematic approach. Dollar cost averaging does not assure a profit and does not
protect against loss in declining markets. Because such a program involves
continuous investment in securities regardless of fluctuating price levels of
such securities, investors should consider their financial ability to continue
purchases when prices are declining.
A participant in the GT Global Dollar Cost Averaging Program first designates
the size of his or her monthly investment in the Fund ("Monthly
Prospectus Page 18
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Investment") after participation in the Program begins. The Monthly Investment
must be at least $1,000. The investor then will make an initial investment of at
least $10,000 in the GT Global Dollar Fund. Thereafter, each month an amount
equal to the specified Monthly Investment automatically will be redeemed from
the GT Global Dollar Fund and invested in Fund shares. A sales charge will be
applied to each automatic monthly purchase of Class A Fund shares in an amount
determined in accordance with the Right of Accumulation privilege described
above. To participate in the Dollar Cost Averaging Program, investors should
complete the Dollar Cost Averaging Application provided at the end of this
Prospectus. Investors should contact their brokers or GT Global for more
information.
PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
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 shareholders' Personal Portfolio for
shares of the same class(es) 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. Shareholders participating in
the Program may also participate in the Right of Accumulation, Letter of Intent,
and Dollar Cost Averaging programs. Certain broker/dealers may charge a fee for
establishing accounts relating to the Program. To participate in the Portfolio
Rebalancing Program, investors should complete the Portfolio Rebalancing Program
Application at the end of this Prospectus. Investors should contact their
broker/dealers or GT Global for more information.
Prospectus Page 19
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Shares of the Fund may be exchanged for shares of the same class of any of the
other GT Global Mutual Funds, based on their respective net asset values without
imposition of any sales charges, provided that the registration remains
identical. EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER REALIZING
A GAIN OR LOSS, AS THE CASE MAY BE, FOR TAX PURPOSES. See "Dividends, Other
Distributions and Federal Income Taxation." In addition to the Fund, the GT
Global Mutual Funds currently include:
-- GT GLOBAL AMERICA SMALL CAP GROWTH FUND
-- GT GLOBAL AMERICA MID CAP GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
-- GT GLOBAL DOLLAR FUND
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL WORLDWIDE GROWTH FUND
Up to four exchanges each year may be made without charge. A $7.50 service
charge will be imposed on each subsequent exchange. If an investor does not
surrender all of his or her shares in an exchange, the remaining balance in the
investor's account after the exchange must be at least $500. Exchange requests
received in good order by the Transfer Agent before the close of regular trading
on the NYSE on any Business Day will be processed at the net asset value
calculated on that day. The terms of the exchange offer may be modified at any
time, on 60 days' prior written notice.
A shareholder interested in making an exchange should contact his broker or the
Transfer Agent to request the prospectus of the other GT Global Mutual Fund(s)
being considered. Certain brokers may charge a fee for handling exchanges.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to his or
her broker/dealer or the Transfer Agent by telephone at the appropriate
toll-free number provided in the Shareholder Account Manual. Exchange orders
will be accepted by telephone provided that the exchange involves only
uncertificated shares on deposit in the shareholder's account or for which
certificates previously have been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Fund, GT Global and the Transfer Agent will not be liable for any loss or damage
for acting in good faith upon instructions received by telephone and reasonably
believed to be genuine. The Fund employs reasonable procedures to confirm that
instructions communicated by telephone are genuine 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.
EXCHANGES BY MAIL. Exchange orders should be sent by mail to the investor's
broker/dealer or to the Transfer Agent at the address set forth in the
Shareholder Account Manual.
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 reserves 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 reserves 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, the Fund and GT Global reserve the right to reject
any purchase order.
Prospectus Page 20
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value (subject to any applicable
contingent deferred sales charge for Class B shares or, in limited
circumstances, Class A shares) and redemption proceeds will be sent within seven
days of the execution of a redemption request. If a redeeming shareholder owns
both Class A and Class B shares of the Fund, the Class A shares will be redeemed
first unless the shareholder specifically requests otherwise.
REDEMPTIONS THROUGH BROKERS/DEALERS. Shareholders with accounts at
broker/dealers which sell shares of the Fund may submit redemption requests to
such broker/dealers. If the shares are held in the broker/dealer's "street
name," the redemption must be made through the broker/ dealer. Broker/dealers
may honor a redemption request either by repurchasing shares from a redeeming
shareholder at the net asset value next determined after the broker/dealer
receives the request or, as described below, by forwarding such requests to the
Transfer Agent (see "How to Redeem Shares -- Redemptions Through the Transfer
Agent"). Redemption proceeds normally will be paid by check or, if offered by
the broker/dealer, credited to the shareholder's brokerage account at the
election of the shareholder. Broker/dealers may impose a service charge for
handling redemption transactions placed through them and may have other
requirements concerning redemptions. Accordingly, shareholders should contact
their broker/dealers for more details.
REDEMPTIONS THROUGH THE TRANSFER AGENT. Redemption requests may be transmitted
to the Transfer Agent by telephone or by mail, in accordance with the
instructions provided in the Shareholder Account Manual. All Redemptions will be
effected at the net asset value next determined after the Transfer Agent has
received the request and any required supporting documentation (less any
applicable contingent deferred sales charge for Class B shares or, in limited
circumstances, Class A shares). Redemption requests will not require a signature
guarantee if the redemption proceeds are to be sent either: (i) to the redeeming
shareholder at the shareholder's address of record as maintained by the Transfer
Agent, provided the shareholder's address of record has not been changed within
the preceding thirty days; or (ii) directly to a pre-designated bank, savings
and loan or credit union account ("Pre-Designated Account"). ALL OTHER
REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institutions.
A notary public is not an acceptable guarantor. A shareholder with questions
concerning the Fund's signature guarantee requirement should contact the
Transfer Agent.
Shareholders may qualify to have redemption proceeds sent to a Pre-Designated
Account by completing the appropriate section of the Account Application at the
end of this Prospectus. Shareholders with Pre-Designated Accounts should request
that redemption proceeds be sent either by bank wire or by check. The minimum
redemption amount for a bank wire is $1,000. Shareholders requesting a bank wire
should allow two business days from the time the redemption request is effected
for the proceeds to be deposited in the shareholder's Pre-Designated Account.
See "How to Redeem Shares -- Other Important Redemption Information."
Shareholders may change their Pre-Designated Accounts only by a letter of
instruction to the Transfer Agent containing all account signatures, each of
which must be guaranteed. The Transfer Agent currently does not charge a bank
wire service fee for each wire redemption sent but reserves the right to do so
in the future. 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.
Prospectus Page 21
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Shareholders automatically have telephone privileges to authorize redemptions.
The Fund, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine 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.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may participate in the GT Global Systematic Withdrawal Plan. A
participating shareholder will receive proceeds from monthly, quarterly or
annual redemptions of Fund shares with respect to either Class A or Class B
shares. No contingent deferred sales charge will be imposed on redemptions made
under the Systematic Withdrawal Plan. The minimum withdrawal amount is $100. The
amount or percentage a participating shareholder specifies to be redeemed may
not, on an annualized basis, exceed 12% of the value of the account, as of the
time the shareholder elects to participate in the Systematic Withdrawal Plan. To
participate in the Systematic Withdrawal Plan, investors should complete the
appropriate portion of the Supplemental Application provided at the end of this
Prospectus. Investors should contact their broker/ dealers or the Transfer Agent
for more information. With respect to Class A shares, participation in the
Systematic Withdrawal Plan concurrent with purchases of Class A shares of the
Fund may be disadvantageous to investors because of the sales charges involved
and possible tax implications, and therefore is discouraged. In addition,
shareholders who participate in the Systematic Withdrawal Plan should not elect
to reinvest dividends or other distributions in additional Fund shares.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in doubt as to what documents are required should contact
his broker or the Transfer Agent.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or in writing will be made promptly
after receipt of a redemption request, if in good order, but not later than
seven days after the date the request is executed. Requests for redemption which
are subject to any special conditions or which specify a future or past
effective date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which the Fund has not
yet received good payment, the Fund may delay payment of redemption proceeds
until it has assured itself that good payment has been collected for the
purchase of the shares. In the case of purchases by check it can take up to 10
business days to confirm that the check has cleared and good payment has been
received. Redemption proceeds will not be delayed when shares have been paid for
by wire or when the investor's account holds a sufficient number of shares for
which funds already have been collected.
The Fund may redeem the shares of any shareholder whose account is reduced to
less than $500 in value through redemptions or other action by the shareholder.
Written notice will be given to the shareholder at least 60 days prior to the
date fixed for such redemption, during which time the shareholder may increase
his or her holdings to an aggregate amount of $500 or more (with a minimum
purchase of $100).
Prospectus Page 22
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Shareholders are encouraged to place purchase, exchange and redemption orders
through their brokers. Shareholders also may place such orders directly through
GT Global in accordance with this Manual. See "How to Invest;" "How to Make
Exchanges;" "How to Redeem Shares;" and "Dividends, Other Distributions and
Federal Income Taxation -- Taxes" for more information.
The Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send completed Account Application (if initial purchase) or letter stating Fund
name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global
P.O. Box 7345
San Francisco, California 94120-7345
INVESTMENTS BY BANK WIRE
An investor opening a new account should call 1-800-223-2138 to obtain an
account number. WITHIN SEVEN DAYS OF PURCHASE SUCH AN INVESTOR MUST SEND A
COMPLETED ACCOUNT APPLICATION CONTAINING THE INVESTOR'S CERTIFIED TAXPAYER
IDENTIFICATION NUMBER TO GT GLOBAL AT THE ADDRESS PROVIDED ABOVE UNDER
"INVESTMENTS BY MAIL." Wire instructions must state Fund name, class of shares,
shareholder's registered name and account number. Bank wires should be sent
through the Federal Reserve Bank Wire System to:
WELLS FARGO BANK N.A.
ABA 121000248
Attn: GT GLOBAL
Account No. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, class of
shares, amount of exchange, name of the GT Global Mutual Fund exchanging into,
shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT Global at 1-800-223-2138
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the instructions
but send to the following:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call GT Global at 1-800-223-2138.
Prospectus Page 23
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund calculates its net asset value as of the close of normal trading on the
NYSE (currently 4:00 p.m. Eastern time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. The
Fund's net asset value per share is computed by determining the value of its
total assets (the securities it holds plus any cash or other assets, including
the interest accrued but not yet received), subtracting all of its liabilities
(including accrued expenses), and dividing the result by the total number of
shares outstanding at such time. Net asset value is determined separately for
each class of the Fund.
Equity securities are valued at the last sale price on the exchange or in the
over-the-counter market in which such securities are primarily traded, as of the
close of business on the day the securities are being valued or, lacking any
sales, at the last available bid price. Long-term obligations are valued at the
mean of representative quoted bid and asked prices for such securities or, if
such prices are not available, at prices for securities of comparable maturity,
quality and type; however, when 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 the Fund
are readily available, those positions are valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under the
direction of the Company's Board of Directors. Securities and other assets
quoted in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
The Fund's portfolio securities, from time to time, may be listed primarily on
foreign exchanges or over-the-counter dealer markets that trade on days when the
NYSE is closed (such as a Saturday). As a result, the net asset values of the
Fund may be significantly affected by such trading on days when shareholders
cannot purchase or redeem shares of the Fund.
The different service and distribution fees borne by each class of shares will
result in different net asset values and dividends. The per share net asset
value of the Class B shares of the Fund generally will be lower than that of the
Class A shares of that Fund because of the higher service and distribution fees
borne by the Class B shares. The per share net asset value of the Advisor Class
shares of the Fund generally will be higher than that of the Class A and Class B
shares of the Fund because of the absence of any service and distribution fees
applicable to the Advisor Class shares. It is expected, however, that the net
asset value per share of Class A and Class B shares of the Fund will tend to
converge immediately after the payment of dividends, which will differ by
approximately the amount of the service and distribution fee accrual
differential between the classes.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund declares and pays quarterly
dividends from its net investment income, if any, which includes dividends,
accrued interest and earned discount (including both original issue and market
discounts) less applicable expenses. The Fund also annually distributes
substantially all of its realized net short-term capital gain (the excess of
short-term capital gains over short-term capital losses), net capital gain (the
excess of net long-term capital gain
Prospectus Page 24
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
over net short-term capital loss) and net gains from foreign currency
transactions, if any. The Fund may make an additional dividend or other
distribution if necessary to avoid a 4% excise tax on certain undistributed
income and gain.
Dividends and other distributions paid by the Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Class B shares will be lower than the per share income
dividends on Class A shares as a result of the higher service and distribution
fees applicable to Class B shares; and the per share income dividends on both
such classes of shares will be lower than the per share income dividends on the
Advisor Class shares as a result of the absence of any service and distribution
fees applicable to Advisor Class shares. SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Fund shares of the distributing class (or in shares of the
corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional shares are made at net asset value without
imposition of a sales charge. IF NO ELECTION IS MADE BY A SHAREHOLDER, ALL
DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY REINVESTED IN ADDITIONAL
FUND SHARES OF THE DISTRIBUTING CLASS. Reinvestments in another GT Global Mutual
Fund may only be directed to an account with the identical shareholder
registration and account number. These elections may be changed by a shareholder
at any time; to be effective with respect to a distribution, the shareholder or
the shareholder's broker must contact the Transfer Agent by mail or telephone at
least 15 Business Days prior to the payment date. THE FEDERAL INCOME TAX
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 the Fund has the effect of reducing
the net asset value per share on the ex-dividend date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent the distribution is paid on the shares so purchased), even though
subject to income tax, as discussed below.
TAXES. The Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that the Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transactions and net short-term capital gain) and net capital gain that is
distributed to its shareholders.
Dividends from the Fund's investment company taxable income (whether paid in
cash or reinvested in additional shares) are taxable to its shareholders as
ordinary income to the extent of the Fund's earnings and profits. Distributions
of the Fund's net capital gain, when designated as such, are taxable to its
shareholders as long-term capital gain, regardless of how long they have held
their Fund shares and whether paid in cash or reinvested in additional shares.
The Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, the shareholders' respective
shares of any foreign taxes paid by the Fund, in which event each shareholder
would be required to include in his or her gross income his or her pro rata
share of those taxes but might be entitled to claim a credit or deduction for
them.
The Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest
- -- Purchases Through the Distributor") are considered to have uncertified
taxpayer identification numbers unless a completed Form W-8 or W-9 or Account
Application is
Prospectus Page 25
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
received by the Transfer Agent within seven days after the purchase. A
shareholder should contact the Transfer Agent if the shareholder is uncertain
whether a proper taxpayer identification number is on file with the Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares (which normally
includes any initial sales charge paid on Class A shares). An exchange of Fund
shares for shares of another GT Global Mutual Fund generally will have similar
tax consequences. However, special tax rules apply when a shareholder (1)
disposes of Class A shares of the Fund through a redemption or exchange within
90 days after purchase and (2) subsequently acquires Class A shares of the Fund
or any other GT Global Mutual Fund on which an initial sales charge normally is
imposed without paying that sales charge due to the reinstatement privilege or
exchange privilege. In these cases, any gain on the disposition of the original
Class A shares will be increased, or loss decreased, by the amount of the sales
charge paid when those shares were acquired, and that amount will increase the
adjusted basis of the shares subsequently acquired. In addition, if Fund shares
are purchased within 30 days before or after redeeming other Fund shares
(regardless of class) at a loss, all or a part of the loss will not be
deductible and instead will increase the basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its shareholders. See "Taxes" in
the Statement of Additional Information for a further discussion. There may be
other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors has overall responsibility for the operation of
the Fund. Pursuant to such responsibility, the Board has approved contracts with
various financial organizations to provide, among other things, day to day
management services required by the Fund. See "Directors and Executive Officers"
in the Statement of Additional Information for a complete description of the
Directors of the Company.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by Chancellor LGT
Asset Management, Inc. (the "Manager") as the Fund's investment manager and
administrator include, but are not limited to, determining the composition of
the Fund's portfolio and placing orders to buy, sell or hold particular
securities; furnishing corporate officers and clerical staff; providing office
space, services and equipment; and supervising all matters relating to the
Fund's operation. For these services, the Fund pays the Manager investment
management and administration fees, computed daily and paid monthly, based on
the average daily net assets, at the annualized rate of .975% on the first $500
million, .95% on the next $500 million, .925% on the next $500 million and .90%
on amounts thereafter. This rate is higher than that paid by most mutual funds.
The Manager and GT Global have undertaken to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the annual rate of 1.85% and 2.50% of the average daily net assets of the
Fund's Class A and Class B shares, respectively. This undertaking may be changed
or eliminated in the future.
The Manager also serves as the Fund'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.
Prospectus Page 26
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 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., and the resulting
entity was named Chancellor LGT Asset Management, Inc. ("Chancellor Capital")
merged with 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 Fund are as follows:
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ------------------ ------------------------------------ ------------------------------------------------------------
<S> <C> <C>
Nicholas S. Train Portfolio Manager since Fund Portfolio Manager for the Manager since 1991.
London inception in 1991
Paul Griffiths Portfolio Manager since 1995 Portfolio Manager for LGT Asset Management PLC (London) and
London the Manager since 1994; from 1993 to 1994, Global Bond Fund
Manager, Lazard Investors; from 1991 to 1993, Global Bond
Fund Manager, Sanwa International PLC.
</TABLE>
In placing securities orders for the Fund's portfolio 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.
DISTRIBUTION OF FUND SHARES. GT Global is the distributor of the Fund's Class A
and Class B shares. GT Global is a subsidiary of Liechtenstein Global Trust with
offices at 50 California Street, 27th Floor, San Francisco, California 94111. As
distributor, GT Global collects the sales charges imposed on purchases of Class
A shares and any contingent deferred sales charges that may be imposed on
certain redemptions on Class A or Class B shares. GT Global reallows a portion
of the sales charge on Class A shares to broker/dealers that have sold such
shares in accordance with the schedule set forth above under "How to Invest." In
addition, GT Global pays a commission equal to 4.00% of the amount invested to
broker/dealers who sell Class B shares. A commission with respect to Class B
shares is not paid on exchanges or certain reinvestments in Class B shares.
GT Global, at its own expense, may provide additional promotional incentives to
brokers that sell shares of the Fund and/or shares of the other GT Global Mutual
Funds. In some instances additional compensation or promotional incentives may
be offered to brokers that have sold or may sell significant amounts of shares
during specified
Prospectus Page 27
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
periods of time. Such compensation and incentives may include, but are not
limited to, cash, merchandise, trips and financial assistance to brokers in
connection with preapproved conferences or seminars, sales or training programs
for invited sales personnel, payment for travel expenses (including meals and
lodging) incurred by sales personnel and members of their families or other
invited guests to various locations for such seminars or training programs,
seminars for the public, advertising and sales campaigns regarding one or more
of the GT Global Mutual Funds, and/or other events sponsored by the broker. In
addition, GT Global makes ongoing payments to brokerage firms, financial
institutions (including banks) and others that facilitate the administration and
servicing of shareholder accounts.
Under a plan of distribution adopted by the Company's Board of Directors
pursuant to Rule 12b-1 under the 1940 Act, with respect to the Fund's Class A
shares ("Class A Plan"), the Fund may pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to a separate plan of distribution adopted with respect to the Fund's
Class B shares ("Class B Plan"), the Fund may pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
GT Global's service and distribution expenses covered by the Plans include the
payment of ongoing commissions; the cost of any additional compensation paid by
GT Global to brokers/dealers; the costs of printing and mailing to prospective
investors prospectuses and other materials relating to the Fund; the costs of
developing, printing, distributing and publishing advertisements and other sales
literature; and allocated costs relating to GT Global's distribution activities,
including, among other things, employee salaries, bonuses and other overhead
expenses. In addition, its expenses under the Class B Plan include payment of
initial sales commissions to broker/ dealers and interest on any unreimbursed
amounts carried forward thereunder.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. Banks and broker/ dealer affiliates of banks may also
execute dealer agreements with GT Global for the purpose of selling shares of
the Fund. If a bank were prohibited from so acting, its shareholder clients
would be permitted to remain shareholders, and alternative means for continuing
the servicing of such shareholders would be sought. It is not expected that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences.
Prospectus Page 28
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
OTHER INFORMATION
- --------------------------------------------------------------------------------
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in the Fund, the shareholder will receive from
the Transfer Agent a confirmation statement reflecting the transaction.
Confirmations for transactions effected pursuant to the Fund's Automatic
Investment Plan, Systematic Withdrawal Plan, and automatic dividend reinvestment
program may be provided quarterly. Shortly after the end of the Fund's fiscal
year on October 31 and fiscal half-year on April 30 of each year, shareholders
receive an annual and semiannual report, respectively. In addition, the federal
income tax status of distributions made by the Fund to shareholders are reported
after the end of each calendar year on Form 1099-DIV. 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 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 the Fund are
entitled to one vote per share (with proportional voting for fractional shares)
and are freely transferable. Shareholders have no preemptive or conversion
rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, each class of shares of the Fund has
exclusive voting rights with respect to its distribution plan. The shares of the
Company's funds will be voted in the aggregate on other matters, such as the
election of Directors and ratification of the Board of Directors' selection of
the Company's independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. The Company would be required to hold a
shareholders' meeting in the event that at any time less than a majority of the
Directors holding office had been elected by shareholders. Directors shall
continue to hold office until their successors are elected and have qualified.
Shares of the Company's funds do not have cumulative voting rights, which means
that the holders of a majority of the shares voting for the election of
Directors can elect all the Directors. A Director may be removed upon a majority
vote of the shareholders qualified to vote in the election. Shareholders holding
10% of the Company's outstanding voting securities may call a meeting of
shareholders for the purpose of voting upon the question of removal of any
Director or for any other purpose. The 1940 Act requires the Company to assist
shareholders in calling such a meeting.
Pursuant to the Company's Articles of Incorporation, it may issue six billion
shares. Of this number, 300 million shares have been classified as shares of the
Fund; 100 million shares have been classified as Class A shares, 100 million
shares have been classified as Class B shares, and 100 million shares have been
classified as Advisor Class shares. This amount may be increased from time to
time in the discretion of the Board of Directors. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.0001 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and other distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
at the discretion of the Board of Directors. Each Class A, Class B and Advisor
Class share of the Fund is equal as to earnings, assets and voting privileges,
except as noted above, and each class bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund when issued are fully paid and
nonassessable.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Fund
toll free at (800) 223-2138 or by writing to the Fund at 50 California Street,
27th Floor, San Francisco, California 94111.
PERFORMANCE INFORMATION. The Fund, from time to time, may include information on
its investment results and/or comparisons of its investment results to various
unmanaged indices or results of other
Prospectus Page 29
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
mutual funds or groups of mutual funds in advertisements, sales literature or
reports furnished to present or prospective shareholders.
In such materials, the Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of the Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of 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 the Fund. Standardized Return
assumes reinvestment of all dividends and other distributions.
In addition, in order to more completely represent the Fund's performance or
more accurately compare such performance to other measures of investment return,
the Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized return reflects percentage rates of return encompassing all
elements of total return (e.g., income and capital appreciation or
depreciation); it assumes reinvestment of all dividends and other distributions.
Non-Standardized Return may be quoted for the same or different periods as those
for which Standardized Return is quoted; it may consist of an aggregate or
average annual percentage rate of return, actual year-by-year rates or any
combination thereof. Non-Standardized Return may or may not take sales charges
into account; performance data calculated without taking the effect of sales
charges into account will be higher than data including the effect of such
charges.
The Fund's performance data reflects past performance and is not necessarily
indicative of future results. The Fund's investment results will vary from time
to time depending upon market conditions, the composition of its portfolio and
its operating expenses. These factors and possible differences in calculation
methods should be considered when comparing the Fund's investment results with
those published for other investment companies, other investment vehicles and
unmanaged indices. The Fund's results also should be considered relative to the
risks associated with its investment objective and policies. See "Investment
Results" in the Statement of Additional Information.
The Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Fund are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of the Manager and GT Global and a subsidiary of
Liechtenstein Global Trust, and maintains its offices at California Plaza, 2121
North California Boulevard, Suite 450, Walnut Creek, California 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is custodian of the Fund's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company and the Fund.
Kirkpatrick & Lockhart LLP also acts as counsel to the Manager, GT Global and
the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and the Fund's independent accountants
are Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109. Coopers & Lybrand L.L.P. conducts an annual audit of the Fund, assists in
the preparation of the Fund's federal and state income tax returns and consults
with the Company and the Fund as to matters of accounting, regulatory filings,
and federal and state income taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 30
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 31
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 32
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 33
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
P.O. Box 7345 ACCOUNT APPLICATION
SAN FRANCISCO, CA 94120-7345
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (Account No.: --------------------------------------)
</TABLE>
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies)
and date of trust instrument. Registration for Uniform Gifts/Transfers to
Minors accounts should be in the name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
------------------------------------ --------------------------------------------------------------------------------
Owner Social Security Number / / or Tax I.D. Number / / (Check applicable box)
------------------------------------ If more than one owner, social security number or taxpayer identification number
Co-owner 1 should be provided for first owner listed. If a purchase is made under Uniform Gift/
------------------------------------ Transfer to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)-----------------------------------------
( )
---------------------------------------------------------------------- ---------------------------
Street Address Home Telephone
( )
---------------------------------------------------------------------- ---------------------------
City, State, Zip Code Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund
selected. Checks should be made payable to "GT GLOBAL."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A Shares or
/ /Class B Shares (Not available for purchases of $500,000 or more or, except
for investors participating in the Portfolio Rebalancing Program, for the
GT Global Dollar Fund).
If a class share box is not checked, your investment will be made in Class A
shares.
<TABLE>
<S> <C> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA MID CAP GROWTH FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 23 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 01 / / GT GLOBAL DOLLAR FUND $
---------- ----------
03 / / GT GLOBAL EUROPE GROWTH FUND $
----------
CHECKWRITING PRIVILEGE
Checkwriting privilege available on Class A shares of GT Global Dollar Fund and GT Global Government Income Fund.
/ / Check here if desired. You will be sent a book of checks.
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS TOTAL INITIAL INVESTMENT: $
----------
All capital gains and dividend distributions will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions AND
dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund: Fund Name ------------------------------------------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right, power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF
THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND I/WE AGREE TO
ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE ACCOUNT
WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION PRIVILEGES
DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS ATTACHED AND
AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS,
INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS' TRANSFER AGENT, THEIR
OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS OR DAMAGES ARISING OUT
OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC INSTRUCTIONS REASONABLY BELIEVED
TO BE GENUINE, INCLUDING ANY SUCH LOSS OR DAMAGES DUE TO NEGLIGENCE ON THE
PART OF SUCH ENTITIES. THE INVESTOR(S) CERTIFIES(Y) AND AGREE(S) THAT THE
CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS AND RESTRICTIONS CONTAINED HEREIN
WILL CONTINUE UNTIL GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. OR THE FUNDS'
TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR REVOCATION. ANY CHANGE
IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME CASES, AS DESCRIBED IN
THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
UNDER PENALTIES OF PERJURY, I CERTIFY THAT THE TAXPAYER IDENTIFICATION
NUMBER ("NUMBER") PROVIDED ON THIS FORM IS MY (OR MY EMPLOYER'S, TRUST'S,
MINOR'S OR OTHER PAYEE'S) TRUE, CORRECT AND COMPLETE NUMBER AND MAY BE
ASSIGNED TO ANY NEW ACCOUNT OPENED UNDER THE EXCHANGE PRIVILEGE. I FURTHER
CERTIFY THAT I AM (OR THE PAYEE WHOSE NUMBER IS GIVEN IS) NOT SUBJECT TO
BACKUP WITHHOLDING BECAUSE: (A) I AM (OR THE PAYEE IS) EXEMPT FROM BACKUP
WITHHOLDING; (B) THE INTERNAL REVENUE SERVICE (THE "I.R.S.") HAS NOT NOTIFIED
ME THAT I AM (OR THE PAYEE IS) SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A
FAILURE TO REPORT ALL INTEREST OR DIVIDENDS; OR (C) THE I.R.S. HAS NOTIFIED ME
THAT I AM (THE PAYEE IS) NO LONGER SUBJECT TO BACKUP WITHHOLDING;
OR, / / I AM (THE PAYEE IS) SUBJECT TO BACKUP WITHHOLDING.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
THE I.R.S. DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT
OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
<TABLE>
<S> <C>
-----------------------------------------------------------
Date
X X
--------------------------------------------------------- ----------------------------------------------------------
X X
--------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ACCOUNT PRIVILEGES
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized By completing the following section, redemptions
Agent, if any, named below, hereby authorize the which exceed $1,000 may be wired or mailed to a
Transfer Agent of the GT Global Mutual Funds, to Pre-Designated Account at your bank. (Wiring
honor any telephone, telex or telegraphic instructions may be obtained from your bank.) A
instructions reasonably believed to be authentic bank wire service fee may be charged.
for redemption and/or exchange between a similar
class of shares of any of the Funds distributed --------------------------------------------------
by GT Global, Inc. Name of Bank
SPECIAL PURCHASE AND REDEMPTION PLANS --------------------------------------------------
/ / I have completed and attached the Bank Address
Supplemental Application for:
/ / AUTOMATIC INVESTMENT PLAN --------------------------------------------------
/ / SYSTEMATIC WITHDRAWAL PLAN Bank A.B.A Number Account Number
OTHER
/ / I/We owned shares of one or more Funds --------------------------------------------------
distributed by GT Global, Inc. as of April Names(s) in which Bank Account is Established
30, 1987 and since that date continuously A corporation (or partnership) must also submit a
have owned shares of such Funds. Attached is "Corporate Resolution" (or "Certificate of
a schedule showing the numbers of each of Partnership") indicating the names and titles of
my/our Shareholder Accounts. Officers authorized to act on its behalf.
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES
/ / I/We qualify for the Right of Accumulation sales charge discount
described in the Prospectus and Statement of Additional Information of
the Fund purchased.
/ / I/We own shares of more than one Fund distributed by GT Global. Listed
below are the numbers of each of my/our Shareholder Accounts.
/ / The registration of some of my/our shares differs from that shown on this
Application. Below are the account number(s) and registration(s) in each
case.
LIST OF OTHER GT GLOBAL MUTUAL FUND ACCOUNTS:
<TABLE>
<CAPTION>
<S> <C>
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
Account Numbers Account Registrations
</TABLE>
LETTER OF INTENT -- CLASS A SHARES
/ / I agree to the terms of the Letter of Intent set forth below. Although I
am not obligated to do so, it is my intention to invest over a
thirteen-month period in Class A shares of one or more of the GT Global
Mutual Funds in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
When a shareholder signs a Letter of Intent in order to qualify for a reduced
sales charge, Class A shares equal to 5% (in no case in excess of 1/2 of 1%
after an aggregate of $500,000 has been purchased under the Letter) of the
dollar amount specified in this Letter will be held in escrow in the
Shareholder's Account out of the initial purchase (or subsequent purchases, if
necessary) by GT Global, Inc. All dividends and other distributions will be
credited to the Shareholder's Account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
thirteen-month period, the purchaser will remit to GT Global, Inc. the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If this difference is not paid within twenty days after written request
by GT Global, Inc. or the shareholder's Authorized Agent, the appropriate
number of escrowed shares will be redeemed to pay such difference. If the
proceeds from this redemption are inadequate, the purchaser will be liable to
GT Global, Inc. for the balance still outstanding. The Letter of Intent may be
revised upward at any time during the thirteen-month period, and such a
revision will be treated as a new Letter, except that the thirteen-month
period during which the purchase must be made will remain unchanged. Exchange
requests involving escrowed shares must specifically reference those shares.
Exchanges of escrowed shares may be delayed to allow for the extra processing
required.
Any questions relating to this Letter of Intent should be directed to GT
Global, 50 California Street, 27th Floor, San Francisco, CA 94111.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Account Application for the purchase of Class A shares
including such shares purchased under a Right of Accumulation or Letter of
Intent or for the purchase of Class B shares in accordance with the terms of
our Dealer Agreement with GT Global, Inc. and with the Prospectus and
Statement of Additional Information of each Fund purchased. We agree to notify
GT Global, Inc. of any purchases properly made under a Letter of Intent or
Right of Accumulation.
<TABLE>
<CAPTION>
<S> <C>
---------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
---------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Number Representative's Name
( )
- -----------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
X
- -----------------------------------------------------------------------------------------------------------------------
Investment Dealer's Authorized Signature Title
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS SUPPLEMENTAL APPLICATION
P.O. Box 7345 SPECIAL INVESTMENT AND
SAN FRANCISCO, CA 94120-7345 WITHDRAWAL OPTIONS
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
ACCOUNT REGISTRATION
Please supply the following information exactly as it appears on the Fund's records.
- --------------------------------------------------------- ---------------------------------------------------------
Fund Name Account Number
- ---------------------------------------------------------- ----------------------------------------------------------
Owner's Name Co-Owner 1
- ---------------------------------------------------------- ----------------------------------------------------------
Co-Owner 2 Telephone Number
- ---------------------------------------------------------- ----------------------------------------------------------
Street Address Social Security or Tax I.D. Number
- ----------------------------------------------------------
City, State, Zip Code
Resident of / / U.S. / / Other ------------------
AUTOMATIC INVESTMENT PLAN / / YES / / NO
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to debit my/our personal checking account on
the designated dates in order to purchase / / Class A shares or / / Class B shares of the Fund indicated at the top of
this Supplemental Application at the applicable public offering price determined on that day.
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 1st day of the month in which you wish investments
to begin.)
Amount of each debit (minimum $100) $
-------------------------------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan
Application.
</TABLE>
- --------------------------------------------------------------------------------
[LOGO]
<TABLE>
<S> <C>
GT GLOBAL MUTUAL FUNDS AUTOMATIC INVESTMENT PLAN
</TABLE>
<TABLE>
<S> <C> <C> <C>
BANK AUTHORIZATION
- ------------------------- ------------------------------ ------------
Bank Name Bank Address Bank Account Number
I/We authorize you, the above named bank, to debit my/our account for amounts drawn by the Transfer Agent of the GT
Global Mutual Funds, acting as my agent. I/We agree that your rights in respect to each withdrawal shall be the same as
if it were a check drawn upon you and signed by me/us. This authority shall remain in effect until I/we revoke it in
writing and you receive it. I/We agree that you shall incur no liability when honoring any such debit.
I/We further agree that you will incur no liability to me if you dishonor any such withdrawal. This will be so even
though such dishonor results in the forfeiture of investment.
- --------------------------------------------------------- ---------------------------------------------------------
Account Holder's Name Joint Account Holder's Name
X X
- ------------------------------------ -------------- ------------------------------------ --------------
Account Holder's Signature Date Joint Account Holder's Signature Date
</TABLE>
(OVER)
<PAGE>
<TABLE>
<S> <C> <C> <C>
SYSTEMATIC WITHDRAWAL PLAN / / YES / / NO
MINIMUM REQUIREMENTS: $10,000 INITIAL ACCOUNT BALANCE AND $100 MINIMUM PERIODIC PAYMENT.
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to redeem the necessary number of / / Class A
or / / Class B shares from my/our GT Global Account on the designated dates in order to make the following periodic
payments:
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 18th day of the month in which you wish withdrawals
to begin.)
Maximum annual withdrawal of 12% of initial account balance for shares subject to a contingent deferred sales charge.
Withdrawals in excess of 12% of the initial account balance annually may result in assessment of a contingent deferred
sales charge, as described in the applicable Fund's prospectus.
Amount of each check ($100 minimum): $ -----------------
Please make checks payable to: --------------------------------------------------------------------------------------
(TO BE COMPLETED ONLY IF Recipient
REDEMPTION PROCEEDS TO BE PAID --------------------------------------------------------------------------------------
TO OTHER THAN ACCOUNT HOLDER Street Address
OF RECORD OR MAILED TO ADDRESS --------------------------------------------------------------------------------------
OTHER THAN ADDRESS OF RECORD) City, State, Zip Code
NOTE: If recipient of checks is not the registered shareholder, signature(s) below must be guaranteed. A corporation
(or partnership) must also submit a "Corporate Resolution" (or "Certification of Partnership") indicating the names
and titles of Officers authorized to act on its behalf.
AGREEMENT AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions
contained herein will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any
change or revocation. Any change in these instructions must be in writing with all signatures guaranteed (if
applicable).
- ----------------------------------------------------------
Date
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock
exchange; (4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary
public is NOT an acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature
guarantee requirement should contact the Transfer Agent.
</TABLE>
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
To: Bank Named on the Reverse
In consideration of your compliance with the request and authorization of the
depositor(s) named on the reverse, the Transfer Agent of the GT Global Mutual
Funds hereby agrees:
1. To indemnify and hold you harmless from any loss you may incur because of the
payment by you and of any debit by the Transfer Agent to its own order on the
account of such depositor(s) and received by you in the regular course of
business for payment, or arising out of the dishonor by you of any debit,
provided there are sufficient funds in such account to pay the same upon
presentation.
2. To defend at its own expense any action which might be brought by any
depositor or any other persons because of your actions taken pursuant to the
above mentioned request or in any manner arising by reason of your participation
in connection with such request.
<PAGE>
[LOGO]
GT Global Mutual Funds 415 392 6181
Fifty California Street
27th Floor
SAN FRANCISCO, CA
94111-4624
GT GLOBAL DOLLAR COST AVERAGING PROGRAM
<TABLE>
<S> <C>
Between: GT Global, Inc.
General Distributor of
The GT Global Mutual Funds
Fifty California Street, 27th Floor
San Francisco, California 94111
415 392 6181; 800 824 1580
and: Company -------------------------------------------------------------------
Address --------------------------------------------------------------------
Phone ---------------------------- Fax ----------------------------
</TABLE>
You have entered into either a Dealer Agreement or a Bank and
Bank-Affiliated Dealer Agreement (each an "Agreement") pursuant to which we
agreed to sell to you Class A and Class B shares of the mutual funds that now or
hereafter may be included in the GT Global Mutual Funds (collectively the
"Funds"; individually a "Fund") or a Bank and Bank-Affiliated Dealer Agreement
pursuant to which you agreed to sell such shares issued by the Funds as agent
for your customers. This Supplement to the Agreement is for the purpose of
establishing contractual terms between us with respect to the GT Global Dollar
Cost Averaging Program ("Program"). All capitalized terms used in this
Supplement and not otherwise defined shall have the same meanings assigned to
them as in the Agreement. All terms of the Agreement shall remain in full force
and effect unless specifically modified or suspended by the terms of this
Supplement.
1. You agree to make available to your customers the Program as described
from time to time in the then current Prospectus of any Fund. We will
provide you with reasonable amounts of literature and an account application
covering the Program.
2. A customer participating in the Program will designate the size of his or
her monthly Funds' investment ("Monthly Amount") as well as the total
amount he or she expects to invest over a 24-month period after participation in
the Program begins ("Total Amount"). A sales charge will be applied to each
automatic monthly purchase of Fund Class A shares in an amount determined in
accordance with the Fund's Right of Accumulation privilege. We will pay you a
commission if you are an agent, or we will pay you an agency commission if you
are a bank or bank-affiliated dealer. This commission will be equal to the
dealer compensation schedule that would be paid if the Total Amount the
participating shareholder expects to invest in the 24 months under the Program
were invested, instead, in the Fund at one time. You agree to pass through to
your broker(s) or registered representative(s) a portion of this commission in
accordance with your established compensation arrangement.
3. If a customer discontinues participation in the Program or otherwise
fails to invest the Total Amount as provided in the customer's Program
agreement, and the selling representative is still employed by you, you agree to
repay to us the portion of the commission applicable to any amount not invested
by the customer. If the selling representative is not employed by you, you agree
to repay us an amount equal to the portion of the commission paid that was
retained by your firm.
4. You acknowledge that all payments due to you under this Supplement are
subject to the limitations contained in each Fund's Prospectus and may be
varied or discontinued at any time.
<PAGE>
5. This Supplement shall be binding upon receipt by us in San Francisco,
California, of a counterpart hereof duly accepted and signed by you.
6. Either of us may cancel this Supplement at any time by written notice to
the other, except that Section 3 shall still remain in effect.
7. All communications to us should be sent to the address below. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you on Page 1.
Accepted:
<TABLE>
<S> <C>
Company ---------------------------------- GT Global, Inc.
Address ------------------------------------ Fifty California Street, 27th Floor
Address ------------------------------------ San Francisco, California 94111
Phone ------------------------------------- 415-392-6181; 800-824-1580
Fax ---------------------------------------- 415-445-7566
By: ---------------------------------------- By: /s/ WILLIAM J. GUILFOYLE
Signature ----------------------------------------
William J. Guilfoyle
---------------------------------------- Date: --------------------------------------
Print Name & Date
</TABLE>
DCALR702.085
May 1996
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global, Inc.
P.O. Box 7345 DOLLAR COST
SAN FRANCISCO, CA 94120-7345 AVERAGING APPLICATION
800 223 2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / CORPORATION / / TRUST / / UTMA/UGMA / / OTHER
1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / IRA ACCOUNT / / ACCOUNT REVISION:
APPLICATION ATTACHED (ACCOUNT NO.:
----------------)
</TABLE>
NOTE: Joint tenant registration will be as "joint tenants with rights of
survivorship" unless otherwise specified. Trust registrations should specify
name of trustee(s), beneficiary(ies) and date of trust instrument.
Registration for Uniform Transfers/Gifts to Minors should be in the name of
one custodian and one minor and include the state under which the
custodianship is created (using the minor's social security number).
<TABLE>
<S> <C> <C> <C>
/ / / / / / - / / / / - / / / / / / / / OR / / / / - / / / / / / / / / / / / / /
---------------------------------------------------------------------------------------------------------------------------------
Owner Check appropriate box / / Social Security Number
or / / Tax I.D. Number
-------------------------------------- --------------------------------------------------------------------
Co-owner 1
-------------------------------------- --------------------------------------------------------------------
Co-owner 2 Home Telephone
-------------------------------------- --------------------------------------------------------------------
Street Address Business Telephone
-------------------------------------- --------------------------------------------------------------------
City, State, Zip Code Resident of / / U.S. / / Specify Other
</TABLE>
2. FUND SELECTION
TOTAL INITIAL INVESTMENT $
----------------------------- ($10,000 MINIMUM). The initial investment will
be made without imposition of any sales charge in the GT Global Dollar Fund.
Method of payment / / check or / / bank wire. Make checks and bank wires
payable to "GT Global." Do not send currency. Bank wires should be sent
through the Federal Reserve Bank wire system to: Wells Fargo Bank, NA,
ABA#121000248. ATTN: GT Global AC-4023-050701 (Stating Fund Name,
Shareholder's Registered Name and Account Number)
ALL GT GLOBAL MUTUAL FUNDS ISSUE TWO CLASSES OF SHARES. Class A shares are
sold with an initial sales charge while Class B shares are sold without an
initial sales charge but are subject to higher expense levels and to a
contingent deferred sales charge payable on certain redemptions. Please read
the prospectus of the applicable GT Global Mutual Fund carefully before you
invest.
MONTHLY TRANSFERS: Each month, GT Global Dollar Fund shares will be
redeemed and either Class A or Class B shares of the designated GT Global
Mutual Fund(s) will be purchased including the applicable sales charge, if
any, in the amounts indicated below ($1,000 minimum aggregate per month):
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / CLASS A SHARES
OR / / CLASS B SHARES
/ / New Account / / Existing Account #
-------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
FUND NAME MONTHLY FUND NAME MONTHLY
AMOUNT AMOUNT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 03 / / GT GLOBAL EUROPE GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 18 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional shares 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>
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Dollar Cost Averaging Application for the purchase of
Class A shares including shares purchased under Right of Accumulation or
Letter of Intent, or for the purchase of Class B shares in accordance with
the terms of our Dealer Agreement with GT Global, Inc., and the Prospectus
and Statement of Additional Information for each Fund. We agree to notify GT
Global, Inc., of any purchases properly made under a Letter of Intent or
Right of Accumulation. Class B shares are not available for Right of
Accumulation or Letter of Intent.
<TABLE>
<S> <C>
--------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
- --------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Name Representative's Number
- -----------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
-------------------------------------------------------------
Investment Dealer's Authorized Signature and Title GT Global Use: DLR------------ BR ------------ Rep
--------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
IRA INSTRUCTIONS
To open an IRA Dollar Cost Averaging account:
Read the GT Global IRA Disclosure Statement carefully.
Complete both this Dollar Cost Averaging Application and the GT Global IRA Application. Shareholder is to sign
both forms.
Mail completed applications with a check to GT Global.
3. AGREEMENT AND SIGNATURES
I/We authorize GT Global, Inc., to transfer shares from my/our GT Global Dollar Fund account, established
hereby, to purchase shares in the other GT Global Mutual Fund(s) and the class indicated on the reverse side of
this application. I/We understand that these transfers will occur on the 15th day of each month, or the prior
business day, and will continue until the funds in my/our GT Global Dollar Fund account fall below the transfer
amount, or until I/we terminate the Dollar Cost Averaging Program in writing. I/We further understand that
monthly purchases of the Class A shares of the other GT Global Mutual Fund(s) indicated will be subject to
applicable sales charges, and that the Class B shares purchased may be subject to a contingent deferred sales
charge when redeemed, as described in the Prospectus of each Fund purchased.
By the execution of this Application(s) I/we represent and warrant that I/we have full right, power, and
authority and am/are of legal age in my/our state(s) of residence to make the investment applied for pursuant to
this Application. The person(s), if any, signing on behalf of the investors 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(s). I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF THE GT GLOBAL MUTUAL FUND(S)
IN WHICH I/WE AM/ARE INVESTING.
I/We and my/our assigns and successors understand and agree that the account will be subject to the
telephone exchange and telephone redemption privilege described in the current Prospectus of the GT Global
Mutual Fund(s) in which I/we am/are investing 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 and their officers and
employees will not be liable for any loss or damages arising out of any such telephone, telex, or telegraph
instructions reasonably believed to be genuine, including any such loss due to negligence on the part of any
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., 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 are guaranteed.
Please indicate the number of signatures required to process written redemption
requests: / / one / / two / / three / / four
(If you do not indicate the number of required signatures, ALL account owners must sign 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 either because: (a) I am (or the payee is) exempt from
backup withholding; (b) the Internal Revenue Service ("IRS") 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 IRS has
notified me that I am (or the payee is) no longer subject to backup withholding OR; / / I am (the payee is)
subject to backup withholding.
Note:
Dollar Cost Averaging accounts held in the GT Global Dollar Fund have the following privilege restrictions:
Check writing, telephone redemptions and exchanges. The other GT Global Mutual Funds which receive the monthly
Dollar Cost Averaging transfers enjoy all regular account privileges, including telephone redemptions and
exchanges.
The Dollar Cost Averaging program does not assure a profit and does not protect against loss in declining
markets. Because such a program involves continuous investment in securities regardless of fluctuating price
levels of such securities, you should consider your financial ability to continue purchases through periods of
low price levels.
- ------------------------------------------------------- -------------------------------------------------------
Date For GT Global Use Only
X X
- ------------------------------------------------------- -------------------------------------------------------
X X
- ------------------------------------------------------- -------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
SAN FRANCISCO, CA
94111-4624
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION EXISTING
SHAREHOLDER ACCOUNT NUMBER
</TABLE>
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 same name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
-------------------------------------- / // // // // // // // // /
Owner Social Security Number / / or Tax I.D. Number "TIN" / / (Check applicable box) If
- -------------------------------------- more than one owner social security number or taxpayer identification number should
Co-owner 1 be provided for first owner listed. If a purchase is made under Uniform Gift/Transfer
- -------------------------------------- to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)---------------------------
-------------------------------------- Failure to provide TIN will result in 31% withholding on redemptions and exchanges.
Street Address ( ) ( )
- -------------------------------------- ------------------------------- -------------------------------
City, State, Zip Code Home Telephone Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund selected
for Class A and Class B shares.
Checks should be made payable to "GT Global."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A
Shares / / Class B Shares or / / Advisor Class Advisor Class shares are
sold through a different prospectus than Class A and Class B shares, are not
sold directly to the general public and only available through certain
employee benefit plans, financial institutions and other entities that have
entered into specific agreements with GT Global, Inc. Special account
requirements apply to Advisor Class shares. Please see an Advisor Class
prospectus for complete information.
If a class share box is not checked, your investment will be made in Class A
shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per fund.
<TABLE>
<S> <C> <C> <C> <C>
07 GT GLOBAL WORLDWIDE GROWTH FUND ---------- 13 GT GLOBAL LATIN AMERICA GROWTH FUND ----------
05 GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 24 GT GLOBAL AMERICA SMALL CAP GROWTH FUND ----------
16 GT GLOBAL EMERGING MARKETS FUND ---------- 06 GT GLOBAL AMERICA GROWTH FUND ----------
11 GT GLOBAL HEALTH CARE FUND ---------- 23 GT GLOBAL AMERICA VALUE FUND ----------
15 GT GLOBAL TELECOMMUNICATIONS FUND ---------- 04 GT GLOBAL JAPAN GROWTH FUND ----------
19 GT GLOBAL INFRASTRUCTURE FUND ---------- 10 GT GLOBAL GROWTH & INCOME FUND ----------
17 GT GLOBAL FINANCIAL SERVICES FUND ---------- 09 GT GLOBAL GOVERNMENT INCOME FUND ----------
21 GT GLOBAL NATURAL RESOURCES FUND ---------- 08 GT GLOBAL STRATEGIC INCOME FUND ----------
22 GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 18 GT GLOBAL HIGH INCOME FUND ----------
02 GT GLOBAL NEW PACIFIC GROWTH FUND ---------- 01 GT GLOBAL DOLLAR FUND ----------
03 GT GLOBAL EUROPE GROWTH FUND ----------
Rebalance frequency - check one
/ / Monthly / / Quarterly / / Semi annual / / Total percentage must equal 100%.
Annual
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains distributions and dividends will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions and
dividends in cash.
Investment will be split according to allocation.
</TABLE>
<TABLE>
<S> <C>
AGREEMENTS AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any change or revocation. ANY
CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING WITH ALL SIGNATURES GUARANTEED (IF APPLICABLE).
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock exchange;
(4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary public is NOT an
acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature guarantee requirement should
contact the Transfer Agent.
</TABLE>
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, 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 GROWTH & INCOME 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 TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
GROPR610017MC
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS -- MARCH 1, 1997
- --------------------------------------------------------------------------------
GT GLOBAL EMERGING MARKETS FUND ("EMERGING MARKETS FUND") seeks long-term growth
of capital by investing primarily in equity securities of companies in emerging
markets.
GT GLOBAL LATIN AMERICA GROWTH FUND ("LATIN AMERICA GROWTH FUND") seeks capital
appreciation by investing primarily in equity and debt securities of a broad
range of Latin American issuers.
There can be no assurance that the Emerging Markets Fund or the Latin America
Growth Fund (each a "Fund," and collectively, the "Funds") will achieve its
investment objective.
The Funds are managed 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.
The Funds are designed for long term investors and not as trading vehicles. The
Funds do not represent a complete investment program, nor are they suitable for
all investors. The Funds may invest significantly in lower quality and unrated
foreign government bonds whose credit quality is generally considered the
equivalent of U.S. corporate debt securities commonly known as "junk bonds."
Investments of this type are subject to a greater risk of loss of principal and
interest. An investment in either Fund should be considered speculative and
subject to special risk factors, related primarily to the Funds' investments in
emerging markets and Latin America. Purchasers should carefully assess the risks
associated with an investment in either Fund.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information for each Fund dated March 1, 1997, has
been filed with the Securities and Exchange Commission ("SEC") and, as
supplemented or amended from time to time, is incorporated herein by reference.
The Statement of Additional Information is available without charge by writing
to the Funds at 50 California Street, 27th Floor, San Francisco, California
94111, or calling (800) 824-1580.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED BY THE FEDERAL RESERVE BOARD, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY OTHER GOVERNMENT AGENCY.
An investment in either Fund offers the following advantages:
/ / Access to Securities Markets Around the World
/ / Professional Management by a Leading Manager with Offices in the World's
Major Markets
/ / Low $500 Minimum Investment
/ / Alternative Purchase Plan
/ / Automatic Dividend and Other Distribution Reinvestment at No Additional
Sales Charge
/ / Exchange Privileges with the Corresponding Classes of the Other GT Global
Mutual Funds
/ / Reduced Sales Charge Plans
/ / Dollar Cost Averaging Program
/ / Automatic Investment Plan
/ / Systematic Withdrawal Plan
FOR FURTHER INFORMATION CALL (800) 824-1580 OR CONTACT YOUR FINANCIAL 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 EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 7
Alternative Purchase Plan................................................................. 11
Investment Objectives and Policies........................................................ 12
Risk Factors.............................................................................. 18
How to Invest............................................................................. 23
How to Make Exchanges..................................................................... 30
How to Redeem Shares...................................................................... 31
Shareholder Account Manual................................................................ 33
Calculation of Net Asset Value............................................................ 34
Dividends, Other Distributions and Federal Income Taxation................................ 34
Management................................................................................ 36
Other Information......................................................................... 39
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus.
<TABLE>
<S> <C> <C>
The Funds: The Emerging Markets Fund is a diversified series, and the Latin
America Growth Fund is a non-diversified series of G.T. Investment
Funds, Inc. (the "Company").
Investment Objectives: The Emerging Markets Fund seeks long-term growth of capital.
The Latin America Growth Fund seeks capital appreciation.
Principal Investments: The Emerging Markets Fund normally invests at least 65% of its
total assets in equity securities of companies in emerging
markets.
The Latin America Growth Fund normally invests at least 65% of its
total assets in equity and debt securities issued by Latin
American companies and governments.
Principal Risk Factors: There is no assurance that either Fund will achieve its investment
objective. The Funds' net asset values will fluctuate, reflecting
fluctuations in the market value of their portfolio holdings.
Each Fund will invest primarily 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 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 Fund may engage in certain foreign currency, options and
futures transactions to attempt to hedge against the overall level
of investment and currency risk associated with its present or
planned investments. Such transactions involve certain risks and
transaction costs.
The Emerging Markets Fund may invest up to 20% of its total assets
in below investment grade debt securities. There is no limitation
on the percentage of the Latin America Growth Fund's total assets
that may be invested in such 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."
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Alternative Purchase Plan: Investors may select Class A or Class B shares, each subject to
different expenses and a different sales charge structure.
Class A Shares: Offered at net asset value plus any applicable sales charge
(maximum is 4.75% of public offering price) and subject to service
and distribution fees at the annualized rate of up to 0.50% of the
average daily net assets of each Fund's Class A shares.
Class B Shares: Offered at net asset value (a maximum contingent deferred sales
charge of 5% of the lesser of the shares' net asset value or the
original purchase price is imposed on certain redemptions made
within six years of date of purchase) and subject to service and
distribution fees at the annualized rate of up to 1.00% of the
average daily net assets of each Fund's Class B shares.
Shares Available Through: Class A and Class B shares of each Fund's common stock are
available through broker/dealers who have entered into agreements
to sell shares with the Funds' distributor, GT Global, Inc. ("GT
Global"). Shares also may be acquired directly through GT Global
or through exchanges of shares of the other GT Global Mutual
Funds, which are open-end management investment companies advised
and/or administered by the Manager. See "How to Invest" and
"Shareholder Account Manual."
Exchange Privileges: Shares of a class of either Fund may be exchanged without a sales
charge for shares of the corresponding class of other GT Global
Mutual Funds. See "How to Make Exchanges" and "Shareholder Account
Manual."
Redemptions: Shares may be redeemed either through broker/dealers or the Funds'
transfer agent, GT Global Investor Services, Inc. ("Transfer
Agent"). See "How to Redeem Shares" and "Shareholder Account
Manual."
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 Fund shares of the distributing class or in shares of the
corresponding class of other GT Global Mutual Funds without a
sales charge.
First Purchase: $500 minimum ($100 for individual retirement accounts ("IRAs") and
reduced amounts for certain other retirement plans).
Subsequent Purchases: $100 minimum (reduced amounts for IRAs and certain other
retirement plans).
Net Asset Values: Class A and Class B shares of each Fund are quoted daily in the
financial section of most newspapers.
Other Features:
Class A Shares Letter of Intent Dollar Cost Averaging Program
Quantity Discounts Automatic Investment Plan
Right of Accumulation Systematic Withdrawal Plan
Reinstatement Privilege Portfolio Rebalancing Program
Class B Shares Reinstatement Privilege Automatic Investment Plan
Systematic Withdrawal Plan Dollar Cost Averaging Program
Portfolio Rebalancing Program
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
GT GLOBAL EMERGING MARKETS FUND
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Class A and Class B shares of the Emerging Markets Fund
are reflected in the following tables (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
----------- -----------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases (as a % of offering price)...................................... 4.75% None
Sales charges on reinvested distributions to shareholders......................................... None None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)........................................................................................... None 5.00%
Redemption charges................................................................................ None None
Exchange fees:
-- On first four exchanges each year............................................................ None None
-- On each additional exchange.................................................................. $ 7.50 $ 7.50
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees..................................................... 0.98% 0.98%
12b-1 distribution and service fees............................................................... 0.50% 1.00%
Other expenses.................................................................................... 0.60% 0.60%
----- -----
Total Fund Operating Expenses..................................................................... 2.08% 2.58%
----- -----
----- -----
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
FIVE
ONE YEAR THREE YEARS YEARS
----- ----------- -----
<S> <C> <C> <C>
Class A Shares (4)....................................................................... $ 68 $ 110 $ 156
Class B Shares
Assuming a complete redemption at end of period (5).................................. $ 76 $ 111 $ 159
Assuming no redemption............................................................... $ 26 $ 81 $ 139
<CAPTION>
TEN
YEARS
-----
<S> <C>
Class A Shares (4)....................................................................... $ 280
Class B Shares
Assuming a complete redemption at end of period (5).................................. $ 295
Assuming no redemption............................................................... $ 295
</TABLE>
- ------------------
(1) THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc. ("NASD") rules regarding investment companies. THE
"HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S 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 Fund's
projected or actual performance.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See "How
to Invest."
(3) Expenses are based on the Fund's 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. The Fund also offers Advisor Class shares
to certain categories of investors. See "Alternative Purchase Plan." Advisor
Class shares are not subject to 12b-1 distribution and service fees.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes payment of the applicable contingent deferred sales charge.
Prospectus Page 5
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
GT GLOBAL LATIN AMERICA GROWTH FUND
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Class A and Class B shares of the Latin America Growth
Fund are reflected in the following tables (1):
<TABLE>
<CAPTION>
CLASS A CLASS B
----------- -----------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases of shares (as a % of offering price)............................. 4.75% None
Sales charges on reinvested distributions to shareholders.......................................... None None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)............................................................................................ None 5.00 %
Redemption charges................................................................................. None None
Exchange fees:
-- On first four exchanges each year........................................................... None None
-- On each additional exchange................................................................. $ 7.50 $ 7.50
ANNUAL FUND OPERATING EXPENSES (3):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees...................................................... 0.98 % 0.98 %
12b-1 distribution and service fees................................................................ 0.50 % 1.00 %
Other expenses..................................................................................... 0.62 % 0.62 %
----- -----
Total Fund Operating Expenses...................................................................... 2.10 % 2.60 %
----- -----
----- -----
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS
----- ----------- -----
<S> <C> <C> <C>
Class A Shares (4)....................................................................... $ 68 $ 111 $ 157
Class B Shares
Assuming a complete redemption at end of period (5).................................. $ 77 $ 112 $ 160
Assuming no redemption............................................................... $ 27 $ 82 $ 140
<CAPTION>
TEN YEARS
-----
<S> <C>
Class A Shares (4)....................................................................... $ 282
Class B Shares
Assuming a complete redemption at end of period (5).................................. $ 297
Assuming no redemption............................................................... $ 297
<FN>
- ------------------
(1) THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the NASD rules regarding investment
companies. THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR
FUTURE EXPENSES. THE FUND'S 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 Fund's projected or actual performance.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See "How
to Invest."
(3) Expenses are based on the Fund's 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. The Fund also offers Advisor Class shares
to certain categories of investors. See "Alternative Purchase Plan."
Advisor Class shares are not subject to 12b-1 distribution and service
fees.
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes payment of the applicable contingent deferred sales charge.
</TABLE>
Prospectus Page 6
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 offered
through this Prospectus 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 also is included in the Statement
of Additional Information.
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
CLASS A+
------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------
1996 1995(E) 1994
---------------- ---------------- ----------------
<S> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period........................ $ 13.85 $ 18.81 $ 14.42
---------------- ---------------- ----------------
Income from investment operations:
Net investment income (loss).............................. 0.11 0.13 (0.02)
Net realized and unrealized gain (loss) on investments.... 0.30 (4.32) 4.68
---------------- ---------------- ----------------
Net increase (decrease) from investment operations...... 0.41 (4.19) 4.66
---------------- ---------------- ----------------
Distributions:
From net investment income................................ -- -- (0.01)
From net realized gain on investments..................... -- (0.77) (0.26)
---------------- ---------------- ----------------
Total distributions..................................... -- (0.77) (0.27)
---------------- ---------------- ----------------
Net asset value, end of period.............................. $ 14.26 $ 13.85 $ 18.81
---------------- ---------------- ----------------
---------------- ---------------- ----------------
Total investment return (c)................................. 2.96% (23.04)% 32.58%
---------------- ---------------- ----------------
---------------- ---------------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's)........................ $224,964 $252,457 $417,322
Ratio of net investment income (loss) to average net
assets..................................................... 0.76% 0.89% (0.11)%
Ratio of expenses to average net assets:
With expense reductions................................... 1.96% 2.12% 2.06%
Without expense reductions................................ 2.08% 2.14% --%(d)
Portfolio turnover rate +++................................. 104% 114% 100%
Average commission rate per share paid on portfolio
transactions+++............................................ $0.0040 N/A N/A
<CAPTION>
MAY 18, 1992
(COMMENCE-
MENT OF
OPERATIONS)
1993 TO OCTOBER 31, 1992
---------------- -------------------
<S> <C> <C>
Per share operating performance:
Net asset value, beginning of period........................ $ 11.10 $ 11.43
---------------- --------
Income from investment operations:
Net investment income (loss).............................. 0.02* 0.07*
Net realized and unrealized gain (loss) on investments.... 3.38 (0.40)
---------------- --------
Net increase (decrease) from investment operations...... 3.40 (0.33)
---------------- --------
Distributions:
From net investment income................................ (0.08) --
From net realized gain on investments..................... -- --
---------------- --------
Total distributions..................................... (0.08) --
---------------- --------
Net asset value, end of period.............................. $ 14.42 $ 11.10
---------------- --------
---------------- --------
Total investment return (c)................................. 30.90% (2.90)%(a)
---------------- --------
---------------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's)........................ $187,808 $84,558
Ratio of net investment income (loss) to average net
assets..................................................... 0.1%* 1.7%*(b)
Ratio of expenses to average net assets:
With expense reductions................................... 2.4%* 2.4%*(b)
Without expense reductions................................ --%(d) --%(d)
Portfolio turnover rate +++................................. 99% 32%(b)
Average commission rate per share paid on portfolio
transactions+++............................................ 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 $0.02
for the year ended October 31, 1993 and for the period from May 18, 1992
(commencement of operations) to October 31, 1992, respectively. Without such
reimbursements, the expense ratios would have been 2.61% and 2.91% and the
ratio of net investment income to average net assets would have been (0.11)%
and 1.21% for the year ended October 31, 1993 and for the period from May
18, 1992 (commencement of operations) to October 31, 1992, respectively.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
(e) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
N/A Not applicable.
Prospectus Page 7
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
GT GLOBAL EMERGING MARKETS FUND
(CONTINUED)
<TABLE>
<CAPTION>
CLASS B++
-----------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------
1996 1995(E)
---------------- ----------------
<S> <C> <C>
Per share operating performance:
Net asset value, beginning of period......................................... $ 13.68 $ 18.68
---------------- ----------------
Income from investment operations:
Net investment income (loss)............................................... 0.04 0.06
Net realized and unrealized gain (loss) on investments..................... 0.30 (4.29)
---------------- ----------------
Net increase (decrease) from investment operations....................... 0.34 (4.23)
---------------- ----------------
Distributions:
From net investment income................................................. -- --
From net realized gain on investments...................................... -- (0.77)
---------------- ----------------
Total distributions...................................................... -- (0.77)
---------------- ----------------
Net asset value, end of period............................................... $ 14.02 $ 13.68
---------------- ----------------
---------------- ----------------
Total investment return (c).................................................. 2.49% (23.37)%
---------------- ----------------
---------------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's)......................................... $216,004 $225,861
Ratio of net investment income (loss) to average net assets.................. 0.26% 0.39%
Ratio of expenses to average net assets:
With expense reductions.................................................... 2.46% 2.62%
Without expense reductions................................................. 2.58% 2.64%
Portfolio turnover rate +++.................................................. 104% 114%
Average commission rate per share paid on portfolio transactions+++.......... $ 0.0040 N/A
<CAPTION>
APRIL 1, 1993 TO
1994 OCTOBER 31, 1993
---------------- ----------------
<S> <C> <C>
Per share operating performance:
Net asset value, beginning of period......................................... $ 14.39 $ 11.47
---------------- --------
Income from investment operations:
Net investment income (loss)............................................... (0.12) 0.00**
Net realized and unrealized gain (loss) on investments..................... 4.67 2.92
---------------- --------
Net increase (decrease) from investment operations....................... 4.55 2.92
---------------- --------
Distributions:
From net investment income................................................. -- --
From net realized gain on investments...................................... (0.26) --
---------------- --------
Total distributions...................................................... (0.26) --
---------------- --------
Net asset value, end of period............................................... $ 18.68 $ 14.39
---------------- --------
---------------- --------
Total investment return (c).................................................. 31.77% 25.5%(a)
---------------- --------
---------------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's)......................................... $291,289 $ 32,318
Ratio of net investment income (loss) to average net assets.................. (0.61)% (0.4)%**(b)
Ratio of expenses to average net assets:
With expense reductions.................................................... 2.56% 2.9%**(b)
Without expense reductions................................................. --%(d) --%(d)
Portfolio turnover rate +++.................................................. 100% 99%
Average commission rate per share paid on portfolio transactions+++.......... N/A 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.
** Includes reimbursement by the Manager of Fund operating expenses of $0.02.
Without such reimbursements, the expense ratio would have been 3.11% and the
ratio of net investment income to average net assets would have been
(0.61)%.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
(e) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
N/A Not applicable.
Prospectus Page 8
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
------------------------------------------------------------------
AUGUST 13, 1991
(COMMENCE-
YEAR ENDED OCTOBER 31, MENT OF
--------------------------------------------- OPERATIONS)
1996 1995(A) 1994(A) 1993(A) 1992 TO OCTOBER 31, 1991
------- ------- -------- -------- ------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period......... $15.38 $26.11 $19.78 $15.59 $16.45 $ 14.29
------- ------- -------- -------- ------- ----------
Income from investment operations:
Net investment income (loss)............... 0.09 0.15 (0.08 ) 0.18 * 0.25 * 0.01*
Net realized and unrealized gain (loss) on
investments............................... 2.59 (9.28 ) 6.75 5.21 (0.98 ) 2.15
------- ------- -------- -------- ------- ----------
Net increase (decrease) from investment
operations.............................. 2.68 (9.13 ) 6.67 5.39 (0.73 ) 2.16
------- ------- -------- -------- ------- ----------
Distributions:
From net investment income................. (0.08 ) 0.00 (0.19 ) (0.12 ) (0.13 ) 0.00
From net realized gain on
investments............................... (0.00 ) (1.60 ) (0.15 ) (1.08 ) 0.00 0.00
In excess of net investment income......... (0.03 ) (0.00 ) (0.00 ) (0.00 ) (0.00 ) (0.00)
------- ------- -------- -------- ------- ----------
Total distributions...................... (0.11 ) (1.60 ) (0.34 ) (1.20 ) (0.13 ) 0.00
------- ------- -------- -------- ------- ----------
Net asset value, end of period............... $17.95 $15.38 $26.11 $19.78 $15.59 $ 16.45
------- ------- -------- -------- ------- ----------
------- ------- -------- -------- ------- ----------
Total investment return (d).................. 17.52% (37.16% 34.10% 37.10% (4.50% 15.10%(b)
------- ------- -------- -------- ------- ----------
------- ------- -------- -------- ------- ----------
Ratios and supplemental data:
Net assets, end of period (in 000's)......... $177,373 $182,462 $336,960 $129,280 $94,085 $125,038
Ratio of net investment income (loss) to
average net assets.......................... 0.46% 0.86% (0.29% 1.30%* 1.30%* 1.20%*(c)
Ratio of expenses to average net assets:
With expense reductions.................... 2.03% 2.11% 2.04% 2.40%* 2.40%* 2.40%*(c)
Without expense reductions................. 2.10% 2.12% --%(e) --%(e) --%(e) --%(e)
Portfolio turnover rate +++.................. 101% 125% 155% 112% 159% none
Average commission rate per share paid on
portfolio transactions+++................... $0.0005 N/A 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 $0.02,
$0.04 and $0.01 for the years ended October 31, 1993 and 1992 and for the
period from August 13, 1991 (commencement of operations) to October 31,
1991, respectively. Without such reimbursements, the expense ratios would
have been 2.49%, 2.62% and 3.42% and the ratios of net investment income to
average net assets would have been 1.25%, 1.07% and 0.l5% for the years
ended October 31, 1993 and 1992 and for the period from August 13, 1991 to
October 31, 1991, respectively.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
(e) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, in any.
N/A Not applicable.
Prospectus Page 9
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
(CONTINUED)
<TABLE>
<CAPTION>
CLASS B++
---------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------
1996 1995(A) 1994(A)
------------------- ------------------- -------------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.............. $ 15,21 $ 25.94 $ 19.75
---------- ---------- ----------
Income from investment operations:
Net investment income (loss).................... (0.00) 0.06 (0.22)
Net realized and unrealized gain (loss) on
investments.................................... 2.59 (9.19) 6.74
---------- ---------- ----------
Net increase (decrease) from investment
operations................................... 2.59 (9.13) 6.52
---------- ---------- ----------
Distributions:
From net investment income...................... (0.01) 0.00 (0.18)
From net realized gain on investments........... (0.00) (1.60) (0.15)
In excess of net investment income.............. (0.01) (0.00) (0.00)
---------- ---------- ----------
Total distributions........................... (0.02) (1.60) (0.33)
---------- ---------- ----------
Net asset value, end of period.................... $ 17.78 $ 15.21 $ 25.94
---------- ---------- ----------
---------- ---------- ----------
Total investment return (d)....................... 17.02% (37.42)% 33.33%
---------- ---------- ----------
---------- ---------- ----------
Ratios and supplemental data:
Net assets, end of period (in 000's).............. $137,400 $134,527 $211,673
Ratio of net investment income (loss) to average
net assets....................................... (0.04)% 0.36% (0.79)%
Ratio of expenses to average net assets:
With expense reductions......................... 2.53% 2.61% 2.54%
Without expense reductions...................... 2.60% 2.62% --%(e)
Portfolio turnover rate +++....................... 101% 125% 155%
Average commission rate per share paid on
portfolio transactions+++........................ $ 0.0005 N/A N/A
<CAPTION>
APRIL 1, 1993 TO
OCTOBER 31, 1993(A)
-------------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period.............. $ 16.26
--------
Income from investment operations:
Net investment income (loss).................... (0.07)
Net realized and unrealized gain (loss) on
investments.................................... 3.56
--------
Net increase (decrease) from investment
operations................................... 3.49
--------
Distributions:
From net investment income...................... 0.00
From net realized gain on investments........... 0.00
In excess of net investment income.............. (0.00)
--------
Total distributions........................... 0.00
--------
Net asset value, end of period.................... $ 19.75
--------
--------
Total investment return (d)....................... 21.50%(b)
--------
--------
Ratios and supplemental data:
Net assets, end of period (in 000's).............. $13,576
Ratio of net investment income (loss) to average
net assets....................................... (0.70)%(c)
Ratio of expenses to average net assets:
With expense reductions......................... 2.90%(c)
Without expense reductions...................... --%(e)
Portfolio turnover rate +++....................... 112%
Average commission rate per share paid on
portfolio transactions+++........................ 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.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
(e) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, in any.
N/A Not applicable.
Prospectus Page 10
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
ALTERNATIVE PURCHASE PLAN
- --------------------------------------------------------------------------------
DIFFERENCES BETWEEN THE CLASSES. The primary difference between the two classes
of each Fund's shares offered through this Prospectus lies in their sales charge
structures and ongoing expenses, as summarized below. Class A and Class B shares
of a Fund represent interests in the same Fund and have the same rights, except
that each class bears the separate expenses of its Rule 12b-1 distribution plan
and has exclusive voting rights with respect to such plan, and each class has a
separate exchange privilege. See "Management" and "How to Make Exchanges." Each
class has distinct advantages and disadvantages for different investors, and
investors should choose the class that better suits their circumstances and
objectives.
CLASS A SHARES. Class A shares are sold at net asset value plus an initial sales
charge of up to 4.75% of the public offering price imposed at the time of
purchase. This initial sales charge is reduced or waived for certain purchases.
Purchases of $500,000 or more must be for Class A shares. Class A shares of the
Funds also bear annual service and distribution fees of up to 0.50% of the
average daily net assets of that class.
CLASS B SHARES. Class B shares are sold at net asset value with no initial sales
charge at the time of purchase. Therefore, the entire amount of an investor's
purchase payment is invested in a Fund. Class B shares bear annual service and
distribution fees of up to 1.00% of the average daily net assets of that class,
and Class B shareholders pay a contingent deferred sales charge of up to 5% of
the lesser of the original purchase price or the net asset value of such shares
at the time of redemption. The higher service and distribution fees paid by the
Class B shares of a Fund should cause that class to have a higher expense ratio
and to pay lower dividends per share than Class A shares of the same Fund.
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES. In deciding which class of
shares of a Fund to purchase, investors should consider the foregoing factors as
well as the following:
INTENDED HOLDING PERIOD. Over time, the cumulative expense of the 1.00% annual
service and distribution fees on the Class B shares of a Fund will approximate
or exceed the expense of the applicable 4.75% maximum initial sales charge plus
the 0.50% service and distribution fees for the Funds on that Fund's Class A
shares. For example, if net asset value remains constant, the Class B shares'
aggregate service and distribution fees would be equal to the Class A shares'
initial maximum sales charge and service and distribution fees approxi-
mately nine years after purchase. Thereafter, Class B shares would experience
higher cumulative expenses. Investors who expect to maintain their investment in
a Fund over the long-term but do not qualify for a reduced initial sales charge
might elect the Class A initial sales charge alternative because over time the
indirect expense to the shareholder of the accumulated service and distribution
fees on the Class B shares will exceed the initial sales charge paid by the
shareholder plus the indirect expense to the shareholder of the accumulated
service and distribution fees of Class A shares. Class B investors, however,
enjoy the benefit of permitting all their dollars to work from the time the
investments are made. Any positive investment return on this additional invested
amount would partially or wholly offset the higher annual expenses borne by
Class B shares. Because the Funds' future returns cannot be predicted, however,
there can be no assurance that such a positive return will be achieved.
Finally, Class B shareholders pay a contingent deferred sales charge if they
redeem during the first six years after purchase, unless a sales charge waiver
applies. Investors expecting to redeem during this period should consider the
cost of the applicable contingent deferred sales charge in addition to the
annual Class B service and distribution fees, as compared with the cost of the
applicable initial sales charge and annual service and distribution fees
applicable to the Class A shares.
REDUCED SALES CHARGES. Class A share purchases of $50,000 or more and Class A
share purchases made under a Fund's reduced sales charge plans may be made at a
reduced initial sales charge. See "How to Invest" for a complete list of reduced
sales charges applicable to Class A purchases.
WAIVER OF SALES CHARGES. The entire initial sales charge on Class A shares of a
Fund is waived for
Prospectus Page 11
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
certain eligible purchasers and these purchasers' entire purchase price would be
immediately invested in that Fund. Investors eligible for complete initial sales
charge waivers should purchase Class A shares. The contingent deferred sales
charge is waived for certain redemptions of Class B shares of a Fund. A 1%
contingent deferred sales charge is imposed on certain redemptions of Class A
shares on which no initial sales charge was assessed.
Investors should understand that the contingent deferred sales charge on the
Class B shares and the initial sales charge on the Class A shares are both
intended to compensate GT Global and selling broker/dealers for their
distribution services. Broker/dealers may receive different levels of
compensation for selling a particular class of shares of the Funds.
See "How to Invest," "How to Redeem Shares," and "Management" for a more
complete description of the initial and contingent deferred sales charges,
service fees and distribution fees for Class A and Class B shares of each Fund
and "Dividends, Other Distributions and Federal Income Taxation" and
"Calculation of Net Asset Value" for other differences between these two
classes.
ADVISOR CLASS SHARES. Advisor Class shares are offered through a separate
prospectus to (a) trustees or other fiduciaries purchasing shares for employee
benefit plans that are sponsored by organizations that 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; (c) any account with assets of at
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.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
EMERGING MARKETS FUND
The Emerging Markets Fund's investment objective is long-term growth of capital.
Under normal circumstances, the Emerging Markets Fund seeks its objective by
investing at least 65% of its total assets in equity securities of companies in
emerging markets. The Emerging Markets Fund may invest in the following types of
equity securities: common stock, preferred stock, securities convertible into
common stock, rights and warrants to acquire such securities and substantially
similar forms of equity with comparable risk characteristics.
For purposes of the Emerging Markets Fund's operations, "emerging markets"
consist of all countries determined by the Manager to have developing or
emerging economies and markets. These countries generally include every country
in the world except the United States, Canada, Japan, Australia, New Zealand and
most countries located in Western Europe. See "Investment Objective and
Policies" in the Statement of Additional Information for a complete list of all
the countries that the Emerging Markets Fund does not consider to be emerging
markets.
Prospectus Page 12
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
For purposes of the Emerging Markets Fund's policy of normally investing at
least 65% of its total assets in equity securities of issuers in emerging
markets, the Emerging Markets Fund will consider investment in the following
emerging markets:
<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>
Although the Emerging Markets Fund considers each of the above-listed countries
eligible for investment, it will not be invested in all such markets at all
times. Moreover, investing in some of those markets currently may not be
desirable or feasible, due to the lack of adequate custody arrangements for the
Emerging Markets Fund's assets, overly burdensome repatriation and similar
restrictions, the lack of organized and liquid securities markets, unacceptable
political risks or for other reasons.
As used in this Prospectus, an issuer in an emerging market is an entity: (i)
for which the principal securities trading market is an emerging market, as
defined above; (ii) that (alone or on a consolidated basis) derives 50% or more
of its total revenues from business in emerging markets, provided that, in the
Manager's view, the value of such issuer's securities will tend to reflect
emerging market developments to a greater extent than developments elsewhere; or
(iii) organized under the laws of, or with a principal office in, an emerging
market.
The Emerging Markets Fund may also invest up to 35% of its total assets in (i)
debt securities of government or corporate issuers in emerging markets; (ii)
equity and debt securities of issuers in developed countries, including the
United States; (iii) securities of issuers in emerging markets not included in
the list of emerging markets above, if investing therein becomes feasible and
desirable subsequent to the date of this Prospectus; and (iv) cash and money
market instruments.
The Emerging Markets Fund invests in those emerging markets that the Manager
believes have strongly developing economies and in which the markets are
becoming more sophisticated. In selecting investments, the Manager seeks to
identify those countries and industries where economic and political factors,
including currency movements, are likely to produce above-average growth rates.
The Manager then invests in those companies in such countries and industries
that are best positioned and managed to take advantage of these economic and
political factors. The Emerging Markets Fund ordinarily will be invested in the
securities of issuers in at least three different emerging markets. In
evaluating investments in securities of issuers in developed markets, the
Manager will consider, among other things, the business activities of the issuer
in emerging markets and the impact that developments in emerging markets are
likely to have on the issuer.
The Manager believes that the issuers of securities in emerging markets often
have sales and earnings growth rates that exceed those in developed countries
and that such growth rates may in turn be reflected in more rapid share price
appreciation. Accordingly, the Manager believes that the Emerging Markets Fund's
policy of investing in equity securities of companies in emerging markets may
enable the Fund to achieve results superior to those produced by mutual funds
with similar objectives that invest solely in equity securities of issuers
domiciled in the United States and/or in other developed markets.
INVESTMENTS IN DEBT SECURITIES. The Emerging Markets Fund may invest in debt
securities of governmental and corporate issuers in emerging markets. Emerging
market debt securities often are rated below investment grade or not rated by
U.S. rating agencies. The Emerging Markets Fund may invest up to 20% of its
total assets in debt securities rated below investment grade. Investment in
below investment grade debt securities involves a high degree of risk and can be
speculative. These debt securities are the equivalent of high yield, high risk
bonds, commonly known as "junk bonds." See "Risk Factors -- Risks Associated
with Debt Securities."
Prospectus Page 13
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
If the rating of a debt security held by the Emerging Markets Fund drops below a
minimum rating considered acceptable by the Manager, the Fund will dispose of
any such security as soon as practicable and consistent with the best interests
of the Fund and its shareholders.
Growth of capital in debt securities may arise as a result of favorable changes
in relative foreign exchange rates, in relative interest rate levels and/ or in
the creditworthiness of issuers. The receipt of income from debt securities
owned by the Emerging Markets Fund is incidental to its objective of long-term
growth of capital.
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, the Emerging Markets Fund temporarily
may invest up to 100% of its assets in cash (U.S. dollars, foreign currencies,
multinational currency units) and/or high quality debt securities or money
market instruments of U.S. or foreign issuers. In addition, for temporary
defensive purposes, most or all of its investments may be made in the United
States and denominated in U.S. dollars. To the extent the Fund employs a
temporary defensive strategy, it will not be invested so as to achieve directly
its investment objective. In addition, pending investment of proceeds from new
sales of Fund shares or to meet ordinary daily cash needs, the Fund temporarily
may hold cash (U.S. dollars, foreign currencies or multinational currency units)
and may invest any portion of its assets in money market instruments.
LATIN AMERICA GROWTH FUND
The Latin America Growth Fund's investment objective is capital appreciation.
The Fund normally invests at least 65% of its total assets in the securities of
a broad range of Latin American issuers. The Fund may invest in common stock,
preferred stock, rights, warrants and securities convertible into common stock,
and other substantially similar forms of equity securities with comparable risk
characteristics, as well as bonds, notes, debentures or other forms of
indebtedness that may be developed in the future. Normally, the Fund will invest
a majority of its assets in equity securities. The Fund may also invest up to
35% of its total assets in a combination of equity and debt securities of U.S.
issuers.
For purposes of this Prospectus, unless otherwise indicated, the Latin America
Growth Fund defines Latin America to include the following countries: Argentina,
the Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica,
Dominican Republic, Ecuador, El Salvador, French Guiana, Guatemala, Guyana,
Haiti, Honduras, Jamaica, Mexico, the Netherlands Antilles, Nicaragua, Panama,
Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and Venezuela. Under
current market conditions, the Latin America Growth Fund expects to invest
primarily in securities issued by companies and governments in Mexico, Chile,
Brazil and Argentina. The Fund may invest more than 25% of its total assets in
any of these four countries but does not expect to invest more than 60% of its
total assets in any one country.
The Latin America Growth Fund defines securities of Latin American issuers to
include: (a) securities of companies organized under the laws of, or having a
principal office located in, a Latin American country; (b) securities of
companies that derive 50% or more of their total revenues from business in Latin
America, provided that, in the Manager's view, the value of such issuers'
securities reflect Latin American developments to a greater extent than
developments elsewhere; (c) securities issued or guaranteed by the government of
a country in Latin America, its agencies or instrumentalities, or
municipalities, or the central bank of such country; (d) U.S. dollar-denominated
securities or securities denominated in a Latin American currency issued by
companies to finance operations in Latin America; and (e) securities of Latin
American issuers, as defined herein, in the form of depositary shares. For
purposes of the foregoing definition, the Fund's purchases of securities issued
by companies outside of Latin America to finance their Latin American operations
will be limited to securities the performance of which is materially related to
such company's Latin American activities.
In allocating investments among the various Latin American countries, the
Manager looks principally at the stage of industrialization, potential for
productivity gains through economic deregulation, the impact of financial
liberalization and monetary conditions and the political outlook in each
country. In allocating assets between equity and debt securities, the Manager
will consider, among other factors: the level and anticipated direction of
interest rates; expected rates of economic growth and corporate profits growth;
changes in
Prospectus Page 14
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
Latin American government policy including regulation governing industry, trade,
financial markets, and foreign and domestic investment; substance and likely
development of government finances; and the condition of the balance of payments
and changes in the terms of trade. In evaluating investments in securities of
U.S. issuers, the Manager will consider, among other factors, the issuer's Latin
American business activities and the impact that development in Latin America
may have on the issuer's operations and financial condition.
Certain sectors of the economies of certain Latin American countries are closed
to equity investments by foreigners. Further, due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities in certain Latin American countries, the Latin
America Growth Fund may be able to invest in such countries solely or primarily
through governmentally approved investment vehicles or companies. In addition,
the portion of the Fund's assets invested directly in Chile may be less than the
portion invested in other Latin American countries because, at present, capital
directly invested in Chile normally cannot be repatriated for at least one year.
As a result, the Fund currently intends to limit most of its Chilean investments
to indirect investments through American Depositary Receipts ("ADRs") and
established Chilean investment companies, the shares of which are not subject to
repatriation restrictions.
INVESTMENTS IN DEBT SECURITIES. Under normal circumstances, the Latin America
Growth Fund may invest up to 50% of its total assets in debt securities. There
is no limitation on the percentage of its assets that may be invested in debt
securities that are rated below investment grade. Investment in below investment
grade debt securities involves a high degree of risk and can be speculative.
These debt securities are the equivalent of high yield, high risk bonds,
commonly known as "junk bonds." Most debt securities in which the Fund will
invest are not rated; if rated, it is expected that such ratings would be below
investment grade. However, the Fund will not invest in debt securities that are
in default in payment as to principal or interest. See "Risk Factors -- Risks
Associated with Debt Securities."
The Latin America Growth Fund may invest in "Brady Bonds," which are debt
restructurings that provide for the exchange of cash and loans for newly issued
bonds. Brady Bonds have been issued by the countries of, among others, Albania,
Argentina, Brazil, Bulgaria, Costa Rica, Dominican Republic, Ecuador, Ivory
Coast, Jordan, Mexico, Nigeria, Philippines, Poland, Russia, Uruguay, Venezuela
and Vietnam, and are expected to be issued by other emerging market countries.
As of the date of this Prospectus, the Fund is not aware of the occurrence of
any payment defaults on Brady Bonds. Investors should recognize, however, that
Brady Bonds have been issued only recently and, accordingly, do not have a long
payment history. In addition, Brady Bonds are often rated below investment
grade.
The Fund may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at that time and is adjusted at regular
intervals thereafter.
Capital appreciation in debt securities may arise as a result of a favorable
change in relative foreign exchange rates, in relative interest rate levels and/
or in the creditworthiness of issuers. The receipt of income from debt
securities owned by the Latin America Growth Fund is incidental to its objective
of capital appreciation.
TEMPORARY DEFENSIVE STRATEGIES. The Latin America Growth Fund may invest up to
100% of its assets in cash (U.S. dollars, foreign currencies, multinational
units) and/or high quality debt securities or money market instruments to
generate income to defray its expenses, for temporary defensive purposes and
pending investment in accordance with its investment objective and policies. In
addition, the Fund may be primarily invested in U.S. securities for temporary
defensive purposes or pending investment of the proceeds of sales of new Fund
shares. The Fund may assume a temporary defensive position when, due to
political, market or other factors broadly affecting Latin American markets, the
Manager determines that opportunities for capital appreciation in those markets
would be significantly limited over an
Prospectus Page 15
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
extended period or that investing in those markets presents undue risk of loss.
ADDITIONAL INVESTMENT POLICIES OF EMERGING MARKETS FUND AND LATIN AMERICA GROWTH
FUND
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Funds may be able to
invest in certain countries solely or primarily through governmentally
authorized investment vehicles or companies. Pursuant to the Investment Company
Act of 1940 (the "1940 Act"), a Fund generally may invest up to 10% of its total
assets in the aggregate in shares of other investment companies and up to 5% of
its total assets in any one investment company, as long as each investment does
not represent more than 3% of the outstanding voting stock of the acquired
investment company at the time of investment.
Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities and
is subject to limitations under the 1940 Act and market availability. The Funds
do not intend to invest in such investment companies unless, in the judgment of
the Manager, the potential benefits of such investment justify the payment of
any applicable premium or sales charge. As a shareholder in an investment
company, the Fund would bear its ratable share of that investment company's
expenses, including its advisory and administration fees. At the same time the
Fund would continue to pay its own management fees and other expenses.
SECURITIES LENDING. The Funds may lend their portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows a
Fund to retain ownership of the securities loaned and, at the same time, earn
additional income that may be used to offset the Fund's custody fees. At all
times a loan is outstanding, a Fund's borrower must maintain with the Fund's
custodian collateral consisting of cash, U.S. government securities or certain
irrevocable letters of credit equal to the value of the borrowed securities plus
any accrued interest. Each Fund limits its loans of portfolio securities to an
aggregate of 30% of the value of its total assets, measured at the time any such
loan is made. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the loaned securities and possible loss of rights
in the collateral should the borrower fail financially.
PRIVATIZATIONS. The governments in some emerging markets and Latin American
countries have been engaged in programs of selling part or all of their stakes
in government owned or controlled enterprises ("privatizations"). The Manager
believes that privatizations may offer opportunities for significant capital
appreciation and intends to invest assets of the Funds in privatizations in
appropriate circumstances. In certain emerging markets and Latin American
countries, the ability of foreign entities such as the Funds to participate in
privatizations may be limited by local law, or the terms on which the Funds may
be permitted to participate may be less advantageous than those afforded local
investors. There can be no assurance that Latin American governments and
governments in emerging markets will continue to sell companies currently owned
or controlled by them or that privatization programs will be successful.
BORROWING. It is a fundamental policy of each Fund that it may borrow an amount
up to 33 1/3% of its total assets in order to meet redemption requests.
Borrowing may cause greater fluctuation in the value of the Funds' shares than
would be the case if the Funds did not borrow, but also may enable the Funds to
retain favorable securities positions rather than liquidating such positions to
meet redemptions. It is a nonfundamental policy of the Emerging Markets Fund and
a fundamental policy of the Latin America Growth Fund, that the Funds will not
purchase securities during times when outstanding borrowings represent 5% or
more of each Fund's total assets.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Funds may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Funds will
purchase or sell when-issued securities and forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Funds. If
a Fund disposes of the right
Prospectus Page 16
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
to acquire a when-issued security prior to its acquisition or disposes of its
right to deliver or receive against a forward commitment, it may incur a gain or
loss. At the time the Funds enter into a transaction on a when-issued or forward
commitment basis, a segregated account consisting of cash or liquid securities
equal to the value of the when-issued or forward commitment securities will be
established and maintained with that Fund's custodian bank and will be marked to
market daily. There is a risk that the securities may not be delivered and that
the Funds may incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Each Fund 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 risk normally associated with the
portfolio. These instruments are often referred to as "derivatives," which may
be defined as financial instruments whose performance is derived, at least in
part, from the performance of another asset (such as a security, currency or an
index of securities). Each Fund 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 Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. Each Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. Each Fund 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.
Only a limited market, if any, currently exists for options and futures
transactions relating to currencies of most emerging markets and most Latin
American markets, to securities denominated in such currencies or to securities
of issuers domiciled or principally engaged in business in such emerging
markets. To the extent that such a market does not exist, the Manager may not be
able to effectively hedge its investment in such markets.
Each Fund may purchase and sell put and call options on securities to hedge
against the risk of fluctuations in the prices of securities held by the Fund or
that the Manager intends to include in the Fund's portfolio. The Funds also may
purchase and sell put and call options on indices to hedge against overall
fluctuations in the securities markets generally or in a specific market sector.
Further, a Fund 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
adversely affect the Fund's portfolio. A Fund 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 Fund may
use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolios against changes in the general level of interest
rates.
OTHER INFORMATION. The investment objective of the Emerging Markets Fund and of
the Latin America Growth Fund may not be changed without the approval of a
majority of the respective Fund's outstanding voting securities. A "majority of
the Fund's outstanding voting securities" means the lesser of (i) 67% of the
shares represented at a meeting at which more than 50% of the outstanding shares
are represented, or (ii) more than 50% of the outstanding shares. In addition,
the Emerging Markets Fund and the Latin America Growth Fund each have adopted
certain investment limitations as fundamental policies which also may not be
changed without shareholder approval. A complete description of these
limitations is included in the Statement of Additional Information. Unless
specifically noted, the Emerging Markets Fund's and the Latin America Growth
Fund's investment policies described in this Prospectus and in the Statement of
Additional Information may be changed by a vote of a majority of the Company's
Board of Directors without shareholder approval.
Prospectus Page 17
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that either Fund will achieve its investment
objective. Each Fund's net asset value will fluctuate, reflecting fluctuations
in the market value of its portfolio positions and its net currency exposure.
Investing in either Fund entails a substantial degree of risk and an investment
in either Fund should be considered speculative. Investors are strongly advised
to consider carefully the special risks involved in emerging markets and Latin
America, which are in addition to the usual risks of investing in developed
markets around the world.
EMERGING MARKETS FUND. Investing in emerging markets involves risks relating to
potential political and economic instability within such markets and the risks
of expropriation, nationalization, confiscation of assets and property or the
imposition of restrictions on foreign investment and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation, the Emerging Markets Fund could lose its entire investment in that
market.
Economies in individual emerging markets may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross domestic product,
rates of inflation, currency depreciation, capital reinvestment, resource self-
sufficiency and balance of payments positions. Many emerging market countries
have experienced high rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain countries with
emerging markets.
Emerging markets generally are dependent heavily upon international trade and,
accordingly, have been and may continue to be affected adversely by trade
barriers, exchange controls, managed adjustments in relative currency values and
other protectionist measures imposed or negotiated by the countries with which
they trade.
Disclosure and regulatory standards in many respects are less stringent than in
the U.S. and other major markets. There also may be a lower level of monitoring
and regulation of emerging markets and the activities of investors in such
markets, and enforcement of existing regulations has been extremely limited. In
addition, the securities of non-U.S. issuers generally are not registered with
the SEC, nor are the issuers thereof usually subject to the SEC's reporting
requirements. Accordingly, there may be less publicly available information
about foreign securities and issuers than is available with respect to U.S.
securities and issuers. Foreign companies generally are not subject to uniform
accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies. The Emerging
Markets Fund's net investment income and/or capital gains from its foreign
investment activities may be subject to non-U.S. withholding taxes.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Emerging Markets Fund to make intended securities purchases due
to settlement problems could cause the Emerging Markets Fund to miss attractive
investment opportunities. Inability to dispose of a portfolio security caused by
settlement problems could result either in losses to the Emerging Markets Fund
due to subsequent declines in value of the portfolio security or, if the
Emerging Markets Fund has entered into a contract to sell the security, could
result in possible liability to the purchaser.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
developed countries. The risk also exists that an emergency situation may arise
in one or more emerging markets as a result of which trading of securities may
cease or may be substantially curtailed and prices for the Emerging Markets
Fund's portfolio securities in such markets may not be readily available.
Section 22(e) of the 1940 Act permits a registered investment company, such as
Prospectus Page 18
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
the Emerging Markets Fund, to suspend redemption of its shares for any period
during which an emergency exists, as determined by the SEC. Accordingly, when
the Emerging Markets Fund believes that circumstances dictate, it will promptly
apply to the SEC for a determination that such an emergency exists within the
meaning of Section 22(e) of the 1940 Act. During the period commencing from the
Emerging Markets Fund's identification of such conditions until the date of any
SEC action, the Emerging Markets Fund's portfolio securities in the affected
markets will be valued at fair value determined in good faith by or under the
direction of the Company's Board of Directors.
LATIN AMERICA GROWTH FUND. The Latin America Growth Fund is classified under the
1940 Act as a "non-diversified" fund. As a result, the Latin America Growth Fund
will be able to invest in a fewer number of issuers than if it were classified
under the 1940 Act as a "diversified" fund. To the extent that the Latin America
Growth Fund invests in a smaller number of issuers, the value of its shares may
fluctuate more widely and it may be subject to greater investment and credit
risk with respect to its portfolio.
Investing in securities of Latin American issuers involves risks relating to
potential political and economic instability of certain Latin American countries
and the risks of expropriation, nationalization, confiscation of assets and
property or the imposition of restrictions on foreign investment and on
repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation, the Latin America Growth Fund could lose
its entire investment in any such country.
The securities markets of Latin American countries are substantially smaller,
less developed, less liquid and more volatile than the major securities markets
in the United States. Disclosure and regulatory standards are in many respects
less stringent than U.S. standards. Furthermore, there is a lower level of
monitoring and regulation of the markets and the activities of investors in such
markets, and enforcement of existing regulations has been extremely limited.
The limited size of many Latin American securities markets and limited trading
volume in issuers compared to volume of trading in U.S. securities could cause
prices to be erratic for reasons apart from factors that affect the quality of
the securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets.
Further, there is a risk that an emergency situation may arise in one or more
Latin American markets as a result of which prices for portfolio securities in
such markets may not be readily available. Accordingly, when the Latin America
Growth Fund believes that circumstances dictate, it will follow the procedures
as described above concerning the Emerging Markets Fund.
The economies of individual Latin American countries may differ favorably or
unfavorably from the U.S. economy in such respects as the rate of growth of
gross domestic product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. 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. Furthermore, certain
Latin American countries may impose withholding taxes on dividends payable to
the Latin America Growth Fund at a higher rate than those imposed by other
foreign countries. This may reduce the Latin America Growth Fund's investment
income available for distribution to shareholders.
Companies in Latin America are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. There is substantially less publicly available
information about Latin American companies and the governments of Latin American
countries than there is about U.S. companies and the U.S. Government.
Certain Latin American countries are among the largest debtors to commercial
banks and foreign governments. At times certain Latin American countries have
declared moratoria on the payment of principal and/or interest on external debt.
The Fund may invest in debt securities, including Brady Bonds, issued as part of
debt restructurings and such debt is to be considered speculative. There is a
history of defaults with
Prospectus Page 19
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
respect to commercial bank loans by public and private entities issuing Brady
Bonds.
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
the Emerging Markets Fund or by the Latin America Growth Fund generally will
vary inversely with market interest rates. If interest rates in a market fall,
the Funds' debt securities issued by governments or companies in that market
ordinarily will increase in value. If market interest rates increase, however,
the debt securities owned by the Funds in that market will likely decrease in
value.
The Emerging Markets Fund may invest up to 20% of its total assets in debt
securities rated below investment grade and the Latin America Growth Fund may
invest up to 50% of its total assets in debt securities of any rating. Such
investments involve a high degree of risk.
Debt rated Baa by Moody's Investors Service, Inc. ("Moody's") is considered by
Moody's to have speculative characteristics. Debt rated BB, B, CCC, CC or C by
Standard & Poor's Ratings Group ("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 foreign debt securities are the equivalent of high
yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. Similarly, certain emerging market and Latin American governments
that issue lower quality debt securities are among the largest debtors to
commercial banks, foreign governments and supranational organizations such as
the World Bank, and may not be able or willing to make principal and/or interest
repayments as they come due. The risk of loss due to default by the issuer is
significantly greater for the holders of lower quality securities because such
securities are generally unsecured and may be subordinated to the claims of
other creditors of the issuer.
Lower quality debt securities frequently have call or buy-back features which
would permit an issuer to call or repurchase the security from the Funds. In
addition, the Funds may have difficulty disposing of lower quality securities
because they may have a thin trading market. There may be no established retail
secondary market for many of these securities, and either Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for the Funds to obtain accurate market quotations for purposes of
valuing the Funds' portfolios. The Funds may also acquire lower quality debt
securities during an initial underwriting or which are sold without registration
under applicable securities laws. Such securities involve special considerations
and risks.
Prospectus Page 20
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Funds may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession.
A Fund may also incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal or interest on its portfolio
holdings, and a Fund may have limited legal recourse in the event of a default.
Debt securities issued by governments in emerging or Latin American markets can
differ from debt obligations issued by private entities in that remedies from
defaults generally must be pursued in the courts of the defaulting government,
and legal recourse is therefore somewhat diminished. Political conditions, in
terms of a government's willingness to meet the terms of its debt obligations,
also are of considerable significance. There can be no assurance that the
holders of commercial bank debt may not contest payments to the holders of debt
securities issued by governments in emerging or Latin American markets in the
event of default by the governments under commercial bank loan agreements.
ILLIQUID SECURITIES. The Emerging Markets Fund may invest up to 15% of its net
assets, and the Latin America Growth Fund may invest up to 10% of its net assets
in securities for which no readily available market exists, so-called "Illiquid
Securities." The Latin America Growth Fund may invest in joint ventures,
cooperatives, partnerships and state enterprises and other similar vehicles
which are illiquid (collectively, "Special Situations"). The Manager believes
that carefully selected investments in Special Situations could enable the Latin
America Growth Fund to achieve capital appreciation substantially exceeding the
appreciation the Fund would realize if it did not make such investments.
However, in order to limit investment risk, the Latin America Growth Fund will
invest no more than 5% of it 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.
CURRENCY RISK. Because the Emerging Markets Fund and the Latin America Growth
Fund may invest substantially in securities denominated in currencies other than
the U.S. dollar, and since the Funds may hold foreign currencies, each Fund will
be affected favorably or unfavorably by exchange control regulations or changes
in the exchange rates between such currencies and the U.S. dollar. Changes in
currency exchange rates will influence the value of each Fund's shares, and also
may affect the value of dividends and interest earned by the Funds and gains and
losses realized by the Funds. Currencies generally are evaluated on the basis of
fundamental economic criteria (e.g., relative inflation and interest rate levels
and trends, growth rate forecasts, balance of payments status and economic
policies) as well as technical and political data. Exchange rates are determined
by the forces of supply and demand in the foreign exchange markets. These forces
are affected by the international balance of payments and other economic and
financial conditions, government intervention, speculation and other factors. If
the currency in which a security is denominated appreciates against the U.S.
dollar, the dollar value of the security will increase. Conversely, a decline in
the exchange rate of the currency would adversely affect the value of the
security expressed in dollars.
Many of the currencies of emerging market and Latin American countries have
experienced steady devaluations relative to the U.S. dollar, and major
devaluations have historically occurred in certain countries. Any devaluations
in the currencies in which a Fund's portfolio securities are denominated may
have a detrimental impact on the Fund.
Some countries also may have fixed currencies whose values against the U.S.
dollar are not independently determined. In addition, there is a risk that
certain countries may restrict the free conversion of their currencies into
other currencies. Further, certain currencies may not be internationally traded.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. Although either Fund is
authorized to enter into options, futures and forward currency transactions, a
Fund 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 and movements in
interest rates and currency markets; (2) imperfect correlation, or even no
correlation,
Prospectus Page 21
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
between movements in the price of forward contracts, options, futures contracts
or options thereon and movements in the price of the currency or security hedged
or used for cover; (3) the fact that skills and techniques needed to trade
options, futures contracts and options thereon or to use forward currency
contracts are different from those needed to select the securities in which the
Funds invest; (4) lack of assurance that a liquid secondary market will exist
for any particular option, futures contract or option thereon at any particular
time; (5) the possible loss of principal under certain conditions; (6) the
possible inability of a Fund to purchase or sell a portfolio security at a time
when it would otherwise be favorable for it to do so, or the possible need for a
Fund to sell a security at a disadvantageous time, due to the need for the Fund
to maintain "cover" or to set aside securities in connection with hedging
transactions; and (7) the possible need of a Fund 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.
Prospectus Page 22
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
HOW TO INVEST
- --------------------------------------------------------------------------------
GENERAL. All purchase orders will be executed at the public offering price next
determined after the purchase order is received, which includes any applicable
sales charge for Class A shares. Orders received before the close of regular
trading on the New York Stock Exchange ("NYSE") (currently, 4:00 P.M. Eastern
time, unless weather, equipment failure or other factors contribute to an
earlier closing time), on any Business Day will be executed at the public
offering price for the applicable class of shares determined that day. A
"Business Day" is any day Monday through Friday on which the NYSE is open for
business. The minimum initial investment is $500 ($100 for IRAs and $25 for
custodial accounts under Section 403(b)(7) of the Code and other tax-qualified
employer-sponsored retirement accounts, if made under a systematic investment
plan providing for monthly payments of at least that amount), and the minimum
for additional purchases is $100 (with a $25 minimum for IRAs, Code Section
403(b)(7) custodial accounts and other tax-qualified employer-sponsored
retirement accounts, as mentioned above). 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."
WHEN PLACING PURCHASE ORDERS, INVESTORS SHOULD SPECIFY WHETHER THE ORDER IS FOR
CLASS A OR CLASS B SHARES OF A FUND. ALL PURCHASE ORDERS THAT FAIL TO SPECIFY A
CLASS WILL AUTOMATICALLY BE INVESTED IN CLASS A SHARES. PURCHASES OF $500,000 OR
MORE MUST BE FOR CLASS A SHARES.
PURCHASES THROUGH BROKER/DEALERS. Shares of the Funds may be purchased through
broker/dealers with which GT Global has entered into dealer agreements. Orders
received by such broker/dealers before the close of regular trading on the NYSE
on a Business Day will be effected that day, provided that such order is
transmitted to the Transfer Agent prior to its close of business on such day.
The broker/dealer will be responsible for forwarding the investor's order to the
Transfer Agent so that it will be received prior to such time. After an initial
investment is made and a shareholder account is established through a
broker/dealer, at the investor's option, subsequent purchases may be made
directly through GT Global. See "Shareholder Account Manual."
Broker/dealers that do not have dealer agreements with GT Global also may offer
to place orders for the purchase of shares. Purchases made through such
broker/dealers will be effected at the public offering price next determined
after the order is received by the Transfer Agent. Such a broker/ dealer may
charge the investor a transaction fee as determined by the broker/dealer. That
fee will be in addition to the sales charge payable by the investor with respect
to Class A shares, and may be avoided if shares are purchased through a broker/
dealer that has a dealer agreement with GT Global or directly through GT Global.
PURCHASES THROUGH THE DISTRIBUTOR. Investors may purchase shares and open an
account directly through GT Global, each Fund's distributor, by completing and
signing an Account Application accompanying this Prospectus. Investors should
mail to the Transfer Agent the completed Account Application indicating the
class of shares together with a check to cover the purchase in accordance with
the instructions provided in the Shareholder Account Manual. Purchases will be
executed at the public offering price next determined after the Transfer Agent
has received the Account Application and check. Subsequent investments do not
need to be accompanied by an application.
Investors also may purchase shares of the Funds through GT Global by bank wire.
Bank wire purchases will be effected at the next determined public offering
price after the bank wire is received. A wire investment is considered received
when the Transfer Agent is notified that the bank wire has been credited to a
Fund. The investor is responsible for providing prior telephone or facsimile
notice to the Transfer Agent that a bank wire is being sent. An investor's bank
may charge a service fee for wiring money to the Funds. The Transfer Agent
Prospectus Page 23
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
currently does not charge a service fee for facilitating wire purchases, but
reserves the right to do so in the future. Investors desiring to open an account
by bank wire should call the Transfer Agent at the appropriate toll free number
provided in the Shareholder Account Manual to obtain an account number and
detailed instructions.
CERTIFICATES. Physical certificates representing a Fund's shares will not be
issued unless a written request is submitted to the Transfer Agent. Shares of a
Fund are recorded on a register by the Transfer Agent, and shareholders who do
not elect to receive certificates have the same rights of ownership as if
certificates had been issued to them. Redemptions and exchanges by shareholders
who hold certificates may take longer to effect than similar transactions
involving non-certificated shares because the physical delivery and processing
of properly executed certificates is required. ACCORDINGLY, THE FUNDS AND GT
GLOBAL RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PURCHASING CLASS A SHARES
Each Fund's public offering price for Class A shares is the next determined net
asset value per share (see "Calculation of Net Asset Value") including any sales
charge determined in accordance with the following schedule:
<TABLE>
<CAPTION>
SALES CHARGE AS PERCENTAGE OF DEALER
REALLOWANCE AS
AMOUNT OF PURCHASE ------------------------------ PERCENTAGE OF
AT THE PUBLIC OFFERING NET THE OFFERING
OFFERING PRICE PRICE INVESTMENT PRICE
- --------------------- ------------- --------------- -------------------
<S> <C> <C> <C>
Less than $50,000.... 4.75% 4.99% 4.25%
$50,000 but less than
$100,000........... 4.00% 4.17% 3.50%
$100,000 but less
than $250,000...... 3.00% 3.09% 2.75%
$250,000 but less
than $500,000...... 2.00% 2.04% 1.75%
$500,000 or
more............... 0.00% 0.00% *
<FN>
- ------------------
* GT Global will pay the following commissions to broker/ dealers that
initiate and are responsible for purchases by any single purchaser of Class
A shares of $500,000 or more in the aggregate: 1.00% of the purchase amount
up to $3 million, plus 0.50% on the excess over $3 million. For purposes of
determining the appropriate commission to be paid in connection with the
transaction, GT Global will combine purchases made by a broker/dealer on
behalf of a single client so that the broker/dealer's commission, as
outlined above, will be based on the aggregate amount of such client's
share purchases over a rolling twelve month period from the date of the
transaction.
</TABLE>
All shares purchased without a sales charge based on the aggregate purchase
amount's equalling at least $500,000 will be subject to a contingent deferred
sales charge for the first year after their purchase equal to 1% of the lower of
the original purchase price or the net asset value of such shares at the time of
redemption. See "Contingent Deferred Sales Charge -- Class A Shares."
From time to time, GT Global may reallow to broker/ dealers the full amount of
the sales charge on Class A shares. In some instances, GT Global may offer these
reallowances only to broker/dealers that have sold or may sell significant
amounts of Class A shares. To the extent that GT Global reallows the full amount
of the sales charge to broker/ dealers, such broker/dealers may be deemed to be
underwriters under the Securities Act of 1933, as amended ("1933 Act"). These
commissions may be paid to broker/dealers and other financial institutions that
initiate purchases made pursuant to sales charge waivers (i) and (vii),
described below under "Sales Charge Waivers -- Class A Shares."
The following purchases may be aggregated for purposes of determining the
"Amount of Purchase":
(a) Individual purchases on behalf of a single purchaser, the purchaser's spouse
and their children under the age of 21 years, including purchases in connection
with an employee benefit plan or plans exclusively for the benefit of such
individual(s), such as an IRA, individual Code Section 403(b) plan or
single-participant, self-employed individual retirement plan ("Keogh Plan") and
purchases made by a company controlled by such individual(s);
(b) Individual purchases by a trustee or other fiduciary purchasing shares for a
single trust estate or a single fiduciary account, including an employee benefit
plan (such as employer-sponsored pension, profit-sharing and stock bonus plans,
including plans under Code Section 401(k), and medical, life and disability
insurance trusts) other than a plan described in "(a)" above; and
(c) Individual purchases by a trustee or other fiduciary purchasing shares
concurrently for two or more employee benefit plans of a single employer or of
employers affiliated with each other (again excluding an employee benefit plan
described in "(a)" above).
Prospectus Page 24
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
SALES CHARGE WAIVERS -- CLASS A SHARES. Class A shares are sold at net asset
value without imposition of sales charges when investments are made by the
following classes of investors:
(i) Trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations that have at least 100 but less than 1,000
employees, and trustees or other fiduciaries purchasing shares for employee
benefit plans which are sponsored by organizations with collective retirement
plan assets of $500,000 or more and have less than 100 employees, and purchases
of at least $500,000 by trustees or other fiduciaries of employee benefit plans
with collective retirement plan assets of $100 million or more.
(ii) Current or retired Trustees, Directors and officers of the investment
companies for which the Manager serves as investment manager or administrator;
employees or retired employees of the companies composing Liechtenstein Global
Trust or affiliated companies of Liechtenstein Global Trust; the children,
siblings and parents of the persons in the foregoing categories; and trusts
primarily for the benefit of such persons.
(iii) Registered representatives or full-time employees of broker/dealers that
have entered into dealer agreements with GT Global, and the children, siblings
and parents of such persons and employees of financial institutions that
directly, or through their affiliates, have entered into dealer agreements with
GT Global (or that otherwise have an arrangement with respect to sales of Fund
shares with a broker/dealer that has entered into a dealer agreement with GT
Global) and the children, siblings and parents of such employees.
(iv) Companies exchanging shares with or selling assets to one or more of the GT
Global Mutual Funds pursuant to a merger, acquisition or exchange offer.
(v) Shareholders of any of the GT Global Mutual Funds as of April 30, 1987 who
since that date continually have owned shares of one or more of the GT Global
Mutual Funds.
(vi) Purchases made through the automatic investment of dividends and other
distributions paid by any of the other GT Global Mutual Funds.
(vii) Registered investment advisers, trust companies and bank trust departments
exercising DISCRETIONARY investment authority with respect to the money to be
invested in the GT Global Mutual Funds provided that the aggregate amount
invested pursuant to this sales charge waiver equals at least $500,000, and
further provided that such money is not eligible to be invested in the Advisor
Class.
(viii) Clients of administrators of tax-qualified employee benefit plans which
have entered into agreements with GT Global.
(ix) Retirement plan participants who borrow from their retirement accounts by
redeeming GT Global Mutual Fund shares and subsequently repay such loans via a
purchase of Fund shares.
(x) Retirement plan participants who receive distributions from a tax-qualified
employer-sponsored retirement plan which is invested in GT Global Mutual Funds,
the proceeds of which are reinvested in Fund shares.
(xi) Accounts not eligible for the Advisor Class as to which a financial
institution or broker/dealer charges an account management fee, provided the
financial institution or broker/dealer has entered into an agreement with GT
Global regarding such accounts.
(xii) Certain former AMA Investment Advisers' shareholders who became
shareholders of the GT Global Health Care Fund in October 1989, and who have
continuously held shares in the GT Global Mutual Funds since that time.
(xiii) An investor purchasing shares of a Fund with redemption proceeds from a
registered management investment company that is not one of the GT Global Mutual
Funds, on which the investor was subject to a front-end sales charge or a
contingent deferred sales charge.
REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in a Fund
have a one-time privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of the Fund and/or one or more of the other GT Global Mutual Funds. The
Transfer Agent must receive from the investor or the investor's broker/dealer
within 180 days after the date of the redemption both a written request for
reinvestment and a check not exceeding the amount of the redemption proceeds.
The reinstatement purchase will be effected at the net asset value per share
next determined after such receipt. Gain on the redemption is taxable
notwithstanding exercise of the reinvestment privilege. See "Dividends, Other
Distributions and Federal Income Taxation -- Taxes."
Prospectus Page 25
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
REDUCED SALES CHARGE PLANS -- CLASS A SHARES. Class A shares of the Funds may be
purchased at reduced sales charges either through the Right of Accumulation or
under a Letter of Intent. For more details on these plans, investors should
contact their brokers or the Transfer Agent.
RIGHT OF ACCUMULATION. Pursuant to the Right of Accumulation, investors are
permitted to purchase shares of the Funds at the sales charge applicable to the
total of (a) the dollar amount then being purchased plus (b) the amount equal to
the total purchase price of the investor's concurrent purchases of the other GT
Global Mutual Funds (other than GT Global Dollar Fund) plus (c) the price of all
shares of GT Global Mutual Funds (other than shares of GT Global Dollar Fund not
acquired by exchange) already held by the investor. To receive the Right of
Accumulation, at the time of purchase investors must give their brokers, the
Transfer Agent or GT Global sufficient information to permit confirmation of
qualification. THE FOREGOING RIGHT OF ACCUMULATION APPLIES ONLY TO CLASS A
SHARES OF THE FUNDS AND OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL
DOLLAR FUND).
LETTER OF INTENT. In executing a Letter of Intent ("LOI") an investor indicates
an aggregate investment amount he or she intends to invest in Class A shares of
the Funds and the Class A shares of other GT Global Mutual Funds (other than GT
Global Dollar Fund) in the following thirteen months. The LOI is included as
part of the Account Application located at the end of this Prospectus. The sales
charge applicable to that aggregate amount then becomes the applicable sales
charge on all purchases made concurrently with the execution of the LOI and in
the thirteen months following that execution. If an investor executes an LOI
within 90 days of a prior purchase of GT Global Mutual Fund Class A shares
(other than GT Global Dollar Fund), the prior purchase may be included under the
LOI and an appropriate adjustment, if any, with respect to the sales charges
paid by the investor in connection with the prior purchase will be made, based
on the then-current net asset value(s) of the pertinent Fund(s).
If at the end of the thirteen month period covered by the LOI, the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the reduced rate and the
sales charges applicable to the purchases actually made. Shares having a value
equal to 5% of the amount specified in the LOI will be held in escrow during the
thirteen month period (while remaining registered in the investor's name) and
are subject to redemption to assure any necessary payment to GT Global of a
higher applicable sales charge.
Investors should be aware that either Fund may, in the future, suspend the
offering of its shares although not for previously established LOIs. The Latin
America Growth Fund has previously suspended the offering of its shares. If all
ongoing sales of either Fund shares are suspended, however, an LOI executed in
connection with the offering of that Fund's shares may continue to be completed
by the purchase of shares of one or more other GT Global Mutual Funds (other
than GT Global Dollar Fund).
For purposes of an LOI, any registered investment adviser, trust company or bank
trust department which exercises investment discretion and which intends within
thirteen months to invest $500,000 or more can be treated as a single purchaser,
provided further that such entity places all purchase and redemption orders.
Such entities should be prepared to establish their qualification for such
treatment. THE FOREGOING LOI APPLIES ONLY TO CLASS A SHARES OF THE FUNDS AND
OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES. Purchases of Class A shares
of $500,000 or more may be made without an initial sales charge. If a
shareholder within one year after the date of purchase redeems any Class A
shares that were purchased without a sales charge by reason of a purchase of
$500,000 or more, a contingent deferred sales charge of 1% of the lower of the
original purchase price or the net asset value of such shares at the time of
redemption will be charged. Class A shares will not be subject to the contingent
deferred sales charge to the extent that the value of such shares represents (1)
reinvestment of dividends or other distributions or (2) Class A shares redeemed
more than one year after their purchase. Such shares purchased for at least
$500,000 without a sales charge may be exchanged for Class A shares of another
GT Global Mutual Fund (other than GT Global Dollar Fund) without the imposition
of a contingent deferred sales charge, although the contingent deferred sales
charge described above will apply to the redemption of the shares acquired
through an exchange. The waivers set forth under "Contingent Deferred Sales
Charge Waivers" below apply to redemptions
Prospectus Page 26
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
of Class A shares upon which a contingent deferred sales charge would otherwise
be imposed. For federal income tax purposes, the amount of the contingent
deferred sales charge will reduce the gain or increase the loss, as the case may
be, on the amount realized on redemption. The amount of any contingent deferred
sales charge will be paid to GT Global.
PURCHASING CLASS B SHARES
Each Fund's public offering price for Class B shares is the next determined net
asset value per share. See "Calculation of Net Asset Value." No initial sales
charge is imposed. A contingent deferred sales charge, however, is imposed on
certain redemptions of Class B shares. Because Class B shares are sold without
an initial sales charge, the Fund receives the full amount of the investor's
purchase payment.
Class B shares will not be subject to a contingent deferred sales charge to the
extent that the value of such shares represents: (1) reinvestment of dividends
or other gain distributions or (2) shares redeemed more than six years after
their purchase. Redemptions of most other Class B shares will be subject to a
contingent deferred sales charge. See "Contingent Deferred Sales Charge
Waivers." The amount of any applicable contingent deferred sales charge will be
calculated by multiplying the lesser of the original purchase price or the net
asset value of such shares at the time of redemption by the applicable
percentage shown in the table below.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE OF THE
LESSER OF NET ASSET VALUE AT
REDEMPTION
OR THE ORIGINAL
REDEMPTION DURING PURCHASE PRICE
- ------------------------------ -----------------------------
<S> <C>
1st Year Since Purchase....... 5%
2nd Year Since Purchase....... 4%
3rd Year Since Purchase....... 3%
4th Year Since Purchase....... 3%
5th Year Since Purchase....... 2%
6th year Since Purchase....... 1%
Thereafter.................... 0%
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it will
be assumed that the redemption is made first of shares acquired pursuant to the
reinvestment of dividends and distributions; then of shares purchased seven
years or more prior to the redemption; and finally, of shares held for the
longest period of time within the applicable six-year period. For shares
acquired in an exchange the length of the holding period will be measured from
the date of original purchase.
For federal income tax purposes, the amount of the contingent deferred sales
charge will reduce the gain or increase the loss, as the case may be, on the
amount realized on redemption. The amount of any contingent deferred sales
charge will be paid to GT Global.
CONTINGENT DEFERRED SALES
CHARGE WAIVERS
The contingent deferred sales charge will be waived for: (1) exchanges, as
described below; (2) redemptions in connection with each Fund's systematic
withdrawal plan not in excess of 12% of the value of the account annually; (3)
total or partial redemptions made within one year following the death or
disability of a shareholder; (4) minimum required distributions made in
connection with a GT Global, IRA, Keogh Plan or custodial account under Section
403(b) of the Code or other retirement plan following attainment of age 70 1/2;
(5) total or partial redemptions resulting from a distribution following
retirement in the case of a tax-qualified employer-sponsored retirement plan;
(6) when a redemption results from a tax-free return of an excess contribution
pursuant to Section 408(d)(4) or (5) of the Code or from the death or disability
of the employee; (7) a one-time reinvestment in Class B shares of the Fund
within 180 days of a prior redemption; (8) redemptions pursuant to the Fund's
right to liquidate a shareholder's account involuntarily; (9) redemptions
pursuant to distributions from a tax-qualified employer-sponsored retirement
plan, which is invested in GT Global Mutual Funds, which are permitted to be
made without penalty pursuant to the Code (other than tax-free rollovers or
transfers of asset) and the proceeds of which are reinvested in GT Global Mutual
Funds; (10) redemptions made in connection with participant-directed exchanges
between options in an employer-sponsored benefit plan; (11) redemptions made for
the purpose of providing cash to fund a loan to a participant in a tax-qualified
retirement plan; (12) redemptions made in connection with a distribution from
any retirement plan or account that is permitted in accordance with the
provisions of Section 72(t)(2) of the Code and the regulations promulgated
thereunder; (13) redemptions made in connection with a distribution from any
retirement plan or account that involves the return of an excess deferral amount
pursuant to Section 401(k)(8) or Section 402(g)(2) of the Code of the return of
excess aggregate contributions pursuant to Section 401(m)(6) of the Code; (14)
redemptions
Prospectus Page 27
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
made in connection with a distribution from a qualified profit-sharing or stock
bonus plan described in Section 401(k) of the Code to a participant or
beneficiary under Section 401(k)(2)(B)(IV) of the Code upon hardship of the
covered employee (determined pursuant to Treasury Regulation section
1.401(k)-1(d)(2); and (15) redemptions made by or for the benefit of certain
states, counties or cities, or any instrumentalities, departments or authorities
thereof where such entities are prohibited or limited by applicable law from
paying a sales charge or commission.
PROGRAMS APPLICABLE TO CLASS A
AND CLASS B SHARES
AUTOMATIC INVESTMENT PLAN. Investors may purchase either Class A or Class B
shares of the Emerging Markets Fund or Latin America Growth Fund through the GT
Global Automatic Investment Plan. Under this Plan, an amount specified by the
shareholder of $100 or more (or $25 for IRAs, Code Section 403(b)(7) custodial
accounts and other tax-qualified employer-sponsored retirement accounts) on a
monthly or quarterly basis will be sent to the Transfer Agent from the
investor's bank for investment in either the Emerging Markets Fund or Latin
America Growth Fund. Investors should be aware that the Emerging Markets Fund or
Latin America Growth Fund may suspend the offering of its shares in the future,
although not the previously established Automatic Investment Plans. If a
suspension of all sales is made, automatic investments will not be accepted
until the offering is recommenced. Participants in the Automatic Investment Plan
should not elect to receive dividends or other distributions from the Funds in
cash. A sales charge will be applied to each automatic monthly purchase of Class
A Fund shares in an amount determined in accordance with the Right of
Accumulation privilege described above. To participate in the Automatic
Investment Plan, investors should complete the appropriate portion of the
Supplemental Application provided at the end of this Prospectus. Investors
should contact their broker/dealers or GT Global for more information.
DOLLAR COST AVERAGING PROGRAM. Investors may purchase either Class A or Class B
shares of a Fund through the GT Global Dollar Cost Averaging Program whereby a
shareholder invests the same dollar amount each month. Accordingly, the investor
purchases more shares when a Fund's net asset value is relatively low and fewer
shares when a Fund's net asset value is relatively high. This can result in a
lower average cost-per-share than if the shareholder followed a less systematic
approach. Dollar cost averaging does not assure a profit and does not protect
against loss in declining markets. Because such a program involves continuous
investment in securities regardless of fluctuating price levels of such
securities, investors should consider their financial ability to continue
purchases when prices are declining.
A participant in the GT Global Dollar Cost Averaging Program first designates
the size of his or her monthly investment in a Fund ("Monthly Investment") after
participation in the Program begins. The Monthly Investment must be at least
$1,000. The investor then will make an initial investment of at least $10,000 in
the GT Global Dollar Fund. Thereafter, each month an amount equal to the
specified Monthly Investment automatically will be redeemed from the GT Global
Dollar Fund and invested in Fund shares. A sales charge will be applied to each
automatic monthly purchase of Class A Fund shares in an amount determined in
accordance with the Right of Accumulation privilege described above. Investors
should be aware that the Emerging Markets Fund or Latin America Growth Fund may
suspend the offering of its shares in the future, although not for shareholders
who are participants in the Dollar Cost Averaging Program at that time. If a
suspension of all sales is made, the Funds will not accept Monthly Investments.
Investors should contact their brokers or GT Global for more information.
PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
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(es) 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
Prospectus Page 28
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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. Shareholders participating in
the Program may also participate in the Right of Accumulation, Letter of Intent,
and Dollar Cost Averaging programs. 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.
Prospectus Page 29
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Shares of the Funds may be exchanged for shares of the same class of any of the
other GT Global Mutual Funds (including the other Fund), based on their
respective net asset values, without imposition of any sales charges, 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 AMERICA SMALL CAP GROWTH FUND
-- GT GLOBAL AMERICA MID CAP GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
-- GT GLOBAL DOLLAR FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL WORLDWIDE GROWTH FUND
Up to four exchanges each year may be made without charge. A $7.50 service
charge will be imposed on each subsequent exchange. If an investor does not
surrender all of his or her shares in an exchange, the remaining balance in the
investor's account after the exchange must be at least $500. Exchange requests
received in good order by the Transfer Agent before the close of regular trading
on the NYSE on any Business Day will be processed at the net asset value
calculated on that day. The terms of the exchange offer may be modified at any
time, on 60 days' prior written notice.
A shareholder interested in making an exchange should contact his broker or the
Transfer Agent to request the prospectus of the other GT Global Mutual Fund(s)
being considered. Certain brokers may charge a fee for handling exchanges.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to his or
her broker/dealer or to the Transfer Agent by telephone at the appropriate
toll-free number provided in the Shareholder Account Manual. Exchange orders
will be accepted by telephone provided that the exchange involves only
uncertificated shares on deposit in the shareholder's account or for which
certificates previously have been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine 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.
EXCHANGES BY MAIL. Exchange orders should be sent by mail to the investor's
broker or to the Transfer Agent at the address set forth in the Shareholder
Account Manual.
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 reserves 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 reserves 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, the Funds and GT Global reserve the right to reject
any purchase order.
Prospectus Page 30
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value (subject to any applicable
contingent deferred sales charge for Class B shares or, in limited
circumstances, Class A shares) and redemption proceeds will be sent within seven
days of the execution of a redemption request. If a redeeming shareholder owns
both Class A and Class B shares of a Fund, Class A shares will be redeemed first
unless the shareholder specifically requests otherwise.
REDEMPTIONS THROUGH BROKER/DEALERS. Shareholders with accounts at broker/dealers
that sell shares of the Funds may submit redemption requests to such
broker/dealers. If the shares are held in the broker/dealer's "street name," the
redemption must be made through the broker/ dealer. Broker/Dealers may honor a
redemption request either by repurchasing shares from a redeeming shareholder at
the net asset value next determined after the broker/dealer receives the request
or, as described below, by forwarding such requests to the Transfer Agent (see
"How to Redeem Shares -- Redemptions Through the Transfer Agent"). Redemption
proceeds normally will be paid by check or, if offered by the broker/dealer,
credited to the shareholder's brokerage account at the election of the
shareholder. Broker/Dealers may impose a service charge for handling redemption
transactions placed through them and may have other requirements concerning
redemptions. Accordingly, shareholders should contact their broker/dealers for
more details.
REDEMPTIONS THROUGH THE TRANSFER AGENT. Redemption requests may be transmitted
to the Transfer Agent by telephone or by mail, in accordance with the
instructions provided in the Shareholder Account Manual. Redemptions will be
effected at the net asset value next determined after the Transfer Agent has
received the request and any required supporting documentation (less any
applicable contingent deferred sales charge for Class B shares or, in limited
circumstances, Class A shares). Redemption requests will not require a signature
guarantee if the redemption proceeds are to be sent either: (i) to the redeeming
shareholder at the shareholder's address of record as maintained by the Transfer
Agent, provided the shareholder's address of record has not been changed within
the preceding thirty days; or (ii) directly to a pre-designated bank, savings
and loan or credit union account ("Pre-Designated Account"). ALL OTHER
REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institution.
A notary public is not an acceptable guarantor. A shareholder uncertain about
the Funds' signature guarantee requirement should contact the Transfer Agent.
Shareholders may qualify to have redemption proceeds sent to a Pre-Designated
Account by completing the appropriate section of the Account Application at the
end of this Prospectus. Shareholders with Pre-Designated Accounts should request
that redemption proceeds be sent either by bank wire or by check. The minimum
redemption amount for a bank wire is $1,000. Shareholders requesting a bank wire
should allow two business days from the time the redemption request is effected
for the proceeds to be deposited in the shareholder's Pre-Designated Account.
See "How to Redeem Shares -- Other Important Redemption Information."
Shareholders may change their Pre-Designated Accounts only by a letter of
instruction to the Transfer Agent containing all account signatures, each of
which must be guaranteed. The Transfer Agent currently does not charge a bank
wire service fee on each wire redemption sent, but reserves the right to do so
in the future. 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.
Prospectus Page 31
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
Shareholders automatically have telephone privileges to authorize redemptions.
The Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
believed to be genuine. The Funds employ reasonable procedures to confirm that
instructions communicated by telephone are genuine 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 preceeding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares in the Funds with a value
of $10,000 or more may participate in the GT Global Systematic Withdrawal Plan.
A participating shareholder will receive proceeds from monthly, quarterly or
annual redemptions of Fund shares with respect to either Class A or Class B
shares. No contingent deferred sales charge will be imposed on certain
redemptions of Class A shares purchased for at least $500,000 without an initial
sales charge and Class B shares made under the Systematic Withdrawal Plan. The
minimum withdrawal amount is $100. The amount or percentage a participating
shareholder specifies may not, on an annualized basis, exceed 12% of the value
of the account, as of the time the shareholder elects to participate in the
Systematic Withdrawal Plan. To participate in the Systematic Withdrawal Plan,
investors should complete the appropriate portion of the Supplemental
Application provided at the end of this Prospectus. Investors should contact
their brokers or the Transfer Agent for more information. With respect to Class
A shares, participation in the Systematic Withdrawal Plan concurrent with
purchases of Class A shares of the Fund may be disadvantageous to investors
because of the sales charges involved and possible tax implications, and
therefore is discouraged. In addition, shareholders who participate in the
Systematic Withdrawal Plan should not elect to reinvest dividends or other
distributions in additional Fund shares.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in doubt as to what documents are required should contact
his broker/dealer or the Transfer Agent.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after the date the request is executed. Requests for redemption which are
subject to any special conditions or which specify a future or past effective
date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which a Fund has not yet
received good payment, the Fund may delay payment of redemption proceeds until
it has assured itself that good payment has been collected for the purchase of
the shares. In the case of purchases by check, it can take up to 10 business
days to confirm that the check has cleared and good payment has been received.
Redemption proceeds will not be delayed when shares have been paid for by wire
or when the investor's account holds a sufficient number of shares for which
funds already have been collected.
A Fund may redeem the shares of any shareholder whose account is reduced to less
than $500 in net asset value through redemptions or other action by the
shareholder. Notice will be given to the shareholder at least 60 days prior to
the date fixed for such redemption, during which time the shareholder may
increase his or her holdings to an aggregate amount of $500 or more (with a
minimum purchase of $100).
Prospectus Page 32
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Shareholders are encouraged to place purchase, exchange and redemption orders
through their broker/dealers. Shareholders also may place such orders directly
through GT Global in accordance with this Manual. See "How to Invest;" "How to
Make Exchanges;" "How to Redeem Shares;" and "Dividends, Other Distributions and
Federal Income Taxation -- Taxes" for more information.
Each Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send completed Account Application (if initial purchase) or letter stating Fund
name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global
P.O. Box 7345
San Francisco, California 94120-7345
INVESTMENTS BY BANK WIRE
An investor opening a new account should call 1-800-223-2138 to obtain an
account number. WITHIN SEVEN DAYS OF PURCHASE SUCH AN INVESTOR MUST SEND A
COMPLETED ACCOUNT APPLICATION CONTAINING THE INVESTOR'S CERTIFIED TAXPAYER
IDENTIFICATION NUMBER TO GT GLOBAL AT THE ADDRESS PROVIDED ABOVE UNDER
"INVESTMENTS BY MAIL." Wire instructions must state Fund name, class of shares,
shareholder's registered name and account number. Bank wires should be sent
through the Federal Reserve Bank Wire System to:
WELLS FARGO BANK, N.A.
ABA 121000248
Attn: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, amount of
exchange, name of the GT Global Mutual Fund exchanging into, shareholder's
registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT Global at 1-800-223-2138
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the above
instructions but send to the following:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call GT Global at 1-800-223-2138.
Prospectus Page 33
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently, 4:00 p.m. Eastern time, unless weather, equipment failure
or other factors contribute to an earlier closing) each Business Day. Each
Fund's asset value per share is computed by determining the value of its total
assets (the securities it holds plus any cash or other assets, including
interest and dividends accrued but not yet received), subtracting all of its
liabilities (including accrued expenses), and dividing the result by the total
number of shares outstanding at such time. Net asset value is determined
separately for each class of shares of each Fund.
Equity securities held by a Fund are valued at the last sale price on the
exchange or in the OTC market in which such securities are primarily traded, as
of the close of business on the day the securities are being valued or, lacking
any sales, at the last available bid price. Long-term debt obligations are
valued at the mean of representative quoted bid or asked prices for such
securities, or, if such prices are not available, at prices for securities of
comparable maturity, quality and type; however, when 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 that
such valuations represent fair value. When market quotations for futures and
options positions held by a Fund are readily available, those positions are
valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under
direction of the Company's Board of Directors. Securities and other assets
quoted in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Each Fund's portfolio securities, from time to time, may be listed primarily on
foreign exchanges or OTC markets that trade on days when the NYSE is closed
(such as Saturday). As a result, the net asset values of the Funds may be
affected significantly by such trading on days when shareholders cannot purchase
or redeem shares of the Funds.
The different service and distribution fees borne by each class of shares will
result in different net asset values and dividends. The per share net asset
value of the Class B shares of a Fund generally will be lower than that of the
Class A shares of that Fund because of the higher service and distribution fees
borne by the Class B shares. The per share net asset value of the Advisor Class
shares of a Fund generally will be higher than that of the Class A and Class B
shares of that Fund because of the absence of any service and distribution fees
applicable to the Advisor Class shares. It is expected, however, that the net
asset value per share of Class A and Class B shares of a Fund will tend to
converge immediately after the payment of dividends, which will differ by
approximately the amount of the service and distribution fee accrual
differential between the classes.
- --------------------------------------------------------------------------------
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 any applicable expenses. Each Fund also annually distributes
substantially all of its realized net short-term capital gain (the excess of
short-term capital gains over short-term capital losses), net capital gain (the
excess of net long-term capital gain over net short-term capital loss) and net
gains from foreign currency transactions, if any. Each Fund
Prospectus Page 34
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
may make an additional dividend or other distribution if necessary to avoid a 4%
excise tax on certain undistributed income and gain.
Dividends and other distributions paid by each Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Class B shares of a Fund will be lower than the per
share income dividends on Class A shares of that Fund as a result of the higher
service and distribution fees applicable to Class B shares; and the per share
income dividends on both such classes of shares of a Fund will be lower than the
per share income dividends on the Advisor Class shares of that Fund as a result
of the absence of any service and distribution fees applicable to Advisor Class
shares. SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Fund shares of the distributing class (or in shares of the
corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional shares are made at net asset value without
imposition of a sales charge. IF NO ELECTION IS MADE BY A SHAREHOLDER, ALL
DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY REINVESTED IN ADDITIONAL
FUND SHARES OF THE DISTRIBUTING CLASS. Reinvestments in another GT Global Mutual
Fund may only be directed to an account with the identical shareholder
registration and account number. These elections may be changed by a shareholder
at any time; to be effective with respect to a distribution, the shareholder or
the shareholder's broker must contact the Transfer Agent by mail or telephone at
least 15 Business Days prior to the payment date. THE FEDERAL INCOME TAX
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.
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 Fund
shares.
Each Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, the shareholders' respective
shares of any foreign taxes paid by the Fund, in which event each shareholder
would be required to include in his or her gross income his or her pro rata
share of those taxes but might be entitled to claim a credit or deduction for
them.
Each Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest
- -- Purchases Through the Distributor") are considered to have uncertified
Prospectus Page 35
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 a Fund's shares may result in taxable gain or loss to the
redeeming shareholder, depending upon whether the redemption proceeds are more
or less than the shareholder's adjusted basis for the redeemed shares (which
normally includes any initial sales charge paid on Class A shares). An exchange
of Fund shares for shares of another GT Global Mutual Fund (including the other
Fund) generally will have similar tax consequences. However, special tax rules
apply when a shareholder (1) disposes of Class A shares of a Fund through a
redemption or exchange within 90 days after purchase and (2) subsequently
acquires Class A shares of that Fund or any other GT Global Mutual Fund on which
an initial sales charge normally is imposed without paying that sales charge due
to the reinstatement privilege or exchange privilege. In these cases, any gain
on the disposition of the original Class A shares will be increased, or loss
decreased, by the amount of the sales charge paid when the shares were acquired,
and that amount will increase the adjusted basis of the shares subsequently
acquired. In addition, if shares of a Fund are purchased within 30 days before
or after redeeming other shares of that Fund (regardless of class) at a loss,
all or a part of the loss will not be deductible and instead will increase the
basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors has overall responsibility for the operation of
the Funds. Pursuant to such responsibility, the Board has approved contracts
with various financial organizations to provide, among other things, day to day
management services required by the Funds. See "Directors and Executive
Officers" in the Statement of Additional Information for a complete description
of the Directors of the Company.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by Chancellor LGT
Asset Management, Inc. (the "Manager") as each Fund's investment manager and
administrator include, but are not limited to, determining the composition of
the Fund's portfolio and placing orders to buy, sell or hold particular
securities; furnishing corporate officers and clerical staff; providing office
space, services and equipment; and supervising all matters relating to the
Fund's operation. For these services, each of the Funds pays the Manager
investment management and administration fees, computed daily and paid monthly,
based on its average daily net assets, at the annualized rate of .975% on the
first $500 million, .95% on the next $500 million, .925% on the next $500
million, and .90% on amounts thereafter. These rates are higher than those paid
by most mutual funds. The Manager and GT Global have undertaken to limit each
Fund's expenses (exclusive of brokerage commissions, taxes, interest and
extraordinary expenses) to the annual rate of 2.40% and 2.90% of the average
daily net assets of the Fund's Class A and Class B shares, respectively. This
undertaking may be changed or eliminated in the future.
The Manager also serves as each Fund'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
Prospectus Page 36
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 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 Funds are as follows:
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Jonathan Chew Portfolio Manager since Fund inception Portfolio Manager for the Manager, LGT
London in 1992 Asset Management PLC (London) and LGT
Asset Management Ltd. (Hong Kong).
James M. Bogin Portfolio Manager since 1993 Portfolio Manager for the Manager
San Francisco since 1993. From 1989 to 1993, Mr.
Bogin was a Fund Manager at Nomura
Investment Management Co. (Tokyo).
John R. Legat Portfolio Manager since 1995 Portfolio Manager for the Manager and
London LGT Asset Management PLC (London).
</TABLE>
LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Soraya M. Betterton Portfolio Manager since Fund inception Portfolio Manager for the Manager.
San Francisco in 1991
</TABLE>
Prospectus Page 37
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
In placing securities orders for the Funds' portfolio 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 each Fund's Class A
and Class B shares. Like the Manager, GT Global is a subsidiary of Liechtenstein
Global Trust with offices at 50 California Street, 27th Floor, San Francisco,
California 94111. As distributor, GT Global collects the sales charges imposed
on purchases of Class A shares and any contingent deferred sales charges that
may be imposed on certain redemptions of Class A and Class B shares. GT Global
reallows a portion of the sales charge on Class A shares to broker/dealers that
have sold such shares in accordance with the schedule set forth above under "How
to Invest." In addition, GT Global pays a commission equal to 4.00% of the
amount invested to broker/dealers who sell Class B shares. A commission with
respect to Class B shares is not paid on exchanges or certain reinvestments in
Class B shares.
The Latin America Growth Fund has previously suspended the offering of its
shares upon the advice of the Manager that doing so was in the best interests of
the portfolio management process. As of the date of this Prospectus, the Latin
America Growth Fund has resumed sales of its shares based upon the Manager's
advice that it is consistent with prudent portfolio management to do so.
However, the Latin America Growth Fund reserves the right to suspend sales again
and Emerging Markets Fund reserves the right to suspend sales in the future
based upon the foregoing portfolio considerations.
GT Global, at its own expense, may provide additional promotional incentives to
broker/dealers that sell shares of the Funds and/or shares of the other GT
Global Mutual Funds. In some instances additional compensation or promotional
incentives may be offered to brokers/dealers that have sold or may sell
significant amounts of shares during specified periods of time. Such
compensation and incentives may include, but are not limited to, cash,
merchandise, trips and financial assistance to broker/dealers in connection with
preapproved conferences or seminars, sales or training programs for invited
sales personnel, payment for travel expenses (including meals and lodging)
incurred by sales personnel and members of their families or other invited
guests to various locations for such seminars or training programs, seminars for
the public, advertising and sales campaigns regarding one or more of the GT
Global Mutual Funds, and/ or other events sponsored by the broker/dealers. In
addition, GT Global makes ongoing payments to brokerage firms, financial
institutions (including banks) and others that facilitate the administration and
servicing of shareholder accounts.
Under a plan of distribution adopted by the Company's Board of Directors
pursuant to Rule 12b-1 under the 1940 Act, with respect to the Fund's Class A
shares ("Class A Plan"), the Funds may each pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A Shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may each pay GT Global a distribution fee at the
annualized rate of up to 0.50% of the average daily net assets of the Fund's
Class A Shares, less any amounts paid by the Fund as the aforementioned service
fee for its expenditures incurred in providing services as distributor. All
expenses for which GT Global is reimbursed under each Class A Plan will have
been incurred within one year of such reimbursement.
Pursuant to a separate plan of distribution adopted by the Company's Board of
Directors with respect to the Fund's Class B shares ("Class B Plan"), each Fund
may pay GT Global a service fee at the annualized rate of up to 0.25% of the
average daily net assets of the Fund's Class B Shares for its expenditures
incurred in servicing and maintaining shareholder accounts, and may pay GT
Global a distribution fee at the annualized rate of up to 0.75% of the average
daily net assets of the Fund's Class B Shares for its expenditures incurred in
providing services as distributor. Expenses incurred under the Class B Plan in
excess of 1.00% annually may be carried forward for reimbursement in subsequent
years as long as that Plan continues in effect.
GT Global's service and distribution expenses under the Plans include the
payment of ongoing commissions; the cost of any additional compensation
Prospectus Page 38
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
paid by GT Global to brokers and dealers; the costs of printing and mailing to
prospective investors prospectuses and other materials relating to the Funds;
the costs of developing, printing, distributing and publishing advertisements
and other sales literature; and allocated costs relating to GT Global's service
and distribution activities, including, among other things, employee salaries,
bonuses and other overhead expenses. In addition, its expenses under each Class
B Plan include payment of initial sales commissions to broker/ dealers and
interest on any unreimbursed amounts carried forward thereunder. GT Global
expects that it will continue to incur certain of such service and distribution
expenses, including trail commission payments and other account servicing costs,
during any suspension of the offering of the Funds shares.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. Banks and broker/ dealer affiliates of banks also may
execute dealer agreements with GT Global for the purpose of selling shares of
the Funds. While the matter is not free from doubt, the Board of Directors
believes that such laws should not preclude a bank from providing administration
or shareholder servicing support or preclude a bank's affiliates from acting as
a broker/dealer. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or their
subsidiaries or affiliates, could prevent a bank and its affiliates from
continuing to perform all or part of its servicing or broker/dealer activities.
If a bank were prohibited from so acting, its shareholder clients would be
permitted to remain shareholders, and alternative means for continuing the
servicing of such shareholders would be sought. It is not expected that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in a Fund, the shareholder will receive from the
Transfer Agent a confirmation statement reflecting the transaction.
Confirmations for transactions effected pursuant to a Fund's Automatic
Investment Plan, Systematic Withdrawal Plan and automatic dividend reinvestment
program may be provided quarterly. Shortly after the end of the Funds' fiscal
year on October 31 and fiscal half-year on April 30 of each year, shareholders
will receive an annual and semiannual report, respectively. In addition, the
federal income tax status of distributions made by the relevant Fund(s) to
shareholders will be reported after the end of the fiscal year on Form 1099-DIV.
Under certain circumstances, duplicate mailings of 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 the
Emerging Markets Fund and the Latin America Growth Fund are entitled to one vote
per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive or conversion rights.
On any matter submitted to a vote of shareholders, shares of each Fund will be
voted by that Fund's shareholders individually when the matter affects the
specific interest of that Fund only, such as approval of that Fund's investment
management arrangements. In addition, each class of shares of a Fund has
exclusive voting rights with respect to its distribution plan. The shares of the
Company's funds will be voted in the aggregate on other matters, such as the
election of Directors and ratification of the Board of Directors' selection of
the Company's independent accountants.
The Company normally will not hold annual meetings of shareholders, except as
required under the
Prospectus Page 39
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
1940 Act. The Company would be required to hold a shareholders meeting in the
event that at any time less than a majority of the Directors holding office had
been elected by shareholders. Directors shall continue to hold office until
their successors are elected and have qualified. Shares of the Company's Funds
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Directors can elect all the Directors.
A Director may be removed upon a majority vote of the shareholders qualified to
vote in the election. Shareholders holding 10% of the Company's outstanding
voting securities may call a meeting of shareholders for the purpose of voting
upon the question of removal of any Director or for any other purpose. The 1940
Act requires the Company to assist shareholders in calling such a meeting.
Pursuant to the Company's Articles of Incorporation, it may issue six billion
shares. Of this number, 300 million shares have been classified as shares of
each Fund. One hundred million shares have been classified as Class A shares of
each Fund, one hundred million shares have been classified as Class B shares of
each Fund, and one hundred million shares have been classified as Advisor Class
shares of each Fund. This amount may be increased from time to time in the
discretion of the Board of Directors. Each share of the Fund represents an
interest in that Fund only, has a par value of $0.0001 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and other distributions out of the income earned and
gain realized on the assets belonging to the Fund as may be declared at the
discretion of the Board of Directors. Each Class A, Class B and Advisor Class
share of the Fund is equal as to earnings, assets and voting privileges, except
as noted above, and each class bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund when issued are fully paid and
nonassessable.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Funds
toll free at (800) 223-2138 or by writing to the Funds at 50 California Street,
27th Floor, San Francisco, California 94111.
PERFORMANCE INFORMATION. Each Fund, from time to time, may include information
on its investment results and/or comparisons of their investment results to
various unmanaged indices or results of other mutual funds or groups of mutual
funds in advertisements, sales literature or reports furnished to present or
prospective shareholders.
In such materials, a Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of each Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of 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 the Fund. Standardized Return
assumes reinvestment of all dividends and other distributions.
In addition, in order to more completely represent a Fund's performance or more
accurately compare such performance to other measures of investment return, a
Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation); it
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without taking the effect of sales charges into
account will be higher than data including the effect of such charges.
Each Fund's performance data reflects past performance and is not necessarily
indicative of future results. A Fund's investment results will vary from time to
time depending upon market conditions, the composition of its portfolio and its
operating expenses. These factors and possible differences in calculation
methods should be considered when comparing a Fund's investment results with
those published for other investment companies, other investment vehicles and
unmanaged indices. A Fund's results also should be considered relative to the
risks associated with its investment objective and policies. See "Investment
Results" in the Statement of Additional Information.
Prospectus Page 40
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of the Manager and GT Global and a subsidiary of
Liechtenstein Global Trust, and maintains its offices at California Plaza, 2121
N. California Boulevard, Suite 450, Walnut Creek, California 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is custodian of each Fund's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company and the Funds.
Kirkpatrick & Lockhart LLP also acts as counsel to the Manager, GT Global and
the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and each Fund's independent accountants
are Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109. Coopers & Lybrand L.L.P. will conduct an annual audit of each Fund,
assist in the preparation of each Fund's federal and state income tax returns
and consult with the Company, or Trust, as applicable, and each Fund as to
matters of accounting, regulatory filings, and federal and state income
taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 41
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 42
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 43
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 44
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 45
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
P.O. Box 7345 ACCOUNT APPLICATION
SAN FRANCISCO, CA 94120-7345
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (Account No.: --------------------------------------)
</TABLE>
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies)
and date of trust instrument. Registration for Uniform Gifts/Transfers to
Minors accounts should be in the name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
------------------------------------ --------------------------------------------------------------------------------
Owner Social Security Number / / or Tax I.D. Number / / (Check applicable box)
------------------------------------ If more than one owner, social security number or taxpayer identification number
Co-owner 1 should be provided for first owner listed. If a purchase is made under Uniform Gift/
------------------------------------ Transfer to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)-----------------------------------------
( )
---------------------------------------------------------------------- ---------------------------
Street Address Home Telephone
( )
---------------------------------------------------------------------- ---------------------------
City, State, Zip Code Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund
selected. Checks should be made payable to "GT GLOBAL."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A Shares or
/ /Class B Shares (Not available for purchases of $500,000 or more or, except
for investors participating in the Portfolio Rebalancing Program, for the
GT Global Dollar Fund).
If a class share box is not checked, your investment will be made in Class A
shares.
<TABLE>
<S> <C> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA MID CAP GROWTH FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 23 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 01 / / GT GLOBAL DOLLAR FUND $
---------- ----------
03 / / GT GLOBAL EUROPE GROWTH FUND $
----------
CHECKWRITING PRIVILEGE
Checkwriting privilege available on Class A shares of GT Global Dollar Fund and GT Global Government Income Fund.
/ / Check here if desired. You will be sent a book of checks.
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS TOTAL INITIAL INVESTMENT: $
----------
All capital gains and dividend distributions will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions AND
dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another GT Global Mutual Fund: Fund Name ------------------------------------------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right, power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF
THE GT GLOBAL MUTUAL FUND(S) IN WHICH I/WE AM/ARE INVESTING AND I/WE AGREE TO
ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE ACCOUNT
WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION PRIVILEGES
DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS ATTACHED AND
AGREE THAT GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS,
INC., G.T. INVESTMENT PORTFOLIOS, INC. AND THE FUNDS' TRANSFER AGENT, THEIR
OFFICERS AND EMPLOYEES, WILL NOT BE LIABLE FOR ANY LOSS OR DAMAGES ARISING OUT
OF ANY SUCH TELEPHONE, TELEX OR TELEGRAPHIC INSTRUCTIONS REASONABLY BELIEVED
TO BE GENUINE, INCLUDING ANY SUCH LOSS OR DAMAGES DUE TO NEGLIGENCE ON THE
PART OF SUCH ENTITIES. THE INVESTOR(S) CERTIFIES(Y) AND AGREE(S) THAT THE
CERTIFICATIONS, AUTHORIZATIONS, DIRECTIONS AND RESTRICTIONS CONTAINED HEREIN
WILL CONTINUE UNTIL GT GLOBAL, INC., G.T. GLOBAL GROWTH SERIES, G.T.
INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC. OR THE FUNDS'
TRANSFER AGENT RECEIVES WRITTEN NOTICE OF ANY CHANGE OR REVOCATION. ANY CHANGE
IN THESE INSTRUCTIONS MUST BE IN WRITING AND IN SOME CASES, AS DESCRIBED IN
THE PROSPECTUS, REQUIRES THAT ALL SIGNATURES BE GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
UNDER PENALTIES OF PERJURY, I CERTIFY THAT THE TAXPAYER IDENTIFICATION
NUMBER ("NUMBER") PROVIDED ON THIS FORM IS MY (OR MY EMPLOYER'S, TRUST'S,
MINOR'S OR OTHER PAYEE'S) TRUE, CORRECT AND COMPLETE NUMBER AND MAY BE
ASSIGNED TO ANY NEW ACCOUNT OPENED UNDER THE EXCHANGE PRIVILEGE. I FURTHER
CERTIFY THAT I AM (OR THE PAYEE WHOSE NUMBER IS GIVEN IS) NOT SUBJECT TO
BACKUP WITHHOLDING BECAUSE: (A) I AM (OR THE PAYEE IS) EXEMPT FROM BACKUP
WITHHOLDING; (B) THE INTERNAL REVENUE SERVICE (THE "I.R.S.") HAS NOT NOTIFIED
ME THAT I AM (OR THE PAYEE IS) SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A
FAILURE TO REPORT ALL INTEREST OR DIVIDENDS; OR (C) THE I.R.S. HAS NOTIFIED ME
THAT I AM (THE PAYEE IS) NO LONGER SUBJECT TO BACKUP WITHHOLDING;
OR, / / I AM (THE PAYEE IS) SUBJECT TO BACKUP WITHHOLDING.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
THE I.R.S. DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT
OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
<TABLE>
<S> <C>
-----------------------------------------------------------
Date
X X
--------------------------------------------------------- ----------------------------------------------------------
X X
--------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ACCOUNT PRIVILEGES
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized By completing the following section, redemptions
Agent, if any, named below, hereby authorize the which exceed $1,000 may be wired or mailed to a
Transfer Agent of the GT Global Mutual Funds, to Pre-Designated Account at your bank. (Wiring
honor any telephone, telex or telegraphic instructions may be obtained from your bank.) A
instructions reasonably believed to be authentic bank wire service fee may be charged.
for redemption and/or exchange between a similar
class of shares of any of the Funds distributed --------------------------------------------------
by GT Global, Inc. Name of Bank
SPECIAL PURCHASE AND REDEMPTION PLANS --------------------------------------------------
/ / I have completed and attached the Bank Address
Supplemental Application for:
/ / AUTOMATIC INVESTMENT PLAN --------------------------------------------------
/ / SYSTEMATIC WITHDRAWAL PLAN Bank A.B.A Number Account Number
OTHER
/ / I/We owned shares of one or more Funds --------------------------------------------------
distributed by GT Global, Inc. as of April Names(s) in which Bank Account is Established
30, 1987 and since that date continuously A corporation (or partnership) must also submit a
have owned shares of such Funds. Attached is "Corporate Resolution" (or "Certificate of
a schedule showing the numbers of each of Partnership") indicating the names and titles of
my/our Shareholder Accounts. Officers authorized to act on its behalf.
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES
/ / I/We qualify for the Right of Accumulation sales charge discount
described in the Prospectus and Statement of Additional Information of
the Fund purchased.
/ / I/We own shares of more than one Fund distributed by GT Global. Listed
below are the numbers of each of my/our Shareholder Accounts.
/ / The registration of some of my/our shares differs from that shown on this
Application. Below are the account number(s) and registration(s) in each
case.
LIST OF OTHER GT GLOBAL MUTUAL FUND ACCOUNTS:
<TABLE>
<CAPTION>
<S> <C>
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
------------------------------------------- --------------------------------------------------
Account Numbers Account Registrations
</TABLE>
LETTER OF INTENT -- CLASS A SHARES
/ / I agree to the terms of the Letter of Intent set forth below. Although I
am not obligated to do so, it is my intention to invest over a
thirteen-month period in Class A shares of one or more of the GT Global
Mutual Funds in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
When a shareholder signs a Letter of Intent in order to qualify for a reduced
sales charge, Class A shares equal to 5% (in no case in excess of 1/2 of 1%
after an aggregate of $500,000 has been purchased under the Letter) of the
dollar amount specified in this Letter will be held in escrow in the
Shareholder's Account out of the initial purchase (or subsequent purchases, if
necessary) by GT Global, Inc. All dividends and other distributions will be
credited to the Shareholder's Account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
thirteen-month period, the purchaser will remit to GT Global, Inc. the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total of such purchases had been made at a single
time. If this difference is not paid within twenty days after written request
by GT Global, Inc. or the shareholder's Authorized Agent, the appropriate
number of escrowed shares will be redeemed to pay such difference. If the
proceeds from this redemption are inadequate, the purchaser will be liable to
GT Global, Inc. for the balance still outstanding. The Letter of Intent may be
revised upward at any time during the thirteen-month period, and such a
revision will be treated as a new Letter, except that the thirteen-month
period during which the purchase must be made will remain unchanged. Exchange
requests involving escrowed shares must specifically reference those shares.
Exchanges of escrowed shares may be delayed to allow for the extra processing
required.
Any questions relating to this Letter of Intent should be directed to GT
Global, 50 California Street, 27th Floor, San Francisco, CA 94111.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Account Application for the purchase of Class A shares
including such shares purchased under a Right of Accumulation or Letter of
Intent or for the purchase of Class B shares in accordance with the terms of
our Dealer Agreement with GT Global, Inc. and with the Prospectus and
Statement of Additional Information of each Fund purchased. We agree to notify
GT Global, Inc. of any purchases properly made under a Letter of Intent or
Right of Accumulation.
<TABLE>
<CAPTION>
<S> <C>
---------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
---------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Number Representative's Name
( )
- -----------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
X
- -----------------------------------------------------------------------------------------------------------------------
Investment Dealer's Authorized Signature Title
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS SUPPLEMENTAL APPLICATION
P.O. Box 7345 SPECIAL INVESTMENT AND
SAN FRANCISCO, CA 94120-7345 WITHDRAWAL OPTIONS
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
ACCOUNT REGISTRATION
Please supply the following information exactly as it appears on the Fund's records.
- --------------------------------------------------------- ---------------------------------------------------------
Fund Name Account Number
- ---------------------------------------------------------- ----------------------------------------------------------
Owner's Name Co-Owner 1
- ---------------------------------------------------------- ----------------------------------------------------------
Co-Owner 2 Telephone Number
- ---------------------------------------------------------- ----------------------------------------------------------
Street Address Social Security or Tax I.D. Number
- ----------------------------------------------------------
City, State, Zip Code
Resident of / / U.S. / / Other ------------------
AUTOMATIC INVESTMENT PLAN / / YES / / NO
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to debit my/our personal checking account on
the designated dates in order to purchase / / Class A shares or / / Class B shares of the Fund indicated at the top of
this Supplemental Application at the applicable public offering price determined on that day.
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 1st day of the month in which you wish investments
to begin.)
Amount of each debit (minimum $100) $
-------------------------------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan
Application.
</TABLE>
- --------------------------------------------------------------------------------
[LOGO]
<TABLE>
<S> <C>
GT GLOBAL MUTUAL FUNDS AUTOMATIC INVESTMENT PLAN
</TABLE>
<TABLE>
<S> <C> <C> <C>
BANK AUTHORIZATION
- ------------------------- ------------------------------ ------------
Bank Name Bank Address Bank Account Number
I/We authorize you, the above named bank, to debit my/our account for amounts drawn by the Transfer Agent of the GT
Global Mutual Funds, acting as my agent. I/We agree that your rights in respect to each withdrawal shall be the same as
if it were a check drawn upon you and signed by me/us. This authority shall remain in effect until I/we revoke it in
writing and you receive it. I/We agree that you shall incur no liability when honoring any such debit.
I/We further agree that you will incur no liability to me if you dishonor any such withdrawal. This will be so even
though such dishonor results in the forfeiture of investment.
- --------------------------------------------------------- ---------------------------------------------------------
Account Holder's Name Joint Account Holder's Name
X X
- ------------------------------------ -------------- ------------------------------------ --------------
Account Holder's Signature Date Joint Account Holder's Signature Date
</TABLE>
(OVER)
<PAGE>
<TABLE>
<S> <C> <C> <C>
SYSTEMATIC WITHDRAWAL PLAN / / YES / / NO
MINIMUM REQUIREMENTS: $10,000 INITIAL ACCOUNT BALANCE AND $100 MINIMUM PERIODIC PAYMENT.
I/We hereby authorize the Transfer Agent of the GT Global Mutual Funds to redeem the necessary number of / / Class A
or / / Class B shares from my/our GT Global Account on the designated dates in order to make the following periodic
payments:
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select
(The request for participation in the Plan must be received by the 18th day of the month in which you wish withdrawals
to begin.)
Maximum annual withdrawal of 12% of initial account balance for shares subject to a contingent deferred sales charge.
Withdrawals in excess of 12% of the initial account balance annually may result in assessment of a contingent deferred
sales charge, as described in the applicable Fund's prospectus.
Amount of each check ($100 minimum): $ -----------------
Please make checks payable to: --------------------------------------------------------------------------------------
(TO BE COMPLETED ONLY IF Recipient
REDEMPTION PROCEEDS TO BE PAID --------------------------------------------------------------------------------------
TO OTHER THAN ACCOUNT HOLDER Street Address
OF RECORD OR MAILED TO ADDRESS --------------------------------------------------------------------------------------
OTHER THAN ADDRESS OF RECORD) City, State, Zip Code
NOTE: If recipient of checks is not the registered shareholder, signature(s) below must be guaranteed. A corporation
(or partnership) must also submit a "Corporate Resolution" (or "Certification of Partnership") indicating the names
and titles of Officers authorized to act on its behalf.
AGREEMENT AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions
contained herein will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any
change or revocation. Any change in these instructions must be in writing with all signatures guaranteed (if
applicable).
- ----------------------------------------------------------
Date
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------------- ---------------------------------------------------
Signature Signature
- ----------------------------------------------------------- ---------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock
exchange; (4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary
public is NOT an acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature
guarantee requirement should contact the Transfer Agent.
</TABLE>
- --------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT
To: Bank Named on the Reverse
In consideration of your compliance with the request and authorization of the
depositor(s) named on the reverse, the Transfer Agent of the GT Global Mutual
Funds hereby agrees:
1. To indemnify and hold you harmless from any loss you may incur because of the
payment by you and of any debit by the Transfer Agent to its own order on the
account of such depositor(s) and received by you in the regular course of
business for payment, or arising out of the dishonor by you of any debit,
provided there are sufficient funds in such account to pay the same upon
presentation.
2. To defend at its own expense any action which might be brought by any
depositor or any other persons because of your actions taken pursuant to the
above mentioned request or in any manner arising by reason of your participation
in connection with such request.
<PAGE>
[LOGO]
GT Global Mutual Funds 415 392 6181
Fifty California Street
27th Floor
SAN FRANCISCO, CA
94111-4624
GT GLOBAL DOLLAR COST AVERAGING PROGRAM
<TABLE>
<S> <C>
Between: GT Global, Inc.
General Distributor of
The GT Global Mutual Funds
Fifty California Street, 27th Floor
San Francisco, California 94111
415 392 6181; 800 824 1580
and: Company -------------------------------------------------------------------
Address --------------------------------------------------------------------
Phone ---------------------------- Fax ----------------------------
</TABLE>
You have entered into either a Dealer Agreement or a Bank and
Bank-Affiliated Dealer Agreement (each an "Agreement") pursuant to which we
agreed to sell to you Class A and Class B shares of the mutual funds that now or
hereafter may be included in the GT Global Mutual Funds (collectively the
"Funds"; individually a "Fund") or a Bank and Bank-Affiliated Dealer Agreement
pursuant to which you agreed to sell such shares issued by the Funds as agent
for your customers. This Supplement to the Agreement is for the purpose of
establishing contractual terms between us with respect to the GT Global Dollar
Cost Averaging Program ("Program"). All capitalized terms used in this
Supplement and not otherwise defined shall have the same meanings assigned to
them as in the Agreement. All terms of the Agreement shall remain in full force
and effect unless specifically modified or suspended by the terms of this
Supplement.
1. You agree to make available to your customers the Program as described
from time to time in the then current Prospectus of any Fund. We will
provide you with reasonable amounts of literature and an account application
covering the Program.
2. A customer participating in the Program will designate the size of his or
her monthly Funds' investment ("Monthly Amount") as well as the total
amount he or she expects to invest over a 24-month period after participation in
the Program begins ("Total Amount"). A sales charge will be applied to each
automatic monthly purchase of Fund Class A shares in an amount determined in
accordance with the Fund's Right of Accumulation privilege. We will pay you a
commission if you are an agent, or we will pay you an agency commission if you
are a bank or bank-affiliated dealer. This commission will be equal to the
dealer compensation schedule that would be paid if the Total Amount the
participating shareholder expects to invest in the 24 months under the Program
were invested, instead, in the Fund at one time. You agree to pass through to
your broker(s) or registered representative(s) a portion of this commission in
accordance with your established compensation arrangement.
3. If a customer discontinues participation in the Program or otherwise
fails to invest the Total Amount as provided in the customer's Program
agreement, and the selling representative is still employed by you, you agree to
repay to us the portion of the commission applicable to any amount not invested
by the customer. If the selling representative is not employed by you, you agree
to repay us an amount equal to the portion of the commission paid that was
retained by your firm.
4. You acknowledge that all payments due to you under this Supplement are
subject to the limitations contained in each Fund's Prospectus and may be
varied or discontinued at any time.
<PAGE>
5. This Supplement shall be binding upon receipt by us in San Francisco,
California, of a counterpart hereof duly accepted and signed by you.
6. Either of us may cancel this Supplement at any time by written notice to
the other, except that Section 3 shall still remain in effect.
7. All communications to us should be sent to the address below. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you on Page 1.
Accepted:
<TABLE>
<S> <C>
Company ---------------------------------- GT Global, Inc.
Address ------------------------------------ Fifty California Street, 27th Floor
Address ------------------------------------ San Francisco, California 94111
Phone ------------------------------------- 415-392-6181; 800-824-1580
Fax ---------------------------------------- 415-445-7566
By: ---------------------------------------- By: /s/ WILLIAM J. GUILFOYLE
Signature ----------------------------------------
William J. Guilfoyle
---------------------------------------- Date: --------------------------------------
Print Name & Date
</TABLE>
DCALR702.085
May 1996
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global, Inc.
P.O. Box 7345 DOLLAR COST
SAN FRANCISCO, CA 94120-7345 AVERAGING APPLICATION
800 223 2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / CORPORATION / / TRUST / / UTMA/UGMA / / OTHER
1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / IRA ACCOUNT / / ACCOUNT REVISION:
APPLICATION ATTACHED (ACCOUNT NO.:
----------------)
</TABLE>
NOTE: Joint tenant registration will be as "joint tenants with rights of
survivorship" unless otherwise specified. Trust registrations should specify
name of trustee(s), beneficiary(ies) and date of trust instrument.
Registration for Uniform Transfers/Gifts to Minors should be in the name of
one custodian and one minor and include the state under which the
custodianship is created (using the minor's social security number).
<TABLE>
<S> <C> <C> <C>
/ / / / / / - / / / / - / / / / / / / / OR / / / / - / / / / / / / / / / / / / /
---------------------------------------------------------------------------------------------------------------------------------
Owner Check appropriate box / / Social Security Number
or / / Tax I.D. Number
-------------------------------------- --------------------------------------------------------------------
Co-owner 1
-------------------------------------- --------------------------------------------------------------------
Co-owner 2 Home Telephone
-------------------------------------- --------------------------------------------------------------------
Street Address Business Telephone
-------------------------------------- --------------------------------------------------------------------
City, State, Zip Code Resident of / / U.S. / / Specify Other
</TABLE>
2. FUND SELECTION
TOTAL INITIAL INVESTMENT $
----------------------------- ($10,000 MINIMUM). The initial investment will
be made without imposition of any sales charge in the GT Global Dollar Fund.
Method of payment / / check or / / bank wire. Make checks and bank wires
payable to "GT Global." Do not send currency. Bank wires should be sent
through the Federal Reserve Bank wire system to: Wells Fargo Bank, NA,
ABA#121000248. ATTN: GT Global AC-4023-050701 (Stating Fund Name,
Shareholder's Registered Name and Account Number)
ALL GT GLOBAL MUTUAL FUNDS ISSUE TWO CLASSES OF SHARES. Class A shares are
sold with an initial sales charge while Class B shares are sold without an
initial sales charge but are subject to higher expense levels and to a
contingent deferred sales charge payable on certain redemptions. Please read
the prospectus of the applicable GT Global Mutual Fund carefully before you
invest.
MONTHLY TRANSFERS: Each month, GT Global Dollar Fund shares will be
redeemed and either Class A or Class B shares of the designated GT Global
Mutual Fund(s) will be purchased including the applicable sales charge, if
any, in the amounts indicated below ($1,000 minimum aggregate per month):
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / CLASS A SHARES
OR / / CLASS B SHARES
/ / New Account / / Existing Account #
-------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
FUND NAME MONTHLY FUND NAME MONTHLY
AMOUNT AMOUNT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 03 / / GT GLOBAL EUROPE GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 18 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional shares 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>
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Dollar Cost Averaging Application for the purchase of
Class A shares including shares purchased under Right of Accumulation or
Letter of Intent, or for the purchase of Class B shares in accordance with
the terms of our Dealer Agreement with GT Global, Inc., and the Prospectus
and Statement of Additional Information for each Fund. We agree to notify GT
Global, Inc., of any purchases properly made under a Letter of Intent or
Right of Accumulation. Class B shares are not available for Right of
Accumulation or Letter of Intent.
<TABLE>
<S> <C>
--------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
- --------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Name Representative's Number
- -----------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
-------------------------------------------------------------
Investment Dealer's Authorized Signature and Title GT Global Use: DLR------------ BR ------------ Rep
--------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
IRA INSTRUCTIONS
To open an IRA Dollar Cost Averaging account:
Read the GT Global IRA Disclosure Statement carefully.
Complete both this Dollar Cost Averaging Application and the GT Global IRA Application. Shareholder is to sign
both forms.
Mail completed applications with a check to GT Global.
3. AGREEMENT AND SIGNATURES
I/We authorize GT Global, Inc., to transfer shares from my/our GT Global Dollar Fund account, established
hereby, to purchase shares in the other GT Global Mutual Fund(s) and the class indicated on the reverse side of
this application. I/We understand that these transfers will occur on the 15th day of each month, or the prior
business day, and will continue until the funds in my/our GT Global Dollar Fund account fall below the transfer
amount, or until I/we terminate the Dollar Cost Averaging Program in writing. I/We further understand that
monthly purchases of the Class A shares of the other GT Global Mutual Fund(s) indicated will be subject to
applicable sales charges, and that the Class B shares purchased may be subject to a contingent deferred sales
charge when redeemed, as described in the Prospectus of each Fund purchased.
By the execution of this Application(s) I/we represent and warrant that I/we have full right, power, and
authority and am/are of legal age in my/our state(s) of residence to make the investment applied for pursuant to
this Application. The person(s), if any, signing on behalf of the investors 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(s). I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF THE GT GLOBAL MUTUAL FUND(S)
IN WHICH I/WE AM/ARE INVESTING.
I/We and my/our assigns and successors understand and agree that the account will be subject to the
telephone exchange and telephone redemption privilege described in the current Prospectus of the GT Global
Mutual Fund(s) in which I/we am/are investing 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 and their officers and
employees will not be liable for any loss or damages arising out of any such telephone, telex, or telegraph
instructions reasonably believed to be genuine, including any such loss due to negligence on the part of any
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., 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 are guaranteed.
Please indicate the number of signatures required to process written redemption
requests: / / one / / two / / three / / four
(If you do not indicate the number of required signatures, ALL account owners must sign 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 either because: (a) I am (or the payee is) exempt from
backup withholding; (b) the Internal Revenue Service ("IRS") 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 IRS has
notified me that I am (or the payee is) no longer subject to backup withholding OR; / / I am (the payee is)
subject to backup withholding.
Note:
Dollar Cost Averaging accounts held in the GT Global Dollar Fund have the following privilege restrictions:
Check writing, telephone redemptions and exchanges. The other GT Global Mutual Funds which receive the monthly
Dollar Cost Averaging transfers enjoy all regular account privileges, including telephone redemptions and
exchanges.
The Dollar Cost Averaging program does not assure a profit and does not protect against loss in declining
markets. Because such a program involves continuous investment in securities regardless of fluctuating price
levels of such securities, you should consider your financial ability to continue purchases through periods of
low price levels.
- ------------------------------------------------------- -------------------------------------------------------
Date For GT Global Use Only
X X
- ------------------------------------------------------- -------------------------------------------------------
X X
- ------------------------------------------------------- -------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
SAN FRANCISCO, CA
94111-4624
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION EXISTING
SHAREHOLDER ACCOUNT NUMBER
</TABLE>
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 same name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
-------------------------------------- / // // // // // // // // /
Owner Social Security Number / / or Tax I.D. Number "TIN" / / (Check applicable box) If
- -------------------------------------- more than one owner social security number or taxpayer identification number should
Co-owner 1 be provided for first owner listed. If a purchase is made under Uniform Gift/Transfer
- -------------------------------------- to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)---------------------------
-------------------------------------- Failure to provide TIN will result in 31% withholding on redemptions and exchanges.
Street Address ( ) ( )
- -------------------------------------- ------------------------------- -------------------------------
City, State, Zip Code Home Telephone Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund selected
for Class A and Class B shares.
Checks should be made payable to "GT Global."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A
Shares / / Class B Shares or / / Advisor Class Advisor Class shares are
sold through a different prospectus than Class A and Class B shares, are not
sold directly to the general public and only available through certain
employee benefit plans, financial institutions and other entities that have
entered into specific agreements with GT Global, Inc. Special account
requirements apply to Advisor Class shares. Please see an Advisor Class
prospectus for complete information.
If a class share box is not checked, your investment will be made in Class A
shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per fund.
<TABLE>
<S> <C> <C> <C> <C>
07 GT GLOBAL WORLDWIDE GROWTH FUND ---------- 13 GT GLOBAL LATIN AMERICA GROWTH FUND ----------
05 GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 24 GT GLOBAL AMERICA SMALL CAP GROWTH FUND ----------
16 GT GLOBAL EMERGING MARKETS FUND ---------- 06 GT GLOBAL AMERICA GROWTH FUND ----------
11 GT GLOBAL HEALTH CARE FUND ---------- 23 GT GLOBAL AMERICA VALUE FUND ----------
15 GT GLOBAL TELECOMMUNICATIONS FUND ---------- 04 GT GLOBAL JAPAN GROWTH FUND ----------
19 GT GLOBAL INFRASTRUCTURE FUND ---------- 10 GT GLOBAL GROWTH & INCOME FUND ----------
17 GT GLOBAL FINANCIAL SERVICES FUND ---------- 09 GT GLOBAL GOVERNMENT INCOME FUND ----------
21 GT GLOBAL NATURAL RESOURCES FUND ---------- 08 GT GLOBAL STRATEGIC INCOME FUND ----------
22 GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 18 GT GLOBAL HIGH INCOME FUND ----------
02 GT GLOBAL NEW PACIFIC GROWTH FUND ---------- 01 GT GLOBAL DOLLAR FUND ----------
03 GT GLOBAL EUROPE GROWTH FUND ----------
Rebalance frequency - check one
/ / Monthly / / Quarterly / / Semi annual / / Total percentage must equal 100%.
Annual
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains distributions and dividends will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions and
dividends in cash.
Investment will be split according to allocation.
</TABLE>
<TABLE>
<S> <C>
AGREEMENTS AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any change or revocation. ANY
CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING WITH ALL SIGNATURES GUARANTEED (IF APPLICABLE).
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock exchange;
(4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary public is NOT an
acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature guarantee requirement should
contact the Transfer Agent.
</TABLE>
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, 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 EMERGING MARKETS FUND, GT GLOBAL LATIN AMERICA GROWTH 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 TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
LEMPR703 MC
<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: $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
Prospectus Page 16
<PAGE>
GT GLOBAL THEME FUNDS
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
Prospectus Page 17
<PAGE>
GT GLOBAL THEME FUNDS
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
Prospectus Page 18
<PAGE>
GT GLOBAL THEME FUNDS
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,
Prospectus Page 19
<PAGE>
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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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
- --------------------------------------------------------------------------------
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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GT GLOBAL THEME FUNDS
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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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.
Prospectus Page 28
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GT GLOBAL THEME FUNDS
HOW TO INVEST
- --------------------------------------------------------------------------------
GENERAL. Advisor Class shares are offered through this Prospectus to (a)
trustees or other fiduciaries purchasing shares for employee benefit plans which
are sponsored by organizations which have at least 1,000 employees; (b) any
account with assets of at least $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
Prospectus Page 29
<PAGE>
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. To participate
in the Portfolio Rebalancing Program, investors should complete the Portfolio
Rebalancing Program Application at the end of this Prospectus. Investors should
contact their broker/dealers or GT Global for more information.
Prospectus Page 30
<PAGE>
GT GLOBAL THEME FUNDS
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
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.
Prospectus Page 31
<PAGE>
GT GLOBAL THEME FUNDS
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value and redemption proceeds
will be sent within seven days of the execution of a redemption request.
Redemption requests may be transmitted to the Transfer Agent by telephone or by
mail, in accordance with the instructions provided in the Shareholder Account
Manual. 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>
[LOGO]
GT Global Mutual Funds 415 392 6181
Fifty California Street
27th Floor
SAN FRANCISCO, CA
94111-4624
GT GLOBAL DOLLAR COST AVERAGING PROGRAM
<TABLE>
<S> <C>
Between: GT Global, Inc.
General Distributor of
The GT Global Mutual Funds
Fifty California Street, 27th Floor
San Francisco, California 94111
415 392 6181; 800 824 1580
and: Company -------------------------------------------------------------------
Address --------------------------------------------------------------------
Phone ---------------------------- Fax ----------------------------
</TABLE>
You have entered into either a Dealer Agreement or a Bank and
Bank-Affiliated Dealer Agreement (each an "Agreement") pursuant to which we
agreed to sell to you Class A and Class B shares of the mutual funds that now or
hereafter may be included in the GT Global Mutual Funds (collectively the
"Funds"; individually a "Fund") or a Bank and Bank-Affiliated Dealer Agreement
pursuant to which you agreed to sell such shares issued by the Funds as agent
for your customers. This Supplement to the Agreement is for the purpose of
establishing contractual terms between us with respect to the GT Global Dollar
Cost Averaging Program ("Program"). All capitalized terms used in this
Supplement and not otherwise defined shall have the same meanings assigned to
them as in the Agreement. All terms of the Agreement shall remain in full force
and effect unless specifically modified or suspended by the terms of this
Supplement.
1. You agree to make available to your customers the Program as described
from time to time in the then current Prospectus of any Fund. We will
provide you with reasonable amounts of literature and an account application
covering the Program.
2. A customer participating in the Program will designate the size of his or
her monthly Funds' investment ("Monthly Amount") as well as the total
amount he or she expects to invest over a 24-month period after participation in
the Program begins ("Total Amount"). A sales charge will be applied to each
automatic monthly purchase of Fund Class A shares in an amount determined in
accordance with the Fund's Right of Accumulation privilege. We will pay you a
commission if you are an agent, or we will pay you an agency commission if you
are a bank or bank-affiliated dealer. This commission will be equal to the
dealer compensation schedule that would be paid if the Total Amount the
participating shareholder expects to invest in the 24 months under the Program
were invested, instead, in the Fund at one time. You agree to pass through to
your broker(s) or registered representative(s) a portion of this commission in
accordance with your established compensation arrangement.
3. If a customer discontinues participation in the Program or otherwise
fails to invest the Total Amount as provided in the customer's Program
agreement, and the selling representative is still employed by you, you agree to
repay to us the portion of the commission applicable to any amount not invested
by the customer. If the selling representative is not employed by you, you agree
to repay us an amount equal to the portion of the commission paid that was
retained by your firm.
4. You acknowledge that all payments due to you under this Supplement are
subject to the limitations contained in each Fund's Prospectus and may be
varied or discontinued at any time.
<PAGE>
5. This Supplement shall be binding upon receipt by us in San Francisco,
California, of a counterpart hereof duly accepted and signed by you.
6. Either of us may cancel this Supplement at any time by written notice to
the other, except that Section 3 shall still remain in effect.
7. All communications to us should be sent to the address below. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you on Page 1.
Accepted:
<TABLE>
<S> <C>
Company ---------------------------------- GT Global, Inc.
Address ------------------------------------ Fifty California Street, 27th Floor
Address ------------------------------------ San Francisco, California 94111
Phone ------------------------------------- 415-392-6181; 800-824-1580
Fax ---------------------------------------- 415-445-7566
By: ---------------------------------------- By: /s/ WILLIAM J. GUILFOYLE
Signature ----------------------------------------
William J. Guilfoyle
---------------------------------------- Date: --------------------------------------
Print Name & Date
</TABLE>
DCALR702.085
May 1996
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global, Inc.
P.O. Box 7345 DOLLAR COST
SAN FRANCISCO, CA 94120-7345 AVERAGING APPLICATION
800 223 2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / CORPORATION / / TRUST / / UTMA/UGMA / / OTHER
1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / IRA ACCOUNT / / ACCOUNT REVISION:
APPLICATION ATTACHED (ACCOUNT NO.:
----------------)
</TABLE>
NOTE: Joint tenant registration will be as "joint tenants with rights of
survivorship" unless otherwise specified. Trust registrations should specify
name of trustee(s), beneficiary(ies) and date of trust instrument.
Registration for Uniform Transfers/Gifts to Minors should be in the name of
one custodian and one minor and include the state under which the
custodianship is created (using the minor's social security number).
<TABLE>
<S> <C> <C> <C>
/ / / / / / - / / / / - / / / / / / / / OR / / / / - / / / / / / / / / / / / / /
---------------------------------------------------------------------------------------------------------------------------------
Owner Check appropriate box / / Social Security Number
or / / Tax I.D. Number
-------------------------------------- --------------------------------------------------------------------
Co-owner 1
-------------------------------------- --------------------------------------------------------------------
Co-owner 2 Home Telephone
-------------------------------------- --------------------------------------------------------------------
Street Address Business Telephone
-------------------------------------- --------------------------------------------------------------------
City, State, Zip Code Resident of / / U.S. / / Specify Other
</TABLE>
2. FUND SELECTION
TOTAL INITIAL INVESTMENT $
----------------------------- ($10,000 MINIMUM). The initial investment will
be made without imposition of any sales charge in the GT Global Dollar Fund.
Method of payment / / check or / / bank wire. Make checks and bank wires
payable to "GT Global." Do not send currency. Bank wires should be sent
through the Federal Reserve Bank wire system to: Wells Fargo Bank, NA,
ABA#121000248. ATTN: GT Global AC-4023-050701 (Stating Fund Name,
Shareholder's Registered Name and Account Number)
ALL GT GLOBAL MUTUAL FUNDS ISSUE TWO CLASSES OF SHARES. Class A shares are
sold with an initial sales charge while Class B shares are sold without an
initial sales charge but are subject to higher expense levels and to a
contingent deferred sales charge payable on certain redemptions. Please read
the prospectus of the applicable GT Global Mutual Fund carefully before you
invest.
MONTHLY TRANSFERS: Each month, GT Global Dollar Fund shares will be
redeemed and either Class A or Class B shares of the designated GT Global
Mutual Fund(s) will be purchased including the applicable sales charge, if
any, in the amounts indicated below ($1,000 minimum aggregate per month):
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / CLASS A SHARES
OR / / CLASS B SHARES
/ / New Account / / Existing Account #
-------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
FUND NAME MONTHLY FUND NAME MONTHLY
AMOUNT AMOUNT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 03 / / GT GLOBAL EUROPE GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 18 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional shares 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>
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Dollar Cost Averaging Application for the purchase of
Class A shares including shares purchased under Right of Accumulation or
Letter of Intent, or for the purchase of Class B shares in accordance with
the terms of our Dealer Agreement with GT Global, Inc., and the Prospectus
and Statement of Additional Information for each Fund. We agree to notify GT
Global, Inc., of any purchases properly made under a Letter of Intent or
Right of Accumulation. Class B shares are not available for Right of
Accumulation or Letter of Intent.
<TABLE>
<S> <C>
--------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
- --------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Name Representative's Number
- -----------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
-------------------------------------------------------------
Investment Dealer's Authorized Signature and Title GT Global Use: DLR------------ BR ------------ Rep
--------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
IRA INSTRUCTIONS
To open an IRA Dollar Cost Averaging account:
Read the GT Global IRA Disclosure Statement carefully.
Complete both this Dollar Cost Averaging Application and the GT Global IRA Application. Shareholder is to sign
both forms.
Mail completed applications with a check to GT Global.
3. AGREEMENT AND SIGNATURES
I/We authorize GT Global, Inc., to transfer shares from my/our GT Global Dollar Fund account, established
hereby, to purchase shares in the other GT Global Mutual Fund(s) and the class indicated on the reverse side of
this application. I/We understand that these transfers will occur on the 15th day of each month, or the prior
business day, and will continue until the funds in my/our GT Global Dollar Fund account fall below the transfer
amount, or until I/we terminate the Dollar Cost Averaging Program in writing. I/We further understand that
monthly purchases of the Class A shares of the other GT Global Mutual Fund(s) indicated will be subject to
applicable sales charges, and that the Class B shares purchased may be subject to a contingent deferred sales
charge when redeemed, as described in the Prospectus of each Fund purchased.
By the execution of this Application(s) I/we represent and warrant that I/we have full right, power, and
authority and am/are of legal age in my/our state(s) of residence to make the investment applied for pursuant to
this Application. The person(s), if any, signing on behalf of the investors 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(s). I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF THE GT GLOBAL MUTUAL FUND(S)
IN WHICH I/WE AM/ARE INVESTING.
I/We and my/our assigns and successors understand and agree that the account will be subject to the
telephone exchange and telephone redemption privilege described in the current Prospectus of the GT Global
Mutual Fund(s) in which I/we am/are investing 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 and their officers and
employees will not be liable for any loss or damages arising out of any such telephone, telex, or telegraph
instructions reasonably believed to be genuine, including any such loss due to negligence on the part of any
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., 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 are guaranteed.
Please indicate the number of signatures required to process written redemption
requests: / / one / / two / / three / / four
(If you do not indicate the number of required signatures, ALL account owners must sign 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 either because: (a) I am (or the payee is) exempt from
backup withholding; (b) the Internal Revenue Service ("IRS") 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 IRS has
notified me that I am (or the payee is) no longer subject to backup withholding OR; / / I am (the payee is)
subject to backup withholding.
Note:
Dollar Cost Averaging accounts held in the GT Global Dollar Fund have the following privilege restrictions:
Check writing, telephone redemptions and exchanges. The other GT Global Mutual Funds which receive the monthly
Dollar Cost Averaging transfers enjoy all regular account privileges, including telephone redemptions and
exchanges.
The Dollar Cost Averaging program does not assure a profit and does not protect against loss in declining
markets. Because such a program involves continuous investment in securities regardless of fluctuating price
levels of such securities, you should consider your financial ability to continue purchases through periods of
low price levels.
- ------------------------------------------------------- -------------------------------------------------------
Date For GT Global Use Only
X X
- ------------------------------------------------------- -------------------------------------------------------
X X
- ------------------------------------------------------- -------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
SAN FRANCISCO, CA
94111-4624
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION EXISTING
SHAREHOLDER ACCOUNT NUMBER
</TABLE>
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 same name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
-------------------------------------- / // // // // // // // // /
Owner Social Security Number / / or Tax I.D. Number "TIN" / / (Check applicable box) If
- -------------------------------------- more than one owner social security number or taxpayer identification number should
Co-owner 1 be provided for first owner listed. If a purchase is made under Uniform Gift/Transfer
- -------------------------------------- to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)---------------------------
-------------------------------------- Failure to provide TIN will result in 31% withholding on redemptions and exchanges.
Street Address ( ) ( )
- -------------------------------------- ------------------------------- -------------------------------
City, State, Zip Code Home Telephone Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund selected
for Class A and Class B shares.
Checks should be made payable to "GT Global."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A
Shares / / Class B Shares or / / Advisor Class Advisor Class shares are
sold through a different prospectus than Class A and Class B shares, are not
sold directly to the general public and only available through certain
employee benefit plans, financial institutions and other entities that have
entered into specific agreements with GT Global, Inc. Special account
requirements apply to Advisor Class shares. Please see an Advisor Class
prospectus for complete information.
If a class share box is not checked, your investment will be made in Class A
shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per fund.
<TABLE>
<S> <C> <C> <C> <C>
07 GT GLOBAL WORLDWIDE GROWTH FUND ---------- 13 GT GLOBAL LATIN AMERICA GROWTH FUND ----------
05 GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 24 GT GLOBAL AMERICA SMALL CAP GROWTH FUND ----------
16 GT GLOBAL EMERGING MARKETS FUND ---------- 06 GT GLOBAL AMERICA GROWTH FUND ----------
11 GT GLOBAL HEALTH CARE FUND ---------- 23 GT GLOBAL AMERICA VALUE FUND ----------
15 GT GLOBAL TELECOMMUNICATIONS FUND ---------- 04 GT GLOBAL JAPAN GROWTH FUND ----------
19 GT GLOBAL INFRASTRUCTURE FUND ---------- 10 GT GLOBAL GROWTH & INCOME FUND ----------
17 GT GLOBAL FINANCIAL SERVICES FUND ---------- 09 GT GLOBAL GOVERNMENT INCOME FUND ----------
21 GT GLOBAL NATURAL RESOURCES FUND ---------- 08 GT GLOBAL STRATEGIC INCOME FUND ----------
22 GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 18 GT GLOBAL HIGH INCOME FUND ----------
02 GT GLOBAL NEW PACIFIC GROWTH FUND ---------- 01 GT GLOBAL DOLLAR FUND ----------
03 GT GLOBAL EUROPE GROWTH FUND ----------
Rebalance frequency - check one
/ / Monthly / / Quarterly / / Semi annual / / Total percentage must equal 100%.
Annual
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains distributions and dividends will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions and
dividends in cash.
Investment will be split according to allocation.
</TABLE>
<TABLE>
<S> <C>
AGREEMENTS AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any change or revocation. ANY
CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING WITH ALL SIGNATURES GUARANTEED (IF APPLICABLE).
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock exchange;
(4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary public is NOT an
acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature guarantee requirement should
contact the Transfer Agent.
</TABLE>
<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.
<PAGE>
GT GLOBAL THEME FUNDS
THEPV703 MC
<PAGE>
GT GLOBAL THEME FUNDS
<PAGE>
GT GLOBAL INCOME FUNDS:
ADVISOR CLASS
PROSPECTUS -- MARCH 1, 1997
- --------------------------------------------------------------------------------
GT GLOBAL GOVERNMENT INCOME FUND ("GOVERNMENT INCOME FUND") seeks a high level
of current income by investing primarily in high quality U.S. and foreign
government debt securities. The Fund's secondary objectives are capital
appreciation and protection of principal through active management of its
maturity structure and currency exposure.
GT GLOBAL STRATEGIC INCOME FUND ("STRATEGIC INCOME FUND") primarily seeks high
current income and secondarily seeks capital appreciation. The Fund allocates
its assets among debt securities of issuers in: (1) the United States; (2)
developed foreign countries; and (3) emerging markets.
GT GLOBAL HIGH INCOME FUND ("HIGH INCOME FUND") primarily seeks high current
income and secondarily seeks capital appreciation by investing all of its
investable assets in the Global High Income Portfolio ("Portfolio"), which, in
turn, invests primarily in the debt securities of issuers located in emerging
markets. The Portfolio's investment objectives are identical to those of the
Fund.
Individually, a "Fund" and, collectively, the "Funds."
There can be no assurance that any Fund or the Portfolio will achieve its
investment objectives. The investment experience of High Income Fund will
correspond directly with the investment experience of the Portfolio.
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 Portfolio are managed and/or administered by Chancellor LGT
Asset Management, Inc. (the "Manager"). The Manager and its worldwide affiliates
are part of the Liechtenstein Global Trust, a global provider of asset
management and private banking products and services to individual and
institutional investors.
The Funds are designed for long-term investors and not as trading vehicles, do
not represent a complete investment program and are not suitable for all
investors. An investment in any of the Funds involves risk factors that should
be reviewed carefully by potential investors. The Strategic Income Fund and the
Portfolio both are authorized to borrow money for investment purposes, which
would increase the volatility of their performance and involves additional
risks. See "Investment Objectives and Policies" and "Risk Factors."
THE STRATEGIC INCOME FUND INVESTS UP TO 50% OF ITS TOTAL ASSETS, AND THE GLOBAL
HIGH INCOME PORTFOLIO INVESTS UP TO 100% OF ITS TOTAL ASSETS, IN LOWER QUALITY
AND UNRATED FOREIGN GOVERNMENT BONDS WHOSE CREDIT QUALITY IS GENERALLY
CONSIDERED THE EQUIVALENT OF U.S. CORPORATE DEBT SECURITIES COMMONLY KNOWN AS
"JUNK BONDS." INVESTMENTS OF THIS TYPE ARE SUBJECT TO A GREATER RISK OF LOSS OF
PRINCIPAL AND INTEREST. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED
WITH AN INVESTMENT IN THESE FUNDS. SEE "INVESTMENT OBJECTIVES AND POLICIES" AND
"RISK FACTORS."
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a front-
end or contingent deferred sales charge or Rule 12b-1 fees.
This Prospectus sets forth concisely information an investor should know before
investing and should be read carefully and retained for future reference. A
Statement of Additional Information, dated March 1, 1997, has been filed with
the Securities and Exchange Commission ("SEC") and, as supplemented or amended
from time to time, is incorporated herein by reference. The Statement of
Additional Information is available without charge by writing to the Funds at 50
California Street, 27th Floor, San Francisco, California 94111, or 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 INCOME FUNDS
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 6
Investment Objectives and Policies........................................................ 12
Risk Factors.............................................................................. 21
How to Invest............................................................................. 27
How to Make Exchanges..................................................................... 29
How to Redeem Shares...................................................................... 30
Shareholder Account Manual................................................................ 32
Calculation of Net Asset Value............................................................ 33
Dividends, Other Distributions and Federal Income Taxation................................ 33
Management................................................................................ 35
Other Information......................................................................... 38
Appendix A -- Description of Debt Ratings................................................. 41
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL INCOME FUNDS
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus.
<TABLE>
<S> <C> <C>
The Funds and the Portfolio: Each Fund is a non-diversified series of G.T. Investment Funds,
Inc. (the "Company"). The Portfolio is a non-diversified, open-end
management investment company.
Investment Objectives: The Government Income Fund primarily seeks high current income and
secondarily seeks capital appreciation and protection of
principal. The Strategic Income Fund and the High Income Fund
primarily seek high current income and secondarily seek capital
appreciation.
Principal Investments: The Government Income Fund invests primarily in high quality U.S.
and foreign government debt obligations.
The Strategic Income Fund allocates its assets among debt
securities of issuers in: (1) the United States; (2) developed
foreign countries; and (3) emerging markets, and selects
particular securities in each sector based on their relative
investment merit.
The High Income Fund invests all of its investable assets in the
Portfolio, which, in turn, invests primarily in debt securities of
issuers located in emerging markets.
Principal Risk Factors: There is no assurance that the Funds or the Portfolio will achieve
their investment objectives. Each Fund's net asset value will
fluctuate, reflecting fluctuations in the market value of its or
its corresponding Portfolio's portfolio holdings. The value of
debt securities held by the Government Income Fund, the Strategic
Income Fund and the Portfolio generally fluctuates with interest
rate movements.
The Government Income Fund, the Strategic Income Fund and the
Portfolio will 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 differ favorably or unfavor-
ably from the U.S. economy. Changes in foreign currency exchange
rates will affect a Fund's or the Portfolio'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. The Portfolio will normally invest at least 65% of its
total assets in debt securities of issuers in emerging markets and
the Strategic Income Fund may invest in such securities. Such
investments entail greater risk than investing in securities of
issuers in developed markets.
The Government Income Fund, the Strategic Income Fund and the
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.
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL INCOME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
The Strategic Income Fund may invest up to 50% of its total
assets, and the Portfolio may invest up to 100% of its total
assets, in debt securities rated below investment grade or, if not
rated, determined by the Manager to be of comparable quality.
Investments of this type are subject to 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 a separate Prospectus to
Advisor Class Shares: (a) trustees or other fiduciaries purchasing shares for employee
benefit plans which are sponsored by organizations which have at
least 1,000 employees; (b) any account with assets of at least
$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 comprising or affiliated with Liechtenstein Global
Trust; and (e) any of the companies comprising 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) that have entered
into agreements with the Funds' distributor, GT Global, Inc. ("GT
Global") or certain of its affiliates. See "How to Invest" and
"Shareholder Account Manual."
Exchange Privileges: Advisor Class shares of a Fund may only be exchanged for Advisor
Class shares of other GT Global Mutual Funds, which are open-end
management investment companies advised and/or administered by the
Manager. See "How to Make Exchanges" and "Shareholder Account
Manual."
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 Dividends are paid monthly from net investment income; other
Distributions: distributions are paid annually from net short term capital gain,
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 are expected to be quoted daily in the
financial section of most newspapers.
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL INCOME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Advisor Class shares of the Funds are reflected in the
following tables (1):
<TABLE>
<CAPTION>
GOVERNMENT STRATEGIC HIGH INCOME
INCOME FUND INCOME 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........................... 0.72% 0.72% 0.99%
12b-1 distribution and service fees..................................... None None None
Other expenses.......................................................... 0.32% 0.33% 0.35%
----- ----- -----
Total Fund Operating Expenses........................................... 1.04% 1.05% 1.34%
----- ----- -----
----- ----- -----
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Funds, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
----- ------ ----- -----
<S> <C> <C> <C> <C>
Government Income Fund
Advisor Class Shares...................................... $ 10 $ 34 $ 59 $ 130
Strategic Income Fund
Advisor Class Shares...................................... $ 11 $ 34 $ 59 $ 131
High Income Fund
Advisor Class Shares...................................... $ 13 $ 43 $ 75 $ 165
</TABLE>
- ------------------------
(1) THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN A FUND. THE "HYPOTHETICAL
EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUNDS' AND
THE PORTFOLIO'S 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 Portfolio's projected or actual performance.
(2) Expenses are based on the Funds' fiscal year ended October 31, 1996. "Other
expenses" include custody, transfer agent, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. Investors purchasing Advisor Class shares
through financial planners, trust companies, bank trust departments or
registered investment advisers, or under a "wrap fee" program, will be
subject to additional fees charged by such entities or by the sponsors of
such programs. Where any account advised by one of the companies 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 High Income Fund and the Portfolio will be less than
or approximately equal to the expenses which the Fund would incur if the
assets of that Fund were invested directly in the type of securities being
held by the Portfolio.
Prospectus Page 5
<PAGE>
GT GLOBAL INCOME 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. For the period March 29, 1988 (commencement of operations) to
October 21, 1992, the Strategic Income Fund was named G.T. Global Bond Fund and
operated under different investment objectives, policies and limitations. This
information is supplemented by the financial statements and accompanying notes
appearing in the Statement of Additional Information. The financial statements
and notes for fiscal year ended October 31, 1996 and each of the preceding four
years have been audited by Coopers & Lybrand L.L.P., independent accountants,
whose report thereon also is included in the Statement of Additional
Information.
GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------------------------
1996 1995(C) 1994(C) 1993(C) 1992 1991 1990 1989
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of
period.................. $ 8.81 $ 8.63 $ 11.07 $ 9.83 $ 10.29 $ 10.46 $ 10.45 $ 10.86
--------- --------- --------- --------- --------- --------- --------- ---------
Income from investment
operations:
Net investment
income................ 0.57 0.62 0.65 0.74 0.92 0.99 1.18 1.15
Net realized and
unrealized gain (loss)
on investments........ 0.03 0.15 (1.52) 1.34 (0.31) (0.07) (0.02) (0.35)
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase
(decrease) from
investment
operations.......... 0.60 0.77 (0.87) 2.08 0.61 0.92 1.16 0.80
--------- --------- --------- --------- --------- --------- --------- ---------
Distributions:
From net investment
income................ (0.57) (0.59) (0.65) (0.74) (0.83) (1.00) (1.15) (1.20)
From net realized gain
on investments........ (0.10) (0.00) (0.27) (0.00) (0.13) (0.09) (0.00) (0.00)
In excess of net
realized gain on
investments........... (0.00) (0.00) (0.55) (0.00) (0.00) (0.00) (0.00) (0.00)
Return of capital...... (0.00) (0.00) (0.10) (0.00) (0.00) (0.00) (0.00) (0.00)
From sources other than
net investment
income................ (0.00) (0.00) (0.00) (0.10) (0.11) (0.00) (0.00) (0.01)
--------- --------- --------- --------- --------- --------- --------- ---------
Total
distributions....... (0.67) (0.59) (1.57) (0.84) (1.07) (1.09) (1.15) (1.21)
--------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of
period.................. $ 8.74 $ 8.81 $ 8.63 $ 11.07 $ 9.83 $ 10.29 $ 10.46 $ 10.45
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Total investment return
(d)..................... 7.11% 9.22% (8.87)% 21.9% 6.3% 9.4% 11.9% 7.2%
Ratios and supplemental
data:
Net assets, end of period
(in 000's).............. $240,945 $385,404 $502,094 $708,301 $623,387 $399,200 $259,726 $122,526
Ratio of net investment
income to average net
assets.................. 6.52% 6.98% 6.87% 7.1% 9.0% 9.5% 11.4% 10.7%
Ratio of expenses to
average net assets:
With expense
reductions............ 1.34% 1.35% 1.33% 1.4% 1.6% 1.6% 1.8% 1.7%
Without expense
reductions............ 1.39% 1.38% --%** --%** --%** --%** --%** --%**
Portfolio turnover
rate ++++............... 268% 385% 625% 495% 351% 326% 334% 413%
</TABLE>
- ------------------------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Net of $0.01 per share of Fund operating expenses reimbursed by the
Manager.
** Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(d) Total investment return does not include sales charges.
Prospectus Page 6
<PAGE>
GT GLOBAL INCOME FUNDS
GOVERNMENT INCOME FUND
(CONTINUED)
<TABLE>
<CAPTION>
ADVISOR
CLASS A+ CLASS B++ CLASS+++
-------------- ----------------------------------------------------------- -----------
MARCH 29, 1988
(COMMENCEMENT
OF OCTOBER 22,
OPERATIONS) TO YEAR ENDED OCTOBER 31, 1992 TO YEAR ENDED
OCTOBER 31, --------------------------------------------- OCTOBER 31, OCTOBER 31,
1988 1996 1995(C) 1994(C) 1993(C) 1992 1996
-------------- --------- --------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 11.43 $ 8.80 $ 8.64 $ 11.07 $ 9.83 $ 9.87 $ 8.80
-------------- --------- --------- --------- --------- ----------- -----------
Income from investment
operations:
Net investment income....... 0.49* 0.51 0.55 0.59 0.67 0.02 0.60
Net realized and unrealized
gain (loss) on
investments................ (0.44) 0.04 0.14 (1.52) 1.34 (0.06) 0.03
-------------- --------- --------- --------- --------- ----------- -----------
Net increase (decrease)
from investment
operations............... 0.05 0.55 0.69 (0.93) 2.01 (0.04) 0.63
-------------- --------- --------- --------- --------- ----------- -----------
Distributions:
From net investment
income..................... (0.49) (0.51) (0.53) (0.59) (0.67) (0.00) (0.60)
From net realized gain on
investments................ (0.12) (0.10) (0.00) (0.27) (0.00) (0.00) (0.10)
In excess of net realized
gain on investments........ (0.00) (0.00) (0.00) (0.54) (0.00) (0.00) (0.00)
Return of capital........... (0.00) (0.00) (0.00) (0.10) (0.00) (0.00) (0.00)
From sources other than net
investment income.......... (0.01) (0.00) (0.00) (0.00) (0.10) (0.00) (0.00)
-------------- --------- --------- --------- --------- ----------- -----------
Total distributions....... (0.62) (0.61) (0.53) (1.50) (0.77) (0.00) (0.70)
-------------- --------- --------- --------- --------- ----------- -----------
Net asset value, end of
period....................... $ 10.86 $ 8.74 $ 8.80 $ 8.64 $ 11.07 $ 9.83 $ 8.73
-------------- --------- --------- --------- --------- ----------- -----------
-------------- --------- --------- --------- --------- ----------- -----------
Total investment return (d)... 1.1%(a) 6.54% 8.22% (9.39)% 21.1% (0.4)%(a) 7.49%
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $57,063 $166,577 $235,481 $262,405 $182,972 $ 2,624 $ 86
Ratio of net investment income
to average net assets........ 7.41%*(b) 5.87% 6.33% 6.22% 6.5% 8.0%(b) 6.87%
Ratio of expenses to average
net assets:
With expense reductions..... 1.80%*(b) 1.99% 2.00% 1.98% 2.0% 1.9%(b) 0.99%
Without expense reductions.. --%** 2.04% 2.03% --%** --%** --%** 1.04%
Portfolio turnover rate ++++.. 291%(b) 268% 385% 625% 495% 351% 268%
<CAPTION>
JUNE 1, 1995
TO
OCTOBER 31,
1995(C)
------------
<S> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 8.98
------------
Income from investment
operations:
Net investment income....... 0.26
Net realized and unrealized
gain (loss) on
investments................ (0.19)
------------
Net increase (decrease)
from investment
operations............... 0.07
------------
Distributions:
From net investment
income..................... (0.25)
From net realized gain on
investments................ (0.00)
In excess of net realized
gain on investments........ (0.00)
Return of capital........... (0.00)
From sources other than net
investment income.......... (0.00)
------------
Total distributions....... (0.25)
------------
Net asset value, end of
period....................... $ 8.80
------------
------------
Total investment return (d)... 0.83%(a)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $ 131
Ratio of net investment income
to average net assets........ 7.33%(b)
Ratio of expenses to average
net assets:
With expense reductions..... 1.00%(b)
Without expense reductions.. 1.03%(b)
Portfolio turnover rate ++++.. 385%
</TABLE>
- ------------------------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Net of $0.01 per share of Fund operating expenses reimbursed by the
Manager.
** Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(d) Total investment return does not include sales charges.
Prospectus Page 7
<PAGE>
GT GLOBAL INCOME FUNDS
STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
CLASS A+
--------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------------------------------
1996 1995(C) 1994 1993(C) 1992 1991 1990
----------- ----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning
of period.................. $ 10.32 $ 10.88 $ 13.61 $ 11.25 $ 10.91 $ 11.20 $ 11.17
----------- ----------- ----------- ----------- ---------- ---------- ----------
Income from investment
operations:
Net investment income..... 0.89 0.97 0.79 0.96 0.86 0.84* 1.04*
Net realized and
unrealized gain (loss) on
investments.............. 1.44 (0.69) (2.14) 2.85 0.31 (0.02) (0.17)
----------- ----------- ----------- ----------- ---------- ---------- ----------
Net increase (decrease)
from investment
operations............. 2.33 0.28 (1.35) 3.81 1.17 0.82 0.87
----------- ----------- ----------- ----------- ---------- ---------- ----------
Distributions:
From net investment
income................... (0.82) (0.80) (0.79) (0.96) (0.83) (0.60) (0.84)
From net realized gain on
investments.............. (0.00) (0.00) (0.38) (0.37) (0.00) (0.51) (0.00)
In excess of net
investment income........ (0.07) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Return of capital......... (0.00) (0.04) (0.21) (0.00) (0.00) (0.00) (0.00)
From sources other than
net investment income.... (0.00) (0.00) (0.00) (0.12) (0.00) (0.00) (0.00)
----------- ----------- ----------- ----------- ---------- ---------- ----------
Total distributions..... (0.89) (0.84) (1.38) (1.45) (0.83) (1.11) (0.84)
----------- ----------- ----------- ----------- ---------- ---------- ----------
Net asset value, end of
period..................... $ 11.76 $ 10.32 $ 10.88 $ 13.61 $ 11.25 $ 10.91 $ 11.20
----------- ----------- ----------- ----------- ---------- ---------- ----------
----------- ----------- ----------- ----------- ---------- ---------- ----------
Total investment return
(d)........................ 23.00% 3.06% (10.44)% 37.0% 11.1% 7.7% 8.3%
Ratios and supplemental
data:
Net assets, end of period
(in 000's)................. $ 185,126 $ 188,165 $ 275,241 $ 287,870 $ 83,849 $ 55,967 $ 44,545
Ratio of net investment
income to average net
assets..................... 8.09% 9.64% 6.74% 7.2% 7.6% 7.2%* 9.6%*
Ratio of expenses to average
net assets:
With expense reductions... 1.38% 1.42% 1.40% 1.7% 1.8% 1.9%* 1.9%*
Without expense
reductions............... 1.40% 1.45% %--(f) %--(f) %--(f) %--(f) %--(f)
Ratio of interest expenses
to average net assets...... N/A N/A 0.10% N/A N/A N/A N/A
Portfolio turnover
rate+++.................... 177% 238% 583% 310% 418% 630% 501%
<CAPTION>
MARCH 29, 1988
(COMMENCE-MENT
OF
OPERATIONS) TO
OCTOBER 31,
1989 1988
---------- ---------------
<S> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning
of period.................. $ 11.25 $ 11.43
---------- ---------------
Income from investment
operations:
Net investment income..... 0.82* 0.45*
Net realized and
unrealized gain (loss) on
investments.............. (0.10) (0.24)
---------- ---------------
Net increase (decrease)
from investment
operations............. 0.72 0.21
---------- ---------------
Distributions:
From net investment
income................... (0.80) (0.39)
From net realized gain on
investments.............. (0.00) (0.00)
In excess of net
investment income........ (0.00) (0.00)
Return of capital......... (0.00) (0.00)
From sources other than
net investment income.... (0.00) (0.00)
---------- ---------------
Total distributions..... (0.80) (0.39)
---------- ---------------
Net asset value, end of
period..................... $ 11.17 $ 11.25
---------- ---------------
---------- ---------------
Total investment return
(d)........................ 6.8% 1.2%(a)
Ratios and supplemental
data:
Net assets, end of period
(in 000's)................. $ 37,820 $ 21,830
Ratio of net investment
income to average net
assets..................... 7.7%* 7.22%*(e)
Ratio of expenses to average
net assets:
With expense reductions... 1.8%* 1.70%*(e)
Without expense
reductions............... %--(f) --%(f)
Ratio of interest expenses
to average net assets...... N/A N/A
Portfolio turnover
rate+++.................... 385% 340%
</TABLE>
- ------------------------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement by the Manager of Fund operating expenses of $0.01,
$0.04, $0.02 and 0.05 for the year ended October 31, 1991, 1990, 1989 and
1988, respectively. Without such reimbursements, the expense ratios would
have been 1.92%, 2.20%, 2.02% and 2.42% and the ratio of net investment
income to average net assets would have been 7.16%, 9.26%, 7.56% and 6.42%
for the year ended October 31, 1991, 1990, 1989 and 1988, respectively.
** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
(a) Not annualized.
(b) Ratios are not meaningful due to short period of operation of Class B
shares.
(c) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(d) Total investment return does not include sales charges.
(e) Annualized.
(f) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
N/A Not applicable.
Prospectus Page 8
<PAGE>
GT GLOBAL INCOME FUNDS
STRATEGIC INCOME FUND
(CONTINUED)
<TABLE>
<CAPTION>
CLASS B++ ADVISOR CLASS**
----------------------------------------------------------- --------------------
JUNE 1,
OCTOBER 22, YEAR 1995 TO
YEAR ENDED OCTOBER 31, 1992 TO ENDED OCTOBER
--------------------------------------------- OCTOBER 31, OCTOBER 31,
1996 1995(C) 1994(C) 1993(C) 1992 31, 1996 1995(C)
--------- --------- --------- --------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.33 $ 10.88 $ 13.60 $ 11.24 $ 11.36 $ 10.33 $ 10.32
--------- --------- --------- --------- ----------- --------- --------
Income from investment operations:
Net investment income................. 0.82 0.91 0.73 0.89 0.01 0.93 0.41
Net realized and unrealized gain
(loss) on investments................ 1.44 (0.69) (2.14) 2.85 (0.13) 1.44 (0.04)
--------- --------- --------- --------- ----------- --------- --------
Net increase (decrease) from
investment operations.............. 2.26 0.22 (1.41) 3.74 (0.12) 2.37 0.37
Distributions:
From net investment income............ (0.75) (0.73) (0.72) (0.89) (0.00) (0.86) (0.34)
From net realized gain on
investments.......................... (0.00) (0.00) (0.38) (0.37) (0.00) (0.00) (0.00)
In excess of net investment income.... (0.07) (0.00) (0.00) (0.00) (0.00) (0.07) (0.00)
Return of capital..................... (0.00) (0.04) (0.21) (0.00) (0.00) (0.00) (0.02)
From sources other than net investment
income............................... (0.00) (0.00) (0.00) (0.12) (0.00) (0.00) (0.00)
--------- --------- --------- --------- ----------- --------- --------
Total distributions................. (0.82) (0.77) (1.31) (1.38) (0.00) (0.93) (0.36)
--------- --------- --------- --------- ----------- --------- --------
Net asset value, end of period.......... $ 11.77 $ 10.33 $ 10.88 $ 13.60 $ 11.24 $ 11.77 $ 10.33
--------- --------- --------- --------- ----------- --------- --------
--------- --------- --------- --------- ----------- --------- --------
Total investment return (d)............. 22.15% 2.48% (11.02)% 36.2% (1.1)%(a) 23.39% 3.72%(a)
Ratios and supplemental data:
Net assets, end of period (in
000's)............................... $333,178 $357,852 $458,550 $310,431 $ 533 $ 479 $ 443
Ratio of net investment income to
average net assets................... 7.44% 8.99% 6.09% 6.5% N/A(b) 8.44% 9.99%(e)
Ratio of expenses to average net assets:
With expense reductions............... 2.03% 2.07% 2.05% 2.4% N/A(b) 1.03% 1.07%(e)
Without expense reductions............ 2.05% 2.10% --%(f) --%(f) --%(f) 1.05% 1.10%(e)
Ratio of interest expenses to average
net assets............................. N/A N/A 0.10% N/A N/A N/A N/A
Portfolio turnover rate+++.............. 177% 238% 583% 310% 418% 177% 238%
</TABLE>
- ------------------------------
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement by the Manager of Fund operating expenses of $0.01,
$0.04, $0.02 and 0.05 for the year ended October 31, 1991, 1990, 1989 and
1988, respectively. Without such reimbursements, the expense ratios would
have been 1.92%, 2.20%, 2.02% and 2.42% and the ratio of net investment
income to average net assets would have been 7.16%, 9.26%, 7.56% and 6.42%
for the year ended October 31, 1991, 1990, 1989 and 1988, respectively.
** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
(a) Not annualized.
(b) Ratios are not meaningful due to short period of operation of Class B
shares.
(c) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(d) Total investment return does not include sales charges.
(e) Annualized.
(f) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
N/A Not applicable.
Prospectus Page 9
<PAGE>
GT GLOBAL INCOME FUNDS
HIGH INCOME FUND
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------
OCTOBER 22, 1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
----------------------------------------- TO OCTOBER 31,
1996 1995 1994(C) 1993(C) 1992
-------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year................ $ 11.70 $ 12.56 $ 14.92 $ 11.43 $11.43
-------- -------- -------- -------- -------
Income from investment operations:
Net investment income........................... 1.27 1.35 0.94 0.78 0.00
Net realized and unrealized gain (loss) on
investments.................................... 3.09 (1.09) (1.87) 3.92 0.00
-------- -------- -------- -------- -------
Net increase (decrease) from investment
operations................................... 4.36 0.26 (0.93) 4.70 0.00
-------- -------- -------- -------- -------
Distributions:
From net investment income...................... (1.11) (1.03) (0.94) (0.78) (0.00)
From net realized gain on investments........... (0.10) (0.03) (0.27) (0.00) (0.00)
In excess of net realized gain on investments... (0.00) (0.00) (0.22) (0.00) (0.00)
From sources other than net investment income... (0.00) (0.00) (0.00) (0.43) (0.00)
Return of capital............................... (0.00) (0.06) (0.00) (0.00) (0.00)
-------- -------- -------- -------- -------
Total distributions........................... (1.21) (1.12) (1.43) (1.21) (0.00)
-------- -------- -------- -------- -------
Net asset value, end of year...................... $ 14.85 $ 11.70 $ 12.56 $ 14.92 $11.43
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
Total investment return (e)....................... 39.05% 2.81% (6.45)% 43.6% 0.0%(b)
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).............. $178,318 $142,002 $167,974 $143,171 $ 207
Ratio of net investment income (loss) to average
net assets....................................... 9.52% 11.85% 7.00% 6.4% N/A(d)
Ratio of operating expenses to average net
assets........................................... 1.69% 1.75% 1.57% 2.2% N/A(d)
Ratio of interest expense to average net assets... 0.04% N/A 0.22% N/A N/A
Portfolio turnover rate (f)....................... 290% --% --% --% --%
</TABLE>
- ------------------------------
(a) Annualized.
(b) Not annualized.
(c) These selected per share data were calculated based upon weighted average
shares during the year.
(d) Ratios are not meaningful due to short period of operation.
(e) Total investment return does not include sales charges.
(f) The Fund invests only in the Portfolio and does not engage in securities
transactions. Accordingly, the portfolio turnover rates presented are for
the Portfolio.
N/A Not applicable.
Prospectus Page 10
<PAGE>
GT GLOBAL INCOME FUNDS
HIGH INCOME FUND
(CONTINUED)
<TABLE>
<CAPTION>
CLASS B ADVISOR CLASS**
-------------------------------------------------------- -----------------------
OCTOBER 22,
1992
(COMMENCEMENT YEAR JUNE 1, 1995
YEAR ENDED OCTOBER 31, OF OPERATIONS) ENDED TO
-------------------------------------- TO OCTOBER 31, OCTOBER OCTOBER 31,
1996 1995 1994(C) 1993(C) 1992 31, 1996 1995
-------- -------- -------- -------- ---------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
year.............................. $ 11.69 $ 12.56 $ 14.90 $ 11.43 $11.43 $ 11.71 $11.44
-------- -------- -------- -------- ------- -------- -------------
Income from investment operations:
Net investment income............ 1.17 1.27 0.86 0.70 0.00 1.34 0.57
Net realized and unrealized gain
(loss) on investments........... 3.09 (1.09) (1.85) 3.90 0.00 3.05 0.17
-------- -------- -------- -------- ------- -------- -------------
Net increase (decrease) from
investment operations......... 4.26 0.18 (0.99) 4.60 0.00 4.39 0.74
-------- -------- -------- -------- ------- -------- -------------
Distributions:
From net investment income....... (1.03) (0.96) (0.86) (0.70) (0.00) (1.16 ) (0.44)
From net realized gain on
investments..................... (0.09) (0.03) (0.27) (0.00) (0.00) (0.11 ) (0.00)
In excess of net realized gain on
investments..................... (0.00) (0.00) (0.22) (0.00) (0.00) (0.00 ) (0.00)
From sources other than net
investment
income.......................... (0.00) (0.00) (0.00) (0.43) (0.00) (0.00 ) (0.00)
Return of capital................ (0.00) (0.06) (0.00) (0.00) (0.00) (0.00 ) (0.03)
-------- -------- -------- -------- ------- -------- -------------
Total distributions............ (1.12) (1.05) (1.35) (1.13) (0.00) (1.27 ) (0.47)
-------- -------- -------- -------- ------- -------- -------------
Net asset value, end of year....... $ 14.83 $ 11.69 $ 12.56 $ 14.90 $11.43 $ 14.83 $11.71
-------- -------- -------- -------- ------- -------- -------------
-------- -------- -------- -------- ------- -------- -------------
Total investment return (e)........ 38.16% 2.07% (6.99)% 42.6% 0.0%(b) 39.38 % 6.54%(b)
-------- -------- -------- -------- ------- -------- -------------
-------- -------- -------- -------- ------- -------- -------------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $251,002 $214,897 $232,423 $127,035 $ 53 $15,298 $1,463
Ratio of net investment income
(loss) to average net assets...... 8.87% 11.20% 6.35% 5.8% N/A(d) 9.87 % 12.20%(a)
Ratio of operating expenses to
average net assets................ 2.34% 2.40% 2.22% 2.8% N/A(d) 1.34 % 1.40%(a)
Ratio of interest expense to
average net assets................ 0.04% N/A 0.22% N/A N/A 0.04 % N/A
Portfolio turnover rate (f)........ 290% --% --% --% --% 290 % --%(a)
</TABLE>
- ------------------------------
(a) Annualized.
(b) Not annualized.
(c) These selected per share data were calculated based upon weighted average
shares during the year.
(d) Ratios are not meaningful due to short period of operation.
(e) Total investment return does not include sales charges.
(f) The Fund invests only in the Portfolio and does not engage in securities
transactions. Accordingly, the portfolio turnover rates presented are for
the Portfolio.
** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
N/A Not applicable.
Prospectus Page 11
<PAGE>
GT GLOBAL INCOME FUNDS
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
GOVERNMENT INCOME FUND
The Government Income Fund seeks a high level of current income by investing
primarily in high quality debt securities of the U.S. and foreign governments,
their agencies and instrumentalities. The Fund's secondary objectives are
capital appreciation and protection of principal through active management of
its maturity structure and currency exposure.
At least 65% of the Fund's total assets normally are invested in debt
obligations issued or guaranteed by the U.S. or foreign governments (including
foreign states, provinces or municipalities) or their agencies, authorities or
instrumentalities. For purposes of this policy, the Fund considers debt
obligations of supranational entities organized or supported by several national
governments, such as the World Bank and the Asian Development Bank, to be
"government securities."
The Fund invests primarily in high quality government debt securities. "High
quality" debt securities are those rated in the top two ratings categories of
Moody's Investors Service, Inc. ("Moody's") or Standard and Poor's Ratings Group
("S&P"), or, if not rated, determined to be of comparable quality by the
Manager. A description of Moody's and S&P ratings is included in the Appendix to
this Prospectus.
The Fund currently contemplates that it will invest principally in obligations
of the United States, Canada, Japan, the Western European nations, New Zealand
and Australia, as well as in multinational currency units. Under normal market
conditions, the Fund invests in issues of not less than three different
countries; investments in the securities of any one country, other than the
United States, normally represent no more than 40% of the Fund's total assets.
The Fund will not invest in a foreign currency or in securities denominated in a
foreign currency if such currency is not at the time of investment considered by
the Manager to be fully exchangable into U.S. dollars (or a multinational
currency unit) without legal restriction.
The Fund may also invest up to 35% of its total assets in: (1) foreign
government securities that are not high quality but are rated at least
"investment grade," i.e., rated within the four highest ratings categories of
Moody's or S&P or, if not rated, determined by the Manager to be of comparable
quality; (2) corporate debt obligations of U.S. or foreign issuers rated at
least investment grade by Moody's or S&P, including debt obligations convertible
into equity securities or having attached warrants or rights to purchase equity
securities; and (3) common stocks, preferred stocks and warrants to acquire such
securities, provided that the Fund will not invest more than 20% of its total
assets in such securities.
STRATEGIC INCOME FUND
The Strategic Income Fund primarily seeks high current income and secondarily
seeks capital appreciation.
The Fund invests in debt securities of issuers in: (1) the United States; (2)
developed foreign countries; and (3) emerging markets. The Fund selects debt
securities from those issued by governments, their agencies and
instrumentalities; central banks; and commercial banks and other corporate
entities. Debt securities in which the Fund may invest include bonds, notes,
debentures, and other similar instruments. The Fund normally invests at least
50% of its net assets in U.S. and foreign debt and other fixed income securities
that, at the time of purchase, are rated at least investment grade by Moody's or
S&P or, if not rated, determined by the Manager to be of comparable quality. No
more than 50% of the Fund's total assets may be invested in securities rated
below investment grade. Such securities involve a high degree of risk and are
predominantly speculative. They are the equivalent of high yield, high risk
bonds, commonly known as "junk bonds." The Fund may also invest in securities
that are in default as to payment of principal and/or interest.
The Fund's investments in emerging market securities may consist substantially
of Brady Bonds (see "General Policies -- Brady Bonds," below) and other
sovereign debt securities issued by emerging market governments that are traded
in the markets of developed countries or groups of developed countries. The
Manager may invest in debt securities of emerging market issuers that it
determines to be suitable investments for the Fund without regard to ratings.
Currently, the substantial majority of emerging market debt securities are
considered to have a credit quality below investment grade. The Fund also may
invest in below-
Prospectus Page 12
<PAGE>
GT GLOBAL INCOME FUNDS
investment grade debt securities of corporate issuers in the United States and
in developed foreign countries, subject to the overall 50% limitation.
HIGH INCOME FUND
The High Income Fund primarily seeks high current income, and secondarily seeks
capital appreciation. The Fund seeks its objectives by investing all of its
investable assets in the Portfolio, which in turn seeks the same objectives as
the Fund by normally investing at least 65% of its total assets in debt
securities of issuers in emerging markets.
The Portfolio intends to invest in the following types of debt securities:
bonds, notes and debentures of emerging market governments; securities issued or
guaranteed by such governments' agencies or instrumentalities; securities issued
or guaranteed by the central banks of emerging market countries; and securities
issued by other banks and companies in such countries and securities denominated
in or indexed to the currencies of emerging markets. Under current market
conditions, the Portfolio expects its investments in emerging market securities
to consist substantially of Brady Bonds (see "General Policies -- Brady Bonds,"
below) and other sovereign debt securities.
The Portfolio may also invest up to 35% of its total assets in (1) equity
securities of issuers in emerging markets included in the list below under the
caption "Emerging Markets"; (2) equity and debt securities of issuers in
developed countries, including the United States; (3) securities of issuers in
emerging markets not included in the emerging markets list, if investing therein
becomes feasible and desirable subsequent to the date of this Prospectus; and
(4) cash and money market instruments. In evaluating investments in securities
of issuers in developed markets, the Manager will consider, among other things,
the business activities of the issuer in emerging markets and the impact that
developments in emerging markets are likely to have on the issuer's financial
condition.
Under normal circumstances, substantially all of the Portfolio's assets will be
invested in debt securities of both governmental and corporate issuers in
emerging markets. Emerging markets debt securities generally are considered to
have a credit quality below investment grade, as defined above. Lower quality
securities involve a high degree of risk and are predominantly speculative.
These debt securities are the equivalent of high yield, high risk bonds,
commonly known as "junk bonds." See "Risk Factors." Many emerging market debt
securities are not rated by U.S. ratings agencies such as Moody's and S&P. The
Portfolio's ability to achieve its investment objectives is thus more dependent
on the Manager's credit analysis. The Portfolio may invest in securities that
are in default as to payment of principal and/or interest.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, investors
should be aware that the High Income Fund, unlike mutual funds that directly
acquire and manage their own portfolios of securities, seeks to achieve its
investment objectives by investing all of its investable assets in the
Portfolio, which is a separate investment company. Since the Fund will invest
only in the Portfolio, the Fund's shareholders will acquire only an indirect
interest in the investments of the Portfolio.The High Income Fund may redeem its
investment from the Portfolio at any time, if the Board of Directors of the
Company determines that it is in the best interests of the Fund and its
shareholders to do so. A change in the Portfolio's investment objectives,
policies or limitations that is not approved by the Board or the shareholders of
the High Income 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. 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.
Should such a distribution occur, the Fund could incur brokerage fees or other
transaction costs in converting such securities to cash. Upon redemption, the
Board would consider what action might be taken, including the investment of all
the investable assets of the Fund in another pooled investment entity having
substantially the same investment objectives as the Fund or the retention by the
Fund of its own investment advisor to manage the Fund's assets in accordance
with the investment objectives, policies and limitations discussed herein with
respect to the Portfolio.
In addition to selling its interests to the Fund, the Portfolio may sell its
interests to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
all of its assets in the Portfolio, it would not be required to sell its shares
at the same public offering price as the Fund and may charge different sales
commissions. Therefore, investors in the Fund may experience different returns
from investors in another investment company which invests exclusively in the
Portfolio. As of the date of this Prospectus, the High Income Fund is the only
institutional investor in the Portfolio.
Prospectus Page 13
<PAGE>
GT GLOBAL INCOME FUNDS
Investors in the Fund should be aware that the Funds' investment in the
Portfolio may be materially affected by the actions of large investors in the
Portfolio, if any. For example, as with all open-end investment companies, if a
large investor were to redeem its interest in the Portfolio, the Portfolio's
remaining investors could experience higher pro rata operating expenses, thereby
producing lower returns. As a result, the Portfolio's security holdings may
become less diverse, resulting in increased risk. Institutional investors in the
Portfolio that have a greater pro rata ownership interest in the Portfolio than
the Fund could have effective voting control over the operation of the
Portfolio. A change in the Portfolio's fundamental objectives, policies and
restrictions, which is not approved by the shareholders of the Fund, could
require the Fund to redeem its interest in the Portfolio. Any such redemption
could result in a distribution in kind of portfolio securities (as opposed to a
cash distribution) by the Portfolio. Should such a distribution occur, the Fund
could incur brokerage fees or other transaction costs in converting such
securities to cash. In addition, a distribution in kind could result in a less
diversified portfolio of investments for the Fund and could affect adversely the
liquidity of the Fund.
GENERAL POLICIES
TEMPORARY DEFENSIVE STRATEGIES. 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. Pursuant to such a defensive strategy,
the Government Income Fund, the Strategic Income Fund and the Portfolio
temporarily may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and/or invest up to 100% of their respective assets in high
quality debt securities or money market instruments of U.S. or foreign issuers.
In addition, for temporary defensive purposes, most or all of the Government
Income Fund's, the Strategic Income Fund's or the Portfolio's investments may be
made in the United States and denominated in U.S. dollars. To the extent the
Funds or the Portfolio employ a temporary defensive strategy, they will not be
invested so as to achieve directly their investment objectives. In addition,
pending investment of proceeds from new sales of Fund shares or to meet ordinary
daily cash needs, the Government Income Fund, the Strategic Income Fund and the
Portfolio may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and may invest in high quality foreign or domestic money market
instruments.
EMERGING MARKET SECURITIES. The Strategic Income Fund and the Portfolio consider
"emerging markets" to consist of all countries determined by the Manager to have
developing or emerging economies and markets. These countries generally include
every country in the world except the United States, Canada, Japan, Australia,
New Zealand and most countries located in Western Europe. The Strategic Income
Fund and the Portfolio will consider investment in the following emerging
markets:
<TABLE>
<S> <C>
Algeria Malaysia
Argentina Mauritius
Bolivia Mexico
Botswana Morocco
Brazil Nicaragua
Bulgaria Nigeria
Chile Oman
China Pakistan
Colombia Panama
Costa Rica Paraguay
Cyprus Peru
Czech Republic Philippines
Dominican Poland
Republic Portugal
Ecuador Republic of Slovakia
Egypt Russia
El Salvador Singapore
Finland Slovenia
Ghana South Africa
Greece South Korea
Hong Kong Sri Lanka
Hungary Swaziland
India Taiwan
Indonesia Thailand
Israel Turkey
Ivory Coast Ukraine
Jamaica Uruguay
Jordan Venezuela
Kazakhstan Zambia
Kenya Zimbabwe
Lebanon
</TABLE>
The Strategic Income Fund and the Portfolio will not be invested in all such
markets at all times. Moreover, investing in some of those markets currently may
not be desirable or feasible, due to the lack of adequate custody arrangements,
overly burdensome repatriation requirements and similar restrictions, the lack
of organized and liquid securities markets, unacceptable political risks or for
other reasons.
As used in this Prospectus and the Statement of Additional Information, an
issuer in an emerging market is an entity: (i) for which the principal
securities trading market is an emerging market, as defined above; (ii) that
(alone or on a consolidated basis) derives 50% or more of its total revenue from
either goods produced, sales made or services
Prospectus Page 14
<PAGE>
GT GLOBAL INCOME FUNDS
performed in emerging markets; or (iii) organized under the laws of, or with a
principal office in, an emerging market.
ASSET ALLOCATION. The Government Income Fund, the Strategic Income Fund and the
Portfolio each invests in debt obligations allocated among diverse markets and
denominated in various currencies, including U.S. dollars, or in multinational
currency units such as European Currency Units. The Funds are designed for
investors who wish to accept the risks entailed in such investments, which are
different from those associated with a portfolio consisting entirely of
securities of U.S. issuers denominated in U.S. dollars. The Government Income
Fund, the Strategic Income Fund and the Portfolio may purchase securities that
are issued by the government or a company or financial institution of one
country but denominated in the currency of another country (or a multinational
currency unit).
The Manager allocates the assets of the Government Income Fund, the Strategic
Income Fund and the Portfolio in securities of issuers in countries and in
currency denominations where the combination of fixed income market returns, the
price appreciation potential of fixed income securities and currency exchange
rate movements will present opportunities primarily for high current income and
secondarily for capital appreciation (and, in the case of the Government Income
Fund, secondarily for capital appreciation and protection of principal). In so
doing, the Manager intends to take full advantage of the different yield, risk
and return characteristics that investment in the fixed income markets of
different countries can provide for U.S. investors. Fundamental economic
strength, credit quality and currency and interest rate trends are the principal
determinants of the emphasis given to various country, geographic and industry
sectors within the Government Income Fund, the Strategic Income Fund and the
Portfolio. Securities held by the Government Income Fund, the Strategic Income
Fund and the Portfolio may be invested in without limitation as to maturity.
The Manager selects securities of particular issuers on the basis of its views
as to the best values then currently available in the marketplace. Such values
are a function of yield, maturity, issue classification and quality
characteristics, coupled with expectations regarding the local and world
economies, movements in the general level and term of interest rates, currency
values, political developments and variations in the supply of funds available
for investment in the world bond market relative to the demands placed upon it.
The Manager generally evaluates currencies on the basis of fundamental economic
criteria (e.g., relative inflation, interest rate levels and trends, growth rate
forecasts, balance of payments status and economic policies) as well as
technical and political data. The Manager may seek to protect a Fund against
such negative currency movements through the use of sophisticated investment
techniques. See "Options, Futures and Forward Currency Transactions" and "Swaps,
Caps, Floors and Collars."
According to the Manager, as of the date of this Prospectus, more than 50% of
the value of all outstanding government debt obligations throughout the world is
represented by obligations denominated in currencies other than the U.S. dollar.
Moreover, from time to time, the debt securities of issuers located outside the
United States have substantially outperformed the debt obligations of U.S.
issuers. Accordingly, the Manager believes that the Government Income Fund's and
the Strategic Income Fund's policy of investing in debt securities throughout
the world and the Portfolio's policy of investing in debt securities of issuers
in emerging markets may enable the achievement of results superior to those
produced by mutual funds with similar objectives to those of the Funds and the
Portfolio that invest solely in debt securities of U.S. issuers.
BRADY BONDS. The Strategic Income Fund and the Portfolio may invest in "Brady
Bonds," which are debt restructurings that provide for the exchange of cash and
loans for newly issued bonds. Brady Bonds have been issued by the countries of,
among others, Albania, Argentina, Brazil, Bulgaria, Costa Rica, Dominican
Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria, Philippines, Poland,
Russia, Uruguay, Venezuela and Vietnam and are expected to be issued by other
emerging market countries. As of the date of this Prospectus, the Strategic
Income Fund and the Portfolio are not aware of the occurrence of any payment
defaults on Brady Bonds. Investors should recognize, however, that Brady Bonds
have been issued only recently and, accordingly, do not have a long payment
history. In addition, Brady Bonds are often rated below investment grade.
The Strategic Income Fund and the Portfolio may invest in either collateralized
or uncollateralized Brady Bonds. U.S. dollar-denominated, collateralized Brady
Bonds, which may be fixed rate par
Prospectus Page 15
<PAGE>
GT GLOBAL INCOME FUNDS
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at that time and is adjusted at regular
intervals thereafter.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Strategic Income Fund and the Portfolio
may invest in fixed and floating rate loans ("Loans") arranged through private
negotiations between a foreign entity and one or more financial institutions
("Lenders"). The majority of the Fund's and the Portfolio's investments in Loans
in emerging markets is expected to be in the form of participations in Loans
("Participations") and assignments of portions of Loans from third parties
("Assignments"). Participations typically will result in the Fund and/or the
Portfolio having a contractual relationship only with the Lender, not with the
borrower government. The Fund and/or the Portfolio will have the right to
receive payments of principal, interest and any fees to which it is entitled
only from the Lender selling the Participation and only upon receipt by the
Lender of the payments from the borrower. In connection with purchasing
Participations, the Fund and/or the Portfolio generally will have no right to
enforce compliance by the borrower with the terms of the loan agreement relating
to the loan ("Loan Agreement"), nor any rights of set-off against the borrower,
and the Fund and/or the Portfolio may not directly benefit from any collateral
supporting the Loan in which it has purchased the Participation. As a result,
the Fund and/or the Portfolio will assume the credit risk of both the borrower
and the Lender that is selling the Participation.
In the event of the insolvency of the Lender selling a Participation, the Fund
and/or the Portfolio may be treated as a general creditor of the Lender and may
not benefit from any set-off between the Lender and the borrower. The Fund
and/or the Portfolio will acquire Participations only if the Lender
interpositioned between the Fund and/or the Portfolio and the borrower is
determined by the Manager to be creditworthy. When the Fund and/or the Portfolio
purchases Assignments from Lenders, the Fund and/or the Portfolio will acquire
direct rights against the borrower on the Loan. However, since Assignments are
arranged through private negotiations between potential assignees and assignors,
the rights and obligations acquired by the Fund and/or the Portfolio as the
purchaser of an Assignment may differ from, and be more limited than, those held
by the assigning Lender.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Government Income Fund, the
Strategic Income Fund and the Portfolio may purchase debt securities on a
"when-issued" basis and may purchase or sell such securities on a "forward
commitment" basis in order to hedge against anticipated changes in interest
rates and prices. The price, which is generally expressed in yield terms, is
fixed at the time the commitment is made, but delivery and payment for the
securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Funds and the
Portfolio will purchase or sell when-issued securities and forward commitments
only with the intention of actually receiving or delivering the securities, as
the case may be. No income accrues on securities which have been purchased
pursuant to a forward commitment or on a when-issued basis prior to delivery of
the securities. If a Fund or the Portfolio disposes of the right to acquire a
when-issued security prior to its acquisition or disposes of its right to
deliver or receive against a forward commitment, it may incur a gain or loss. At
the time a Fund or the Portfolio enters into a transaction on a when-issued or
forward commitment basis, a segregated account consisting of cash or 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 a Fund or the Portfolio may incur a loss. The Government Income Fund
may invest up to 5% of its total assets in a combination of securities purchased
on a when-issued basis or with respect to which it has entered into forward
commitment agreements.
The Strategic Income Fund and the Portfolio may also sell securities on a "when,
as and if issued" basis for hedging purposes. Under such a transaction, the Fund
or the Portfolio is required to deliver at a future date a security it does not
presently hold, but which it has a right to receive if the security is issued.
Issuance of the security may not occur, in which case the Fund or Portfolio
would have no obligation to the other party, and would not receive payment for
the sale. Selling securities on a "when, as and if issued" basis may reduce risk
of loss to the extent that such a sale wholly or partially
Prospectus Page 16
<PAGE>
GT GLOBAL INCOME FUNDS
offsets unfavorable price movements on the investments being hedged. However,
such sales also limit the amount the Fund or Portfolio can receive if the "when,
as and if issued" security is in fact issued.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Government
Income Fund may borrow from banks or may borrow through reverse repurchase
agreements and "roll" transactions in connection with meeting requests for the
redemption of Fund shares. The Government Income Fund also may borrow up to 5%
of its total assets for temporary or emergency purposes other than to meet
redemptions. However, the Government Income Fund will not borrow for investment
purposes, nor will the Fund purchase securities while borrowings are
outstanding.
Both the Strategic Income Fund and the Portfolio are authorized to borrow money
from banks in an amount up to 33 1/3% of its total assets (including the amount
borrowed), less all liabilities and indebtedness other than the borrowings and
may use the proceeds of such borrowings for investment purposes. The Strategic
Income Fund and the Portfolio will borrow for investment purposes only when the
Manager believes that such borrowings will benefit the Fund or the Portfolio,
respectively, after taking into account considerations such as the costs of the
borrowing and the likely investment returns on the securities purchased with the
borrowed monies.
Borrowing for investment purposes is known as leveraging, which is a speculative
practice. Such borrowing by the Strategic Income Fund and the Portfolio creates
the opportunity for increased net income and appreciation but, at the same time,
involves special risk considerations. For example, leveraging might exaggerate
changes in the net asset value of Fund shares and in the yield realized by the
Fund or the Portfolio. Although the principal amount of such borrowings will be
fixed, the Fund's and the Portfolio's assets may change in value during the time
the borrowing is outstanding. By leveraging the Fund or the Portfolio, changes
in net asset values, higher or lower, may be greater in degree than if leverage
was not employed. To the extent the income derived from the assets obtained with
borrowed funds exceeds the interest and other expenses that the Fund or the
Portfolio will have to pay, the Fund's or the Portfolio's net income will be
greater than if borrowing was not used. Conversely, if the income from the
assets obtained with borrowed funds is not sufficient to cover the cost of
borrowing, the net income of the Fund or the Portfolio will be less than if
borrowing were not used, and therefore the amount available for distribution to
shareholders as dividends will be reduced. The Strategic Income Fund and the
Portfolio each expects that some of its borrowings may be made on a secured
basis.
In addition to the foregoing borrowings, the Strategic Income Fund and the
Portfolio each may borrow money for temporary or emergency purposes or payments
in an amount not exceeding 5% of the value of its total assets (not including
the amount borrowed) provided that the total amount borrowed by the Strategic
Income Fund or the Portfolio for any purpose does not exceed 33 1/3% of its
total assets.
The Funds and the Portfolio may also enter into reverse repurchase agreements
with a bank or recognized securities dealer, although the Strategic Income Fund
currently has no intention of doing so with respect to more than 5% of its total
assets. Under a reverse repurchase agreement, the Funds or the Portfolio would
sell securities and agree to repurchase them at a particular price at a future
date. At the time a Fund or the Portfolio enters into a reverse repurchase
agreement, it will establish and maintain a segregated account with an approved
custodian containing cash or liquid securities having a value not less than the
repurchase price, including accrued interest. Reverse repurchase agreements
involve the risk that the market value of the securities retained in lieu of
sale by a Fund or the Portfolio may decline below the price of the securities a
Fund or the Portfolio has sold but is obligated to repurchase. In the event the
buyer of securities under a reverse repurchase agreement files for bankruptcy or
becomes insolvent, such buyer or its trustee or receiver may receive an
extension of time to determine whether to enforce a Fund's or the Portfolio's
obligation to repurchase the securities, and a Fund's or the Portfolio's use of
the proceeds of the reverse repurchase agreement may effectively be restricted
pending such decision.
The Strategic Income Fund and the Portfolio also may enter into "dollar rolls,"
in which the Fund or the Portfolio sells fixed income securities for delivery in
the current month and simultaneously contracts to repurchase substantially
similar (same type, coupon and maturity) securities on a specified future date.
During the roll period, the Fund or the Portfolio would forego principal and
interest paid on such securities. The Fund or the Portfolio would be compensated
by the difference between the current sales price and the forward price for
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the future purchase, as well as by the interest earned on the cash proceeds of
the initial sale. See "Investment Objectives and Policies" in the Statement of
Additional Information.
Reverse repurchase agreements and dollar rolls will be treated as borrowings and
will be deducted from the Strategic Income Fund's or the Portfolio's assets for
purposes of calculating compliance with the Fund's or the Portfolio's borrowing
limitation. See "Investment Limitations" in the Statement of Additional
Information.
SECURITIES LENDING. The Government Income Fund, the Strategic Income Fund and
the Portfolio may lend their respective portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows a Fund to retain
ownership of the securities loaned and, at the same time earn additional income
that may be used to offset the Fund's custody fee. At all times a loan is
outstanding, each Fund and the Portfolio requires the borrower to maintain with
the Fund's or the Portfolio's custodian, collateral consisting of cash, U.S.
government securities, or certain irrovocable letters of credit equal to at
least the value of the borrowed securities, plus any accrued interest. Each Fund
and the Portfolio limits its loans of portfolio securities to an aggregate of
30% of the value of its total assets, measured at the time any such loan is
made. The risks in lending portfolio securities, as with other extensions of
secured credit, consist of possible delays in receiving additional collateral or
in recovery of the loaned securities and possible loss of rights in the
collateral should the borrower fail financially.
ZERO COUPON SECURITIES. The Strategic Income Fund and the Portfolio may invest
in certain zero coupon securities that are "stripped" U.S. Treasury notes and
bonds. They also may invest in zero coupon and other deep discount securities
issued by foreign governments and domestic and foreign corporations, including
certain Brady Bonds and other foreign debt and in payment-in-kind securities.
Zero coupon securities pay no interest to holders prior to maturity, and
payment-in-kind securities pay interest in the form of additional securities.
However, a portion of the original issue discount on zero coupon securities and
the "interest" on payment-in-kind securities will be included in the investing
Fund's or Portfolio's income. Accordingly, for a Fund to continue to qualify for
tax treatment as a regulated investment company and to avoid a certain excise
tax (see "Taxes" in the Statement of Additional Information), it may be required
to distribute an amount that is greater than the total amount of cash it
actually receives (or, in the case of the High Income Fund, its share of the
total amount of cash the Portfolio actually receives). These distributions must
be made from the Fund's (or, in the case of the High Income Fund, its, or its
share of, the Portfolio's) cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Fund or the Portfolio will not be able to
purchase additional income-producing securities with cash used to make such
distributions, and its current income ultimately may be reduced as a result.
Zero coupon and payment-in-kind securities usually trade at a deep discount from
their face or par value and will be subject to greater fluctuations of market
value in response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest in cash.
SYNTHETIC SECURITY POSITIONS. The Government Income Fund, the Strategic Income
Fund and the Portfolio may utilize combinations of futures on bonds and forward
currency contracts to create investment positions that have substantially the
same characteristics as bonds of the same type as those on which the futures
contracts are written. Investment positions of this type are generally referred
to as "synthetic securities."
For example, in order to establish a synthetic security position for a Fund or
the Portfolio that is comparable to owning a Japanese government bond, the
Manager might purchase futures contracts on Japanese government bonds in the
desired principal amount and purchase forward currency contracts for Japanese
Yen in an amount equal to the then current purchase price for such bonds in the
Japanese cash market, with each contract having approximately the same delivery
date.
The Manager might roll over the futures and forward currency contract positions
before taking delivery in order to continue the Fund's or the Portfolio's
investment position, or the Manager might close out those positions, thus
effectively selling the synthetic security. Further, the amount of each contract
might be adjusted in response to market conditions and the forward currency
contract might be changed in amount or eliminated in order to hedge against
currency fluctuations.
The Manager would create synthetic security positions for a Fund or the
Portfolio when it believes that it can obtain a better yield or achieve cost
savings in comparison to purchasing actual bonds or when comparable bonds are
not readily available in
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GT GLOBAL INCOME FUNDS
the market. Synthetic security positions are subject to the risk that changes in
the value of purchased futures contracts may differ from changes in the value of
the bonds that might otherwise have been purchased in the cash market. Also,
while the Manager believes that the cost of creating synthetic security
positions generally will be materially lower than the cost of acquiring
comparable bonds in the cash market, a Fund or the Portfolio will incur
transaction costs in connection with each purchase of a futures or forward
currency contract. The use of futures contracts and forward currency contracts
to create synthetic security positions also is subject to substantially the same
risks as those that exist when these instruments are used in connection with
hedging strategies. See "Options, Futures and Forward Currency Transactions"
below and "Options, Futures and Currency Strategies" in the Statement of
Additional Information.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Government Income Fund,
the Strategic Income Fund and the 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
Funds' or Portfolio investment. The Strategic Income Fund and the Portfolio also
may enter into interest rate, currency and index swaps and purchase or sell
related caps, floors and collars and other similar instruments. See "Swaps,
Caps, Floors and Collars" below. These instruments are often referred to as
"derivatives," which may be defined as financial instruments whose performance
is derived, at least in part, from the performance of another asset (such as a
security, currency or an index of securities). The Government Income Fund, the
Strategic Income Fund and the Portfolio may enter into such instruments up to
the full value of their portfolio assets. 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, the Government Income Fund, the Strategic Income Fund and the
Portfolio may enter into forward currency contracts for the purchase or sale of
a specified currency at a specified future date. Such contracts may involve the
purchase or sale of a foreign currency against the U.S. dollar or may involve
two foreign currencies. The Government Income Fund, the Strategic Income Fund
and the Portfolio may enter into forward currency contracts either with respect
to specific transactions or with respect to the respective Fund's or the
Portfolio's portfolio positions. Each Fund and the 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, each Fund and the Portfolio may purchase and sell put and call
options on securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or the Portfolio or that the Manager intends to
include in the Fund's or the Portfolio's portfolio. The Funds and the Portfolio
also may purchase and sell put and call options on indices to hedge against
overall fluctuations in the securities markets generally or in a specific market
sector.
Further, the Funds and the Portfolio may sell index futures contracts and may
purchase put options or write call options on such futures contracts to protect
against a general market or market sector decline that could adversely affect
the Fund's or the Portfolio's portfolio. The Funds and the Portfolio also may
purchase index futures contracts and purchase call options or write put options
on such contracts to hedge against a general market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. A Fund or
the Portfolio may use interest rate futures contracts and options thereon to
hedge its portfolio against changes in the general level of interest rates.
SWAPS, CAPS, FLOORS AND COLLARS. The Strategic Income Fund and the Portfolio may
enter into interest rate, currency and index swaps, and purchase or sell related
caps, floors and collars and other derivative instruments. The Fund and the
Portfolio expect to enter into these transactions primarily to preserve a return
or spread on a particular investment or portion of its portfolio, to protect
against currency fluctuations, as a technique for managing the portfolio's
duration (I.E., the price sensitivity to changes in interest rates) or to
protect against any increase in the price of securities the Fund or the
Portfolio anticipates purchasing at a later date. The Fund and the Portfolio
intend to use these transactions as hedges, and neither will sell interest rate
caps or floors if it does not own securities or other instruments providing an
income stream roughly equivalent to
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GT GLOBAL INCOME FUNDS
what the Fund or the Portfolio may be obligated to pay.
Interest rate swaps involve the exchange by the Fund or the Portfolio with
another party of their respective commitments to pay or receive interest (for
example, an exchange of floating rate payments for fixed rate payments) with
respect to a notional amount of principal. A currency swap is an agreement to
exchange cash flows on a notional amount based on changes in the values of the
reference indices.
The purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling the cap to the extent that a specified
index exceeds a predetermined interest rate. The purchase of an interest rate
floor entitles the purchaser to receive payments on a notional principal amount
from the party selling the floor to the extent that a specified index falls
below a predetermined interest rate or amount. A collar is a combination of a
cap and a floor that preserves a certain return within a predetermined range of
interest rates or values.
INDEXED COMMERCIAL PAPER. The Strategic Income Fund and the Portfolio may invest
without limitation in commercial paper which is indexed to certain specific
foreign currency exchange rates. The terms of such commercial paper provide that
its principal amount is adjusted upwards or downwards (but not below zero) at
maturity to reflect changes in the exchange rate between two currencies while
the obligation is outstanding. The Strategic Income Fund and the Portfolio will
purchase such commercial paper with the currency in which it is denominated and,
at maturity, will receive interest and principal payments thereon in that
currency, but the amount of principal payable by the issuer at maturity will
change in proportion to the change (if any) in the exchange rate between the two
specified currencies between the date the instrument is issued and the date the
instrument matures. While such commercial paper entails the risk of loss of
principal, the potential for realizing gains as a result of changes in foreign
currency exchange rates enables the Fund and the Portfolio to hedge against a
decline in the U.S. dollar value of investments denominated in foreign
currencies while seeking to provide an attractive money market rate of return.
The Fund and the Portfolio will not purchase such commercial paper for
speculation.
OTHER INDEXED SECURITIES. The Government Income Fund, Strategic Income Fund and
the Portfolio may invest in certain other indexed securities, which are
securities whose prices are indexed to the prices of other securities,
securities indices, currencies, precious metals or other commodities, or other
financial indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is determined by
reference to a specific instrument or statistic. The performance of indexed
securities depends to a great extent on the performance of the security,
currency, or other instrument to which they are indexed, and may also be
influenced by interest rate changes in the United States and abroad. At the same
time, indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more volatile
than the underlying instruments. New forms of indexed securities continue to be
developed. Each Fund and Portfolio may invest in such securities to the extent
consistent with its investment objectives.
OTHER INFORMATION. Each Fund's investment objectives may not be changed without
the approval of a majority of the respective Fund's outstanding voting
securities. A "majority of the Fund's outstanding voting securities" means the
lesser of (i) 67% of the shares represented at a meeting at which more than 50%
of the outstanding shares are represented, or (ii) more than 50% of the
outstanding shares. In addition, each Fund has adopted certain investment
limitations which also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Each Fund's other investment policies described herein
and in the Statement of Additional Information may be changed by a vote of a
majority of the Company's Board of Directors without shareholder approval.
The approval of the High Income Fund and of other investors in the Portfolio, if
any, is not required to change the investment objectives, policies or
limitations of the Portfolio, unless otherwise specified. Written notice shall
be provided to shareholders of the High Income Fund thirty days prior to any
changes in the Portfolio's investment objectives.
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GT GLOBAL INCOME FUNDS
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that any Fund or the Portfolio will achieve its
investment objectives. The Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its portfolio positions and its net currency
exposure. The value of fixed income securities held by the Government Income
Fund, the Strategic Income Fund and the Portfolio generally fluctuates inversely
with interest rate movements. Longer term bonds held by the Government Income
Fund, the Strategic Income Fund or the Portfolio are subject to greater interest
rate risk.
Each Fund and the Portfolio is classified under the Investment Company Act of
1940 (the "1940 Act") as a "non-diversified" fund. As a result, the Government
Income Fund, the Strategic Income Fund and the Portfolio each will be able to
invest in a fewer number of issuers than if it were classified under the 1940
Act as a "diversified" fund. To the extent that a Fund or the Portfolio invests
in a smaller number of issuers, the value of each Fund's shares may fluctuate
more widely and the Funds and the Portfolio may be subject to greater investment
and credit risk with respect to their portfolios.
FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally are not registered with the SEC, nor
are the issuers thereof usually subject to the SEC's reporting requirements.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available with respect to U.S. securities and
issuers. Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies. In addition, certain costs
attibutable 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 Government Income and Strategic Income Funds' and the
Portfolio's interest and dividends from foreign issuers may be subject to
non-U.S. withholding taxes, thereby reducing their net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Government Income Fund, the Strategic Income Fund and the
Portfolio, political or social instability, or diplomatic developments which
could affect the investments of the Government Income Fund, the Strategic Income
Fund and the Portfolio in those countries. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, rate of savings
and capital reinvestment, resource self-sufficiency and balance of payments
positions.
CURRENCY RISK. Since the Government Income Fund, the Strategic Income Fund and
the Portfolio normally invest substantially in securities denominated in
currencies other than the U.S. dollar, and because they may hold foreign
currencies, they will be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Funds' shares, and also may affect the value of dividends and interest earned by
the Funds and gains and losses realized by the Funds. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and political data.
The exchange rates between the U.S. dollar and other currencies are determined
by supply and demand in the currency exchange markets, the international balance
of payments, governmental intervention, speculation and other economic and
political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
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GT GLOBAL INCOME FUNDS
devaluations have historically occurred in certain countries.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Strategic Income Fund and
the Portfolio should be considered speculative. Investors are strongly advised
to consider carefully the special risks involved in emerging markets, which are
in addition to the usual risks of investing in developed foreign markets around
the world.
Investing in emerging markets involves risks relating to potential political and
economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Strategic Income Fund or the Portfolio could lose its
entire investment in that market.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Strategic Income Fund or the Portfolio to make intended
securities purchases due to settlement problems could cause the Strategic Income
Fund or the Portfolio to forego attractive investment opportunities. Inability
to dispose of a portfolio security caused by settlement problems could result
either in losses to the Strategic Income Fund or the Portfolio due to subsequent
declines in value of the portfolio security or, if the Strategic Income Fund or
the Portfolio has entered into a contract to sell the security, could result in
possible liability to the purchaser.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Strategic Income Fund's or the
Portfolio's portfolio securities in such markets may not be readily available.
Section 22(e) of the 1940 Act permits a registered investment company to suspend
redemption of its shares for any period during which an emergency exists, as
determined by the SEC. Accordingly, when the Strategic Income Fund or the
Portfolio believes that appropriate circumstances warrant, it will promptly
apply to the SEC for a determination that an emergency exists within the meaning
of Section 22(e) of the 1940 Act. During the period commencing from the
Strategic Income Fund's or the Portfolio's identification of such conditions
until the date of SEC action, the portfolio securities of the Strategic Income
Fund or the Portfolio in the affected markets will be valued at fair value as
determined in good faith by or under the direction of the Company's Board of
Directors or the Portfolio's Board of Trustees.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Strategic Income Fund and the Portfolio
may have difficulty disposing of Assignments and Participations. The liquidity
of such securities is limited and, the Fund and the Portfolio anticipate that
such securities could be sold only to a limited number of institutional
investors. The lack of a liquid secondary market could have an adverse impact on
the value of such securities and on the Fund's and the Portfolio's ability to
dispose of particular Assignments or Participations when necessary to meet the
Fund's and/or the Portfolio's
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GT GLOBAL INCOME FUNDS
liquidity needs or in response to a specific economic event, such as a
deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for Assignments and Participations also may make it more
difficult for the Fund and/or the Portfolio to assign a value to those
securities for purposes of valuing the Fund's or the Portfolio's portfolio and
calculating its net asset value.
SOVEREIGN DEBT. The Strategic Income Fund and the Portfolio may invest in
sovereign debt securities of emerging market governments, including Brady Bonds.
Investments in such securities involve special risks. The issuer of the debt or
the governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal or interest when due in accordance with
the terms of such debt. Periods of economic uncertainty may result in the
volatility of market prices of sovereign debt obligations, and in turn a Fund's
net asset value, to a greater extent than the volatility inherent in domestic
fixed income securities.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which a
sovereign debtor may be subject. Emerging market governments could default on
their sovereign debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
abroad to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a sovereign debtor's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing sovereign debt could adversely affect the Fund's or the
Portfolio's investments. Emerging markets are faced with social and political
issues and some of them have experienced high rates of inflation in recent years
and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance governmental
programs, and may have other adverse social, political and economic
consequences. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their sovereign debt. Although the Manager intends to manage the Strategic
Income Fund and the Portfolio in a manner that will minimize the exposure to
such risks, there can be no assurance that adverse political changes will not
cause the Fund or the Portfolio to suffer a loss of interest or principal on any
of its holdings.
In recent years, some of the emerging market countries in which the Strategic
Income Fund and the Portfolio expect to invest have encountered difficulties in
servicing their sovereign debt obligations. Some of these countries have
withheld payments of interest and/or principal of sovereign debt. These
difficulties have also led to agreements to restructure external debt
obligations -- in particular, commercial bank loans, typically by rescheduling
principal payments, reducing interest rates and extending new credits to finance
interest payments on existing debt. In the future, holders of emerging market
sovereign debt securities may be requested to participate in similar
rescheduling of such debt. Certain emerging market countries are among the
largest debtors to commercial banks and foreign governments. Currently, Brazil,
Mexico and Argentina are the largest debtors among developing countries. At
times certain emerging market countries have declared moratoria on the payment
of principal and interest on external debt; such a moratorium is currently in
effect in certain emerging market countries. There is no bankruptcy proceeding
by which a creditor may collect in whole or in part sovereign debt on which an
emerging market government has defaulted.
The ability of emerging market governments to make timely payments on their
sovereign debt securities is likely to be influenced strongly by a country's
balance of trade and its access to trade and other international credits. A
country whose exports are concentrated in a few commodities could be vulnerable
to a decline in the international prices of one or more of such commodities.
Increased protectionism on the part of a country's
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GT GLOBAL INCOME FUNDS
trading partners could also adversely affect its exports. Such events could
diminish a country's trade account surplus, if any. To the extent that a country
receives payment for its exports in currencies other than hard currencies, its
ability to make hard currency payments could be affected.
Investors should also be aware that certain sovereign debt instruments in which
the Strategic Income Fund and the Portfolio may invest involve great risk. As
noted above, sovereign debt obligations issued by emerging market governments
generally are deemed to be the equivalent in terms of quality to securities
rated below investment grade by Moody's and S&P. Such securities are regarded as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations and involve
major risk exposure to adverse conditions. Some of such securities, with respect
to which the issuer currently may not be paying interest or may be in payment
default, may be comparable to securities rated D by S&P or C by Moody's. The
Strategic Income Fund and the Portfolio may have difficulty disposing of and
valuing certain sovereign debt obligations because there may be a limited
trading market for such securities. Because there is no liquid secondary market
for many of these securities, the Strategic Income Fund and the Portfolio
anticipate that such securities could be sold only to a limited number of
dealers or institutional investors.
LOWER QUALITY DEBT SECURITIES. Under normal market conditions the Strategic
Income Fund may invest up to 50% of its total assets in debt securities rated
below investment grade, and up to 100% the Portfolio's total assets will be so
invested. Such investments involve a high degree of risk.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P and debt rated Ba, B,
Caa, Ca or C by Moody's, is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such lower quality debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. Debt rated C
by Moody's or S&P is the lowest quality debt that is not in default as to
principal or interest and such issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing. Lower
quality debt securities are also generally considered to be subject to greater
risk than higher quality securities with regard to a deterioration of general
economic conditions. These securities are the equivalent of high yield, high
risk bonds, commonly known as "junk bonds." As noted above, the Strategic Income
Fund and the Portfolio may invest in debt securities rated below C, which are in
default as to principal and/ or interest.
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit quality in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Appendix A" for a discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Strategic Income Fund or the Portfolio. If an issuer exercises
these provisions in a declining interest rate market, the Strategic Income Fund
or the Portfolio may have to replace
Prospectus Page 24
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GT GLOBAL INCOME FUNDS
the security with a lower yielding security, resulting in a decreased return for
investors. In addition, the Strategic Income Fund and the Portfolio may have
difficulty disposing of lower quality securities because there may be a thin
trading market for such securities. There may be no established retail secondary
market for many of these securities, and the Strategic Income Fund and the
Portfolio anticipate that such securities could be sold only to a limited number
of dealers or institutional investors. The lack of a liquid secondary market
also may have an adverse impact on market prices of such instruments and may
make it more difficult for the Strategic Income Fund and the Portfolio to obtain
accurate market quotations for purposes of valuing the securities in the
portfolios of the Strategic Income Fund and the Portfolio. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may also
decrease the values and liquidity of lower quality securities, especially in a
thinly traded market. The Strategic Income Fund and the Portfolio also may
acquire lower quality debt securities during an initial underwriting or may
acquire lower quality debt securities which are sold without registration under
applicable securities laws. Such securities involve special considerations and
risks.
Factors having an adverse effect on the market value of lower rated securities
or their equivalents purchased by the Strategic Income Fund and the Portfolio
will adversely impact net asset value of the Strategic Income Fund and the High
Income Fund. See "Risk Factors" in the Statement of Additional Information. In
addition to the foregoing, such factors may include: (i) potential adverse
publicity; (ii) heightened sensitivity to general economic or political
conditions; and (iii) the likely adverse impact of a major economic recession.
The Strategic Income Fund and the Portfolio each also may incur additional
expenses to the extent it is required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings, and the Fund and the
Portfolio may have limited legal recourse in the event of a default. Debt
securities issued by governments in emerging markets can differ from debt
obligations issued by private entities in that remedies from defaults generally
must be pursued in the courts of the defaulting government, and legal recourse
is therefore somewhat diminished. Political conditions, in terms of a
government's willingness to meet the terms of its debt obligations, also are of
considerable significance. There can be no assurance that the holders of
commercial bank debt may not contest payments to the holders of debt securities
issued by governments in emerging markets in the event of default by the
governments under commercial bank loan agreements.
As of October 31, 1996, the Strategic Income Fund and the Portfolio had 78.8%
and 58.7%, respectively, of their total net assets in debt securities that
received a rating from Moody's and 19.6% and 39.7%, respectively, of their total
net assets in debt securities that were not so rated. In addition, the Strategic
Income Fund and the Portfolio had 1.6% and 1.6%, respectively, of their total
net assets in cash and net receivables. The Strategic Income Fund had the
following percentages of its total net assets invested in rated securities: Aaa
- -- 36.6%, Aa -- 15.6%, A -- 1.0%, Baa -- 1.5%, Ba -- 11.5%, B -- 12.6%, Caa --
0%, Ca -- 0%, C -- 0%. Included under the unrated category are securities
comprising 26.2% of the Strategic Income Fund's total net assets which, while
unrated, have been determined by the Manager to be of comparable quality to
securities in the following categories: Baa -- 0%; Ba -- 10%; and B -- 9.6%. The
Portfolio had the following percentages of its total net assets invested in
rated securities: Aaa -- 2.7%, Aa -- .7%, A -- 3.6%, Baa -- 3.0%, Ba -- 20.2%, B
- -- 28.5%, Caa -- 0%, Ca -- 0%, C -- 0%. Included under the unrated category are
securities composing 39.7% of the Portfolio's total net assets which, while
unrated, have been determined by the Manager to be of comparable quality to
securities in the following rating categories: Baa -- 1.3 %; Ba -- 18.0%; and B
- -- 20.4%. It should be noted that the allocation of the investments of the
Strategic Income Fund and the Portfolio by rating on any given date will vary
and should not be considered representative of the future portfolio composition
of the Strategic Income Fund or the Portfolio.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although each Fund and the
Portfolio is authorized to enter into options, futures and forward currency
transactions, the Funds and the Portfolio might not enter into any such
transactions. 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. 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
Prospectus Page 25
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GT GLOBAL INCOME FUNDS
thereon and movements in the price of the currency or security hedged or used
for cover; (3) the fact that skills and techniques needed to trade options,
futures contracts and options thereon or to use forward currency contracts are
different from those needed to select the securities in which a Fund or
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 Fund or Portfolio to purchase or sell a
portfolio security at a time when it would otherwise be favorable for it to do
so, or the possible need for a Fund or Portfolio to sell a security at a
disadvantageous time, due to the need for the Fund or Portfolio to maintain
"cover" or to set aside securities in connection with hedging transactions; and
(7) the possible need to defer closing out of 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 Code. See "Dividends, Other Distributions and
Federal Income Taxation" herein and "Taxes" in the Statement of Additional
Information.
ILLIQUID SECURITIES. The Government Income Fund may invest up to 10% of its
total assets, and the Strategic Income Fund and the Portfolio up to 15% of their
net assets, in securities for which no readily available market exists,
so-called "illiquid securities." 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.
Prospectus Page 26
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GT GLOBAL INCOME FUNDS
HOW TO INVEST
- --------------------------------------------------------------------------------
GENERAL. Advisor Class shares are offered through this Prospectus to (a)
trustees or other fiduciaries purchasing shares for employee benefit plans which
are sponsored by organizations which have at least 1,000 employees; (b) any
account with assets of at least $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." Investors in Wrap Fee Accounts and Advisory
Accounts may only purchase Advisor Class shares through Financial Advisors who
have entered into agreements with GT Global and certain of its affiliates.
Investors may be charged a fee by their agents or brokers if they effect
transactions other than through a dealer.
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. 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 contact your
Financial Advisor or GT Global.
PURCHASES BY BANK WIRE. Shares of the Funds may also be purchased through GT
Global by bank wire. Bank wire purchases will be effected at the next determined
public offering price after the bank wire is received. A wire investment is
considered received when the Transfer Agent is notified that the bank wire has
been credited to the Funds. Prior telephonic or facsimile notice that a bank
wire is being sent must be provided to the Transfer Agent. A bank may charge a
service fee for wiring money to the Funds. The Transfer Agent currently does not
charge a service fee for facilitating wire purchases, but reserves the right to
do so in the future. For more information, please refer to the Shareholder
Account Manual in this Prospectus.
CERTIFICATES. Physical certificates representing a Fund's shares will not be
issued unless a written request is submitted to the Transfer Agent. Shares of a
Fund are recorded on a register by the Transfer Agent, and shareholders who do
not elect to receive certificates have the same rights of ownership as if
certificates had been issued to them. Redemptions and exchanges by shareholders
who hold certificates may take longer to effect than similar transactions
involving non-certificated shares because the physical delivery and processing
of properly executed certificates is required. ACCORDINGLY, THE FUNDS AND GT
GLOBAL RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
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
Prospectus Page 27
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GT GLOBAL INCOME FUNDS
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.
Prospectus Page 28
<PAGE>
GT GLOBAL INCOME FUNDS
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Advisor Class shares of any Fund may be exchanged for Advisor Class shares of
other GT Global Mutual Funds based on their respective net asset values,
provided that the registration remains identical. EXCHANGES ARE NOT TAX-FREE AND
MAY RESULT IN A SHAREHOLDER REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR
TAX PURPOSES. See "Dividends, Other Distributions and Federal Income Taxation --
Taxes." In addition to the Funds, the GT Global Mutual Funds currently include:
-- GT GLOBAL WORLDWIDE GROWTH FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND
-- GT GLOBAL AMERICA 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 DOLLAR FUND
Up to four exchanges each year per Fund may be made without charge. A $7.50
service charge will be imposed on each subsequent exchange. Exchange requests
received in good order by the Transfer Agent before the close of regular trading
on the NYSE on any Business Day will be processed at the net asset value
calculated on that day. 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 his or her Financial Advisor to request the prospectus
of the other GT Global Mutual Fund(s) being considered. Other investors should
contact GT Global. See the Shareholder Account Manual in this Prospectus for
additional information.
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 reserves 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 reserves 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, the Funds and GT Global reserve the right to reject
any purchase order.
Prospectus Page 29
<PAGE>
GT GLOBAL INCOME FUNDS
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Shares of each Fund may be redeemed at their net asset value and redemption
proceeds will be sent within seven days of the execution of a redemption
request. Redemption requests may be transmitted to the Transfer Agent by
telephone or by mail, in accordance with the instructions provided in the
Shareholder Account Manual. 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 Fund employs 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 a Wrap Fee Account or Advisory Account who is in doubt
as to what documents are required should contact his 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
Prospectus Page 30
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GT GLOBAL INCOME FUNDS
in good order, but not later than seven days after the date the request is
executed. Requests for redemption which are subject to any special conditions or
which specify a future or past effective date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which a Fund has not yet
received good payment, the Fund may delay payment of redemption proceeds until
it has assured itself that good payment has been collected for the purchase of
the shares. In the case of purchases by check it can take up to 10 business days
to confirm that the check has cleared and good payment has been received.
Redemption proceeds will not be delayed when shares have been paid for by wire
or when the investor's account holds a sufficient number of shares for which
funds already have been collected.
GT Global reserves the right to redeem the shares of any Advisory Account or
Wrap Fee Account if the amount invested in GT Global Mutual Funds through such
account is reduced to less than $500 through redemptions or other action by the
shareholder. Written notice will be given to the shareholder at least 60 days
prior to the date fixed for such redemption, during which time the shareholder
may increase the amount invested in GT Global Mutual Funds through such account
to an aggregate amount of $500 or more.
For additional information on how to redeem shares, see the Shareholder Account
Manual in this Prospectus, or contact your Financial Advisor.
Prospectus Page 31
<PAGE>
GT GLOBAL INCOME FUNDS
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Purchase, exchange and redemption orders 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
An investor opening a new account should call 1-800-223-2138 to obtain an
account number. WITHIN SEVEN DAYS OF PURCHASE SUCH AN INVESTOR MUST SEND A
COMPLETED ACCOUNT APPLICATION CONTAINING THE INVESTOR'S CERTIFIED TAXPAYER
IDENTIFICATION NUMBER TO GT GLOBAL AT THE ADDRESS PROVIDED ABOVE UNDER
"INVESTMENTS BY MAIL." Wire instructions must state Fund name, class of shares,
shareholder's registered name and account number. Bank wires should be sent
through the Federal Reserve Bank Wire System to:
WELLS FARGO BANK, N.A.
ABA 121000248
Attn: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, amount of
exchange, name of the GT Global Mutual Fund exchanging into, shareholder's
registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT Global at 1-800-223-2138
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the above
instructions but send to the following address:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call GT Global at 1-800-223-2138.
Prospectus Page 32
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GT GLOBAL INCOME FUNDS
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
The Funds calculate net asset value as of the close of normal trading on the
NYSE (currently 4:00 p.m., Eastern time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. Each
Fund's net asset value per share is computed by determining the value of its
total assets (which, in the case of the High Income Fund, is the value of its
proportionate share of the total assets of the Portfolio) subtracting all of its
liabilities, and dividing the result by the total number of shares outstanding
at such time. Net asset value is determined separately for each class of shares
of each Fund.
Long-term debt obligations held by a Fund or the Portfolio are valued at the
mean of representative quoted bid and asked prices for such securities or, if
such prices are not available, at prices for securities of comparable maturity,
quality and type; however, when 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. Equity securities are valued at the last
sale price on the exchange or in the OTC market in which such securities are
primarily traded, as of the close of business on the day the securities are
being valued, or, lacking any sales, at the last available bid price. When
market quotations for futures and options positions held by a Fund or the
Portfolio are readily available, those positions are valued based upon such
quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under the
direction of the Company's Board of Directors or the Portfolio's Board of
Trustees. Securities and other assets quoted in foreign currencies are valued in
U.S. dollars based on the prevailing exchange rates on that day.
Each Fund's or the Portfolio's portfolio securities, from time to time, may be
listed primarily on foreign exchanges or OTC dealer markets that may trade on
days when the NYSE is closed (such as Saturday). As a result, the net asset
values of a Fund's shares may be significantly affected by such trading on days
when shareholders have no access to that Fund.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. Each Fund declares and pays monthly dividends
from its net investment income, if any, which includes accrued interest, earned
discount (including both original issue and market discounts) and dividends less
applicable expenses. Each Fund also annually distributes substantially all of
its realized net short-term capital gain (the excess of short-term capital gains
over short-term capital losses), net capital gain (the excess of net long-term
capital gain over net short-term capital loss) and net gains from foreign
currency transactions, if any. Each Fund may make an additional dividend or
other distribution if necessary to avoid a 4% excise tax on certain
undistributed income and gain.
Dividends and other distributions paid by each Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Advisor Class shares of a Fund will be higher than the
per share income dividends on shares of other classes of that Fund as a result
of the service and distribution fees applicable to those other shares.
SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Advisor Class shares of the distributing Fund (or other GT Global
Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional
Prospectus Page 33
<PAGE>
GT GLOBAL INCOME 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. The 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 shares of a Fund
are purchased within 30 days before or after redeeming other shares of that Fund
(regardless of class) at a loss, all or a part of the loss will not be
deductible and instead will increase the basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors are therefore urged to consult their
tax advisers.
Prospectus Page 34
<PAGE>
GT GLOBAL INCOME FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors and the Portfolio's Board of Trustees have
overall responsibility for the operation of the Funds and the Portfolio,
respectively, and have approved contracts with various financial organizations
to provide, among other things, day to day management services required by the
Funds and the Portfolio. See "Directors, Trustees, and Executive Officers" in
the Statement of Additional Information for a complete description of the
Directors of each of the Funds and the Trustees of the Portfolio.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by Chancellor LGT
Asset Management, Inc. (the "Manager") as the Government Income Fund's, the
Strategic Income Fund's and the Portfolio's investment manager and administrator
include, but are not limited to, determining the composition of the investment
portfolio of the Government Income Fund, the Strategic Income Fund and the
Portfolio and placing orders to buy, sell or hold particular securities. In
addition, the Manager provides the following administration services to the
Funds and the Portfolio: furnishing corporate officers and clerical staff;
providing office space, services and equipment; and supervising all matters
relating to the Government Income Fund's, the Strategic Income Fund's and the
Portfolio's operation.
The Government Income Fund and the Strategic Income Fund each pays the Manager
administration fees computed daily and payable monthly, based on their
respective average daily net assets, for such services at the annualized rate of
.725% on the first $500 million, .70% on the next $1 billion, .675% on the next
$1 billion, and .65% on amounts thereafter. The High Income Fund pays
administration fees, directly to the Manager at the annualized rate of 0.25% of
the Fund's average daily net assets. In addition, the Fund bears its pro rata
portion of the investment management and administration fees paid by the
Portfolio to the Manager. The Portfolio pays such fees, based on the average
daily net assets of the Portfolio, directly to the Manager at the annualized
rate of .475% on the first $500 million, .45% on the next $1 billion, .425% on
the next $1 billion and .40% on amounts thereafter, plus 2% of the Portfolio's
total investment income as stated in the Portfolio's Statement of Operations,
calculated in accordance with generally accepted accounting principles, adjusted
daily for currency revaluations, on a marked to market basis, of the Portfolio's
assets; provided, however, that during any fiscal year this amount shall not
exceed 2% of the Portfolio's total investment income calculated in accordance
with generally accepted accounting principles. These rates are higher than those
paid by most mutual funds. Each Fund pays all expenses not assumed by the
Manager, GT Global or any other agents. The Manager has undertaken to limit the
expenses of the Advisor Class shares of the Government Income Fund and the
Strategic Income Fund (exclusive of brokerage commissions, taxes, interest and
extraordinary expenses) to the maximum annual level of 1.50% of the average
daily net assets of each such Fund's Advisor Class shares. The Manager and GT
Global have undertaken to limit the expenses of the High Income Fund's Advisor
Class shares (and such Fund's pro-rata portion of the Portfolio's expenses) to
the maximum annual level of 1.85% of the average daily net assets of such Fund's
Advisor Class shares. This undertaking may be changed or eliminated in the
future.
The Manager also serves as each Fund'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
Prospectus Page 35
<PAGE>
GT GLOBAL INCOME FUNDS
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 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 Government Income Fund, the Strategic Income Fund and the Portfolio are
as follows:
GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ------------------------- ------------------------- -------------------------------------------------------------------
<S> <C> <C>
Cheng-Hock Lau Portfolio Manager since Portfolio Manager for the Manager since 1996. Mr. Lau has been
New York 1996 Chief Investment Officer for Developed Market Debt for the Manager
since November 1996, and was a Senior Portfolio Manager for
global/international fixed income for the Manager from July 1995
to November 1996. Prior to October 31, 1996, Mr. Lau was an
employee of Chancellor Capital. Prior thereto, Mr. Lau was a
Senior Vice President and Senior Portfolio Manager for Fiduciary
Trust Company International from 1993 to 1995, and Vice President
at Bankers Trust Company from 1991 to 1993.
Simon Nocera Portfolio Manager since Chief Investment Officer for Emerging Market Debt for the Manager
San Francisco 1996 since January 1996. Mr. Nocera has been a Portfolio Manager and
Economist for the Manager since 1992. From 1991 to 1992, Mr.
Nocera was Senior Vice President and Director for Global Fixed
Income Research at the Putnam Companies.
Robert F. Allen Portfolio Manager since Portfolio Manager for the Manager since 1989.
San Francisco 1989
</TABLE>
Prospectus Page 36
<PAGE>
GT GLOBAL INCOME FUNDS
<TABLE>
<S> <C> <C>
STRATEGIC INCOME FUND
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ------------------------- ------------------------- -------------------------------------------------------------------
<S> <C> <C>
Simon Nocera Portfolio Manager since Chief Investment Officer for Emerging Market Debt for the Manager
San Francisco 1992 since January 1996. Mr. Nocera has been a Portfolio Manager and
Economist for the Manager since 1992. From 1991 to 1992, Mr.
Nocera was Senior Vice President and Director for Global Fixed
Income Research at the Putnam Companies.
Cheng-Hock Lau Portfolio Manager since Portfolio Manager for the Manager since 1996. Mr. Lau has been
New York 1996 Chief Investment Officer for Developed Market Debt for the Manager
since November 1996, and was a Senior Portfolio Manager for
global/international fixed income for the Manager from July 1995
to November 1996. Prior to October 31, 1996, Mr. Lau was an
employee of Chancellor Capital. Prior thereto, Mr. Lau was a
Senior Vice President and Senior Portfolio Manager for Fiduciary
Trust Company International from 1993 to 1995, and Vice President
at Bankers Trust Company from 1991 to 1993.
</TABLE>
<TABLE>
<CAPTION>
HIGH INCOME PORTFOLIO
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO LAST FIVE YEARS
- -------------------- -------------------- ------------------------------------------------------
<S> <C> <C>
Simon Nocera Portfolio Manager Chief Investment Officer for Emerging Market Debt for
San Francisco since Portfolio the Manager since January 1996. Mr. Nocera has been a
inception in 1992 Portfolio Manager and Economist for the Manager since
1992. From 1991 to 1992, Mr. Nocera was Senior Vice
President and Director for Global Fixed Income
Research at the Putnam Companies.
</TABLE>
------------------------
Prior to October 31, 1996, Mr. Lau was an employee of Chancellor Capital.
In placing orders for the Government Income Fund's, Strategic Income Fund's and
the Portfolio's 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 for the Fund 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 or the Portfolio 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 each Fund's 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,
California 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 brokers
that sell shares of the Funds and/or shares of the other GT Global Mutual Funds.
In some instances compensation or promotional incentives may be offered to
brokers that have sold or may sell significant amounts of shares during
specified periods of time. Such compensation and incentives may include, but are
not limited to, cash, merchandise, trips and financial assistance to brokers in
connection with preapproved conferences or seminars, sales or training programs
for invited sales personnel, payment for travel expenses (including meals and
lodging) incurred by sales personnel and members of their families or other
invited guests to various locations for such seminars or training programs,
seminars for the public, advertising and sales campaigns regarding one or more
of the GT Global Mutual Funds, and/or other events sponsored by the broker.
Prospectus Page 37
<PAGE>
GT GLOBAL INCOME FUNDS
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. Banks and broker/ dealer affiliates of banks also may
execute dealer agreements with GT Global for the purpose of selling shares of
the Fund. If a bank were prohibited from so acting, its shareholder clients
would be permitted to remain shareholders, and alternative means for continuing
the servicing of such shareholders would be sought. It is not expected that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences.
- --------------------------------------------------------------------------------
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 a semiannual report, respectively. In
addition, the federal income status of distributions made by the Fund to
shareholders are reported after the end of each calendar year on Form 1099-DIV.
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 the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, each class of shares of a Fund has
exclusive voting rights with respect to its distribution plan. The shares of the
Company's funds will be voted in the aggregate on all other matters, such as the
election of Directors and ratification of the Board of Directors' selection of
the Company's independent accountants.
Normally there will be no annual meeting of shareholders of the Company in any
year, except as required under the 1940 Act. The Company would be required to
hold a shareholders' meeting in the event that at any time less than a majority
of the Directors holding office had been elected by shareholders. Directors
shall continue to hold office until their successors are elected and have
qualified. Shares of the Company's funds do not have cumulative voting rights,
which means that the holders of a majority of the shares voting for the election
of Directors can elect all the Directors. A Director may be removed upon a
majority vote of the shareholders qualified to vote in the election.
Shareholders holding 10% of the Company's outstanding voting shares may call a
meeting of shareholders for the purpose of voting upon the question of removal
of any Director or for any other purpose. The 1940 Act requires the Company to
assist shareholders in calling such a meeting.
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 B shares.
Prospectus Page 38
<PAGE>
GT GLOBAL INCOME FUNDS
Pursuant to the Company's Articles of Incorporation, it may issue six billion
shares. Of this number, 300 million shares have been classified as shares of the
Strategic Income Fund and the High Income Fund; 100 million shares of each Fund
have been classified as Class A and Class B shares, respectively. In addition,
500 million shares have been classified as shares of Government Income Fund; 200
million shares have each been classified as Class A and Class B shares,
respectively. Moreover, 100 million shares have been classified as Advisor Class
shares for each Fund. This amount may be increased from time to time in the
discretion of the Board of Directors. Each share of a Fund represents an
interest in that Fund only, has a par value of $0.0001 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and other distributions out of the income earned and
gain realized on the assets belonging to the Fund as may be declared at the
discretion of the Board of Directors. Each Class A, Class B and Advisor Class
share of a Fund is equal as to earnings, assets and voting privileges, except as
noted above, and each class bears the expenses related to the distribution of
its shares. Shares of each Fund when issued are fully paid and nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a trust under the
laws of the state of New York. The Portfolio's Declaration of Trust provides
that the High Income Fund and other entities investing in the Portfolio (E.G.,
other investment companies, insurance company separate accounts and common and
commingled trust funds), if any, will each be liable for all obligations of the
Portfolio. However, the Directors of the Company believe that the risk of the
High Income Fund incurring financial loss on account of such liability is
limited to circumstances in which both inadequate insurance existed and the
Portfolio itself was unable to meet its obligations, and that neither the High
Income Fund nor its shareholders will be exposed to a material risk of liability
by reason of the High Income Fund's investing in the Portfolio. Any information
received from the Portfolio in the Portfolio shareholder report will be provided
to the High Income Fund's shareholders.
Whenever the High Income Fund is requested to vote on any proposal of the
Portfolio, the High Income Fund will hold a meeting of Fund shareholders and
will cast its vote as instructed by Fund shareholders. 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 50 California Street,
27th Floor, San Francisco, California 94111.
PERFORMANCE INFORMATION. The Funds, from time to time, may include information
on their investment results and/or comparisons of their investment results to
various unmanaged indices or results of other mutual funds or groups of mutual
funds in advertisements, sales literature or reports furnished to present or
prospective shareholders. Investors should be aware that as of October 22, 1992,
the investment objectives of the Strategic Income Fund were changed from
long-term high capital appreciation, primarily and moderate income, secondarily,
to primarily high current income and secondarily capital appreciation. In
addition, the investment policies and limitations of the Strategic Income Fund
were modified.
In such materials, each Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of each Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of 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 the Fund. Standardized Return
assumes reinvestment of all dividends and other distributions.
In addition, in order to more completely represent each Fund's performance or
more accurately compare such performance to other measures of investment return,
each Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation); it
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized
Prospectus Page 39
<PAGE>
GT GLOBAL INCOME FUNDS
Return may or may not take sales charges into account; performance data
calculated without taking the effect of sales charges into account will be
higher than data including the effect of such charges.
Each Fund also may refer in advertising and promotional materials to its yield,
which will fluctuate over time. A Fund's yield shows the rate of income that it
earns on its investments, expressed as a percentage of the public offering price
of its shares. A Fund calculates yield by determining the interest income it
earned from its portfolio investments for a specified thirty-day period (net of
expenses), dividing such income by the average number of shares outstanding, and
expressing the result as an annualized percentage based on the public offering
price at the end of that thirty-day period. Yield accounting methods differ from
the methods used for other accounting purposes. Accordingly, a Fund's yield may
not equal the dividend income actually paid to investors or the income reported
in its financial statements. Yield is calculated separately for each class of
shares of each Fund.
Each Fund's performance data will reflect past performance and will not
necessarily be indicative of future results. A Fund's investment results will
vary from time to time depending upon market conditions, the composition of its
portfolio and its operating expenses. These factors and possible differences in
calculation methods should be considered when comparing a Fund's investment
results with those published for other investment companies, other investment
vehicles and unmanaged indices. Each Fund's results also should be considered
relative to the risks associated with its investment objectives and policies.
See "Investment Results" in the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of the Manager and GT Global, a subsidiary of
Liechtenstein Global Trust, and maintains its offices at California Plaza, 2121
N. California Boulevard, Suite 450, Walnut Creek, California 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is custodian of each Fund's and the Portfolio's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company, the Funds and
the Portfolio. Kirkpatrick & Lockhart LLP also acts as counsel to the Manager,
GT Global and the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and each Fund's and the Portfolio's
independent accountants are Coopers & Lybrand L.L.P., One Post Office Square,
Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. conducts an annual audit
of each Fund and the Portfolio, assist in the preparation of each Fund's and the
Portfolio's federal and state income tax returns and consult with the Company,
each Fund and the Portfolio as to matters of accounting, regulatory filings, and
federal and state income taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 40
<PAGE>
GT GLOBAL INCOME FUNDS
APPENDIX A
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued by
various entities from "Aaa" to "C". Investment grade ratings are the first four
categories:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear somewhat
larger.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa -- Medium-grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Ba -- Have speculative elements and their future cannot be considered as
well assured. Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B -- Generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small.
Caa -- Poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca -- Speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
C -- Lowest rated class of bonds. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities that are not rated
as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
Prospectus Page 41
<PAGE>
GT GLOBAL INCOME FUNDS
generic rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the company ranks in the lower end of its generic
rating category.
STANDARD & POOR'S RATINGS GROUP ("S&P") rates the securities debt of various
entities in categories ranging from "AAA" to "D" according to quality.
Investment grade ratings are the first four categories:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal although
it is somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" are
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of this
obligation. "BB" indicates the lowest degree of speculation and "C" the
highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
BB -- Has less near-term volnerability to default than other speculative
issues; however, it faces major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The "BB" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "BBB-" rating.
B -- Has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
CCC -- Has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The "CCC" rating category
is also used for debt subordinated to senior debt that is assigned an actual
or implied "B" or "B-" rating.
CC -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC" rating.
C -- Typically applied to debt subordinated to senior debt which is
assigned an actual or implied "CCC-" debt rating. The "C" rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1 -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The "D" rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper having a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the
Prospectus Page 42
<PAGE>
GT GLOBAL INCOME FUNDS
following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structure with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2 have a strong
ability for repayment of Senior short-term debt obligations. This normally will
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging from
"A1" for the highest quality obligations to "D" for the lowest. Issues in the
"A" category are delineated with numbers 1, 2, and 3 to indicate the relative
degree of safety. A-1 -- This highest category indicates that the degree of
safety regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics will be denoted with a plus sign (+)
designation. A-2 -- Capacity for timely payments on issues with this designation
is satisfactory; however, the relative degree of safety is not as high as for
issues designated "A-1."
Prospectus Page 43
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 44
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 45
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 46
<PAGE>
GT GLOBAL INCOME 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>
[LOGO]
GT Global Mutual Funds 415 392 6181
Fifty California Street
27th Floor
SAN FRANCISCO, CA
94111-4624
GT GLOBAL DOLLAR COST AVERAGING PROGRAM
<TABLE>
<S> <C>
Between: GT Global, Inc.
General Distributor of
The GT Global Mutual Funds
Fifty California Street, 27th Floor
San Francisco, California 94111
415 392 6181; 800 824 1580
and: Company -------------------------------------------------------------------
Address --------------------------------------------------------------------
Phone ---------------------------- Fax ----------------------------
</TABLE>
You have entered into either a Dealer Agreement or a Bank and
Bank-Affiliated Dealer Agreement (each an "Agreement") pursuant to which we
agreed to sell to you Class A and Class B shares of the mutual funds that now or
hereafter may be included in the GT Global Mutual Funds (collectively the
"Funds"; individually a "Fund") or a Bank and Bank-Affiliated Dealer Agreement
pursuant to which you agreed to sell such shares issued by the Funds as agent
for your customers. This Supplement to the Agreement is for the purpose of
establishing contractual terms between us with respect to the GT Global Dollar
Cost Averaging Program ("Program"). All capitalized terms used in this
Supplement and not otherwise defined shall have the same meanings assigned to
them as in the Agreement. All terms of the Agreement shall remain in full force
and effect unless specifically modified or suspended by the terms of this
Supplement.
1. You agree to make available to your customers the Program as described
from time to time in the then current Prospectus of any Fund. We will
provide you with reasonable amounts of literature and an account application
covering the Program.
2. A customer participating in the Program will designate the size of his or
her monthly Funds' investment ("Monthly Amount") as well as the total
amount he or she expects to invest over a 24-month period after participation in
the Program begins ("Total Amount"). A sales charge will be applied to each
automatic monthly purchase of Fund Class A shares in an amount determined in
accordance with the Fund's Right of Accumulation privilege. We will pay you a
commission if you are an agent, or we will pay you an agency commission if you
are a bank or bank-affiliated dealer. This commission will be equal to the
dealer compensation schedule that would be paid if the Total Amount the
participating shareholder expects to invest in the 24 months under the Program
were invested, instead, in the Fund at one time. You agree to pass through to
your broker(s) or registered representative(s) a portion of this commission in
accordance with your established compensation arrangement.
3. If a customer discontinues participation in the Program or otherwise
fails to invest the Total Amount as provided in the customer's Program
agreement, and the selling representative is still employed by you, you agree to
repay to us the portion of the commission applicable to any amount not invested
by the customer. If the selling representative is not employed by you, you agree
to repay us an amount equal to the portion of the commission paid that was
retained by your firm.
4. You acknowledge that all payments due to you under this Supplement are
subject to the limitations contained in each Fund's Prospectus and may be
varied or discontinued at any time.
<PAGE>
5. This Supplement shall be binding upon receipt by us in San Francisco,
California, of a counterpart hereof duly accepted and signed by you.
6. Either of us may cancel this Supplement at any time by written notice to
the other, except that Section 3 shall still remain in effect.
7. All communications to us should be sent to the address below. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you on Page 1.
Accepted:
<TABLE>
<S> <C>
Company ---------------------------------- GT Global, Inc.
Address ------------------------------------ Fifty California Street, 27th Floor
Address ------------------------------------ San Francisco, California 94111
Phone ------------------------------------- 415-392-6181; 800-824-1580
Fax ---------------------------------------- 415-445-7566
By: ---------------------------------------- By: /s/ WILLIAM J. GUILFOYLE
Signature ----------------------------------------
William J. Guilfoyle
---------------------------------------- Date: --------------------------------------
Print Name & Date
</TABLE>
DCALR702.085
May 1996
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global, Inc.
P.O. Box 7345 DOLLAR COST
SAN FRANCISCO, CA 94120-7345 AVERAGING APPLICATION
800 223 2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / CORPORATION / / TRUST / / UTMA/UGMA / / OTHER
1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / IRA ACCOUNT / / ACCOUNT REVISION:
APPLICATION ATTACHED (ACCOUNT NO.:
----------------)
</TABLE>
NOTE: Joint tenant registration will be as "joint tenants with rights of
survivorship" unless otherwise specified. Trust registrations should specify
name of trustee(s), beneficiary(ies) and date of trust instrument.
Registration for Uniform Transfers/Gifts to Minors should be in the name of
one custodian and one minor and include the state under which the
custodianship is created (using the minor's social security number).
<TABLE>
<S> <C> <C> <C>
/ / / / / / - / / / / - / / / / / / / / OR / / / / - / / / / / / / / / / / / / /
---------------------------------------------------------------------------------------------------------------------------------
Owner Check appropriate box / / Social Security Number
or / / Tax I.D. Number
-------------------------------------- --------------------------------------------------------------------
Co-owner 1
-------------------------------------- --------------------------------------------------------------------
Co-owner 2 Home Telephone
-------------------------------------- --------------------------------------------------------------------
Street Address Business Telephone
-------------------------------------- --------------------------------------------------------------------
City, State, Zip Code Resident of / / U.S. / / Specify Other
</TABLE>
2. FUND SELECTION
TOTAL INITIAL INVESTMENT $
----------------------------- ($10,000 MINIMUM). The initial investment will
be made without imposition of any sales charge in the GT Global Dollar Fund.
Method of payment / / check or / / bank wire. Make checks and bank wires
payable to "GT Global." Do not send currency. Bank wires should be sent
through the Federal Reserve Bank wire system to: Wells Fargo Bank, NA,
ABA#121000248. ATTN: GT Global AC-4023-050701 (Stating Fund Name,
Shareholder's Registered Name and Account Number)
ALL GT GLOBAL MUTUAL FUNDS ISSUE TWO CLASSES OF SHARES. Class A shares are
sold with an initial sales charge while Class B shares are sold without an
initial sales charge but are subject to higher expense levels and to a
contingent deferred sales charge payable on certain redemptions. Please read
the prospectus of the applicable GT Global Mutual Fund carefully before you
invest.
MONTHLY TRANSFERS: Each month, GT Global Dollar Fund shares will be
redeemed and either Class A or Class B shares of the designated GT Global
Mutual Fund(s) will be purchased including the applicable sales charge, if
any, in the amounts indicated below ($1,000 minimum aggregate per month):
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / CLASS A SHARES
OR / / CLASS B SHARES
/ / New Account / / Existing Account #
-------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
FUND NAME MONTHLY FUND NAME MONTHLY
AMOUNT AMOUNT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 03 / / GT GLOBAL EUROPE GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 18 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional shares 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>
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Dollar Cost Averaging Application for the purchase of
Class A shares including shares purchased under Right of Accumulation or
Letter of Intent, or for the purchase of Class B shares in accordance with
the terms of our Dealer Agreement with GT Global, Inc., and the Prospectus
and Statement of Additional Information for each Fund. We agree to notify GT
Global, Inc., of any purchases properly made under a Letter of Intent or
Right of Accumulation. Class B shares are not available for Right of
Accumulation or Letter of Intent.
<TABLE>
<S> <C>
--------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
- --------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Name Representative's Number
- -----------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
-------------------------------------------------------------
Investment Dealer's Authorized Signature and Title GT Global Use: DLR------------ BR ------------ Rep
--------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
IRA INSTRUCTIONS
To open an IRA Dollar Cost Averaging account:
Read the GT Global IRA Disclosure Statement carefully.
Complete both this Dollar Cost Averaging Application and the GT Global IRA Application. Shareholder is to sign
both forms.
Mail completed applications with a check to GT Global.
3. AGREEMENT AND SIGNATURES
I/We authorize GT Global, Inc., to transfer shares from my/our GT Global Dollar Fund account, established
hereby, to purchase shares in the other GT Global Mutual Fund(s) and the class indicated on the reverse side of
this application. I/We understand that these transfers will occur on the 15th day of each month, or the prior
business day, and will continue until the funds in my/our GT Global Dollar Fund account fall below the transfer
amount, or until I/we terminate the Dollar Cost Averaging Program in writing. I/We further understand that
monthly purchases of the Class A shares of the other GT Global Mutual Fund(s) indicated will be subject to
applicable sales charges, and that the Class B shares purchased may be subject to a contingent deferred sales
charge when redeemed, as described in the Prospectus of each Fund purchased.
By the execution of this Application(s) I/we represent and warrant that I/we have full right, power, and
authority and am/are of legal age in my/our state(s) of residence to make the investment applied for pursuant to
this Application. The person(s), if any, signing on behalf of the investors 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(s). I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF THE GT GLOBAL MUTUAL FUND(S)
IN WHICH I/WE AM/ARE INVESTING.
I/We and my/our assigns and successors understand and agree that the account will be subject to the
telephone exchange and telephone redemption privilege described in the current Prospectus of the GT Global
Mutual Fund(s) in which I/we am/are investing 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 and their officers and
employees will not be liable for any loss or damages arising out of any such telephone, telex, or telegraph
instructions reasonably believed to be genuine, including any such loss due to negligence on the part of any
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., 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 are guaranteed.
Please indicate the number of signatures required to process written redemption
requests: / / one / / two / / three / / four
(If you do not indicate the number of required signatures, ALL account owners must sign 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 either because: (a) I am (or the payee is) exempt from
backup withholding; (b) the Internal Revenue Service ("IRS") 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 IRS has
notified me that I am (or the payee is) no longer subject to backup withholding OR; / / I am (the payee is)
subject to backup withholding.
Note:
Dollar Cost Averaging accounts held in the GT Global Dollar Fund have the following privilege restrictions:
Check writing, telephone redemptions and exchanges. The other GT Global Mutual Funds which receive the monthly
Dollar Cost Averaging transfers enjoy all regular account privileges, including telephone redemptions and
exchanges.
The Dollar Cost Averaging program does not assure a profit and does not protect against loss in declining
markets. Because such a program involves continuous investment in securities regardless of fluctuating price
levels of such securities, you should consider your financial ability to continue purchases through periods of
low price levels.
- ------------------------------------------------------- -------------------------------------------------------
Date For GT Global Use Only
X X
- ------------------------------------------------------- -------------------------------------------------------
X X
- ------------------------------------------------------- -------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
SAN FRANCISCO, CA
94111-4624
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION EXISTING
SHAREHOLDER ACCOUNT NUMBER
</TABLE>
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 same name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
-------------------------------------- / // // // // // // // // /
Owner Social Security Number / / or Tax I.D. Number "TIN" / / (Check applicable box) If
- -------------------------------------- more than one owner social security number or taxpayer identification number should
Co-owner 1 be provided for first owner listed. If a purchase is made under Uniform Gift/Transfer
- -------------------------------------- to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)---------------------------
-------------------------------------- Failure to provide TIN will result in 31% withholding on redemptions and exchanges.
Street Address ( ) ( )
- -------------------------------------- ------------------------------- -------------------------------
City, State, Zip Code Home Telephone Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund selected
for Class A and Class B shares.
Checks should be made payable to "GT Global."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A
Shares / / Class B Shares or / / Advisor Class Advisor Class shares are
sold through a different prospectus than Class A and Class B shares, are not
sold directly to the general public and only available through certain
employee benefit plans, financial institutions and other entities that have
entered into specific agreements with GT Global, Inc. Special account
requirements apply to Advisor Class shares. Please see an Advisor Class
prospectus for complete information.
If a class share box is not checked, your investment will be made in Class A
shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per fund.
<TABLE>
<S> <C> <C> <C> <C>
07 GT GLOBAL WORLDWIDE GROWTH FUND ---------- 13 GT GLOBAL LATIN AMERICA GROWTH FUND ----------
05 GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 24 GT GLOBAL AMERICA SMALL CAP GROWTH FUND ----------
16 GT GLOBAL EMERGING MARKETS FUND ---------- 06 GT GLOBAL AMERICA GROWTH FUND ----------
11 GT GLOBAL HEALTH CARE FUND ---------- 23 GT GLOBAL AMERICA VALUE FUND ----------
15 GT GLOBAL TELECOMMUNICATIONS FUND ---------- 04 GT GLOBAL JAPAN GROWTH FUND ----------
19 GT GLOBAL INFRASTRUCTURE FUND ---------- 10 GT GLOBAL GROWTH & INCOME FUND ----------
17 GT GLOBAL FINANCIAL SERVICES FUND ---------- 09 GT GLOBAL GOVERNMENT INCOME FUND ----------
21 GT GLOBAL NATURAL RESOURCES FUND ---------- 08 GT GLOBAL STRATEGIC INCOME FUND ----------
22 GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 18 GT GLOBAL HIGH INCOME FUND ----------
02 GT GLOBAL NEW PACIFIC GROWTH FUND ---------- 01 GT GLOBAL DOLLAR FUND ----------
03 GT GLOBAL EUROPE GROWTH FUND ----------
Rebalance frequency - check one
/ / Monthly / / Quarterly / / Semi annual / / Total percentage must equal 100%.
Annual
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains distributions and dividends will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions and
dividends in cash.
Investment will be split according to allocation.
</TABLE>
<TABLE>
<S> <C>
AGREEMENTS AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any change or revocation. ANY
CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING WITH ALL SIGNATURES GUARANTEED (IF APPLICABLE).
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock exchange;
(4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary public is NOT an
acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature guarantee requirement should
contact the Transfer Agent.
</TABLE>
<PAGE>
GT GLOBAL INCOME FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, 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 CHANCELLOR LGT ASSET
MANAGEMENT, INC., G.T. INVESTMENT FUNDS, INC., GT GLOBAL GOVERNMENT INCOME
FUND, GT GLOBAL STRATEGIC INCOME FUND, GT GLOBAL HIGH INCOME FUND, GLOBAL
HIGH INCOME PORTFOLIO, OR GT GLOBAL, INC. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
INCPV703 MC
<PAGE>
GT GLOBAL GROWTH & INCOME FUND:
ADVISOR CLASS
PROSPECTUS -- MARCH 1, 1997
- --------------------------------------------------------------------------------
GT GLOBAL GROWTH & INCOME FUND ("FUND") seeks long-term capital appreciation
together with current income. The Fund invests in a global portfolio of both
equity and debt securities, in such relative proportions as deemed most
appropriate by the Fund's investment manager, Chancellor LGT Asset Management,
Inc. (the "Manager"), in view of then-current economic and market conditions.
There can be no assurance that the Fund will achieve its investment objective.
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 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 herein by reference. The Statement of
Additional Information is available without charge by writing to the Fund at 50
California Street, San Francisco, California 94111, or by calling (800)
824-1580.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
An investment in the Fund offers the following advantages:
/ / Professional Management by a Leading Manager with Offices in the World's
Major Markets
/ / Automatic Dividend and Other Distribution Reinvestment
/ / Exchange Privileges with the Advisor Class of the Other GT Global Mutual
Funds
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 GROWTH & INCOME FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 6
Investment Objective and Policies......................................................... 8
How to Invest............................................................................. 12
How to Make Exchanges..................................................................... 14
How to Redeem Shares...................................................................... 15
Shareholder Account Manual................................................................ 17
Calculation of Net Asset Value............................................................ 18
Dividends, Other Distributions and Federal Income Taxation................................ 18
Management................................................................................ 20
Other Information......................................................................... 22
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus.
<TABLE>
<S> <C> <C>
The Fund: The Fund is a non-diversified series of G.T. Investment Funds, Inc.
Investment Objective: The Fund seeks long-term capital appreciation together with
current income.
Principal Investments: The Fund invests primarily in blue-chip equity securities and high
quality government bonds of issuers located in the United States
and throughout the world.
Principal Risk Factors: There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its portfolio holdings. The
value of debt securities held by the Fund generally fluctuates
inversely with interest rate movements. Certain investment grade
debt securities may possess speculative qualities.
The Fund 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 differ favorably or unfavorably from the U.S.
economy. Changes in foreign currency exchange rates will affect
the Fund's net asset value, earnings and gains and losses realized
on sales of securities. Securities of foreign companies may be
less liquid and their prices more volatile than those of
securities of comparable U.S. companies.
The Fund may engage in certain foreign currency, options and
futures transactions to attempt to hedge against the overall level
of investment and currency risk associated with its present or
planned investments. Such transactions involve certain risks and
transaction costs.
See "Investment Objective and Policies."
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."
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Advisor Class shares are offered through this Prospectus to (a)
trustees or other fiduciaries purchasing shares for employee
benefit plans that are sponsored by organizations that 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 the Liechtenstein
Global Trust; and (e) any of the companies composing or affiliated
with the Liechtenstein Global Trust.
Shares Available Through: Advisor Class shares of the Fund's common stock are available
through Financial Advisors (as defined herein) that have entered
into agreements with the Fund's distributor, GT Global, Inc. ("GT
Global") or certain of its affiliates. See "How to Invest" and
"Shareholder Account Manual."
Exchange Privileges: Advisor Class shares may only be exchanged for Advisor Class
shares of other GT Global Mutual Funds, which are open-end
management investment companies advised and/or administered by the
Manager. See "How to Make Exchanges" and "Shareholder Account
Manual."
Redemptions: Shares may be redeemed through the Fund's transfer agent, GT
Global Investor Services, Inc. ("Transfer Agent"). See "How to
Redeem Shares" and "Shareholder Account Manual."
Dividends and Other Dividends are paid quarterly from net investment income; other
Distributions: distributions are paid annually from net short-term capital gain,
net capital gain and net gains from foreign currency transactions,
if any.
Reinvestment: Dividends and other distributions may be reinvested automatically
in Advisor Class shares of the Fund or in Advisor Class shares of
other GT Global Mutual Funds.
Net Asset Value: Advisor Class shares are expected to be quoted daily in the
financial section of most newspapers.
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transactions costs
associated with investing in the Advisor Class shares of the Fund are reflected
in the following tables (1):
<TABLE>
<CAPTION>
ADVISOR CLASS
---------------
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares (as a % of offering price)................................. None
Sales charges on reinvested distributions to shareholders.............................................. None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)................................................................................................ None
Redemption charges..................................................................................... None
Exchange Fees:
-- On first four exchanges each year................................................................. None
-- On each additional exchange....................................................................... $ 7.50
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.......................................................... 0.97%
12b-1 distribution and service fees.................................................................... None
Other expenses......................................................................................... 0.34%
-------
Total Fund Operating Expenses............................................................................ 1.31%
-------
-------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares..................................................................... $13 $42 $ 73 $161
</TABLE>
- --------------
(1) THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. THE "HYPOTHETICAL
EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUND'S
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 Fund's projected or actual
performance.
(2) Expenses are based on the Fund's fiscal year ended October 31, 1996. "Other
expenses" include custody, transfer agent, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. Investors purchasing Advisor Class shares
through financial planners, trust companies, bank trust departments or
registered investment advisers, or under a "wrap fee" program, will be
subject to additional fees charged by such entities or by the sponsors of
such programs. Where any account advised by one of the companies composing
or affiliated with Liechtenstein Global Trust invests in Advisor Class
shares of the Fund, such account shall not be subject to duplicative
advisory fees.
Prospectus Page 5
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed information concerning income and capital
changes for one share of each class of shares of the Fund for the periods shown.
This information is supplemented by the financial statements and accompanying
notes appearing in the Statement of Additional
Information. The financial statements and notes for the fiscal year ended
October 31, 1996 have been audited by Coopers & Lybrand L.L.P., independent
accountants, whose report thereon also is included in the Statement of
Additional Information.
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------------
SEPTEMBER 25,
1990
(COMMENCE-
MENT OF
OPERATIONS)
YEAR ENDED OCTOBER 31, TO
-------------------------------------------------------- OCTOBER 31,
1996 1995 1994 1993(A) 1992 1991 1990
-------- -------- -------- -------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.25 $ 4.77 $ 4.76
-------- -------- -------- -------- ------- ------- -------------
Income from investment
operations:
Net investment income....... 0.22 0.24 0.22 0.24* 0.21* 0.27* 0.01*
Net realized and unrealized
gain (loss) on
investments................ 0.82 0.13 (0.03) 1.05 0.10 0.47 --
-------- -------- -------- -------- ------- ------- -------------
Net increase (decrease)
from investment
operations............... 1.04 0.37 0.19 1.29 0.31 0.74 0.01
-------- -------- -------- -------- ------- ------- -------------
Distributions:
From net investment
income..................... (0.24) (0.22) (0.21) (0.24) (0.14) (0.26) --
From net realized gain on
investments................ (0.04) (0.01) (0.06) -- (0.14) -- --
From sources other than net
investment income.......... -- -- -- (0.04) -- -- --
-------- -------- -------- -------- ------- ------- -------------
Total distributions....... (0.28) (0.23) (0.27) (0.28) (0.28) (0.26) --
-------- -------- -------- -------- ------- ------- -------------
Net asset value, end of
period....................... $ 7.11 $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.25 $ 4.77
-------- -------- -------- -------- ------- ------- -------------
-------- -------- -------- -------- ------- ------- -------------
Total investment return (e)... 16.80% 6.27% 3.14% 25.1% 5.9% 15.68% 0.2%(b)
-------- -------- -------- -------- ------- ------- -------------
-------- -------- -------- -------- ------- ------- -------------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $286,203 $284,069 $317,847 $251,428 $27,754 $71,376 $9,486
Ratio of net investment income
to average net assets........ 3.17% 3.85% 3.30% 3.3%* 4.1%* 5.0%* 2.9%*(c)
Ratio of expenses to average
net assets:
With expense reductions..... 1.59% 1.70% 1.67% 1.8%* 1.9%* 1.9%* 0.6%*(c)
Without expense
reductions................. 1.66% 1.74% -- (f) -- (f) -- (f) -- (f) --%(f)
Portfolio turnover rate+++.... 39% 83% 117% 24% 53% 46% none
Average commission rate per
share paid on portfolio
transactions+++.............. $ 0.0139 N/A N/A N/A N/A N/A N/A
<FN>
- ------------------
+ All capital shares issued and outstanding as of October 21, 1992 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 $0.005,
$0.02, $0.03 and $0.01 for the years ended October 31, 1993, 1992, 1991 and
for the period from September 25, 1990 to October 31, 1990, respectively.
Without such reimbursements, the expense ratios would have been 1.93%,
2.20%, 2.46% and 2.40% and the net investment income to average net assets
would have been 3.20%, 3.70%, 4.40% and 1.04% for the years ended October
31, 1993, 1992, 1991 and for the period from September 25, 1990 to October
31, 1990, respectively.
** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the year.
(b) Not annualized.
(c) Annualized.
(d) Ratios are not meaningful due to short period of operation of Class B
shares.
(e) Total investment return does not include sales charges.
(f) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
N/A Not applicable.
</TABLE>
Prospectus Page 6
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
CLASS B++
---------------------------------------------------
OCTOBER 22,
YEAR ENDED OCTOBER 31, 1992 TO
-------------------------------------- OCTOBER 31,
1996 1995 1994 1993(A) 1992(A)
-------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.29
-------- -------- -------- -------- -----------
Income from investment operations:
Net investment income................. 0.17 0.20 0.18 0.20*** 0.01
Net realized and unrealized gain
(loss) on investments................ 0.82 0.13 (0.03) 1.05 (0.02)
-------- -------- -------- -------- -----------
Net increase (decrease) from
investment operations.............. 0.99 0.33 0.15 1.25 (0.01)
-------- -------- -------- -------- -----------
Distributions:
From net investment income............ (0.20) (0.18) (0.17) (0.20) --
From net realized gain on
investments.......................... (0.03) (0.01) (0.06) -- --
From sources other than net investment
income............................... -- -- -- (0.04) --
-------- -------- -------- -------- -----------
Total distributions................. (0.23) (0.19) (0.23) (0.24) --
-------- -------- -------- -------- -----------
Net asset value, end of period.......... $ 7.11 $ 6.35 $ 6.21 $ 6.29 $ 5.28
-------- -------- -------- -------- -----------
-------- -------- -------- -------- -----------
Total investment return (e)............. 16.06% 5.57% 2.48% 24.3% (0.2)%(b)
-------- -------- -------- -------- -----------
-------- -------- -------- -------- -----------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $383,966 $356,796 $359,242 $150,768 $ 280
Ratio of net investment income to
average net assets..................... 2.52% 3.20% 2.65% 2.6 *** N/A(d)
Ratio of expenses to average net assets:
With expense reductions............... 2.24% 2.35% 2.32% 2.5 *** N/A(d)
Without expense reductions and
reimbursements....................... 2.31% 2.39% -- (f) -- (f) --%(f)(d)
Portfolio turnover rate+++.............. 39% 83% 117% 24% 53%
Average commission rate per share paid
on portfolio transactions+++........... $ 0.0139 N/A N/A N/A N/A
<CAPTION>
ADVISOR CLASS**
-------------------------
JUNE 1,
YEAR 1995
ENDED TO
OCTOBER 31, OCTOBER 31,
1996 1995
----------- -----------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.35 $ 6.24
----------- -----------
Income from investment operations:
Net investment income................. 0.23 0.11
Net realized and unrealized gain
(loss) on investments................ 0.82 0.13
----------- -----------
Net increase (decrease) from
investment operations.............. 1.05 0.24
----------- -----------
Distributions:
From net investment income............ (0.26) (0.13)
From net realized gain on
investments.......................... (0.04) --
From sources other than net investment
income............................... -- --
----------- -----------
Total distributions................. (0.30) (0.13)
----------- -----------
Net asset value, end of period.......... $ 7.10 $ 6.35
----------- -----------
----------- -----------
Total investment return (e)............. 17.19% 3.83%(b)
----------- -----------
----------- -----------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 3,085 944
Ratio of net investment income to
average net assets..................... 3.52% 4.20%(c)
Ratio of expenses to average net assets:
With expense reductions............... 1.24% 1.35%(c)
Without expense reductions and
reimbursements....................... 1.31% 1.39%(c)
Portfolio turnover rate+++.............. 39% 83%
Average commission rate per share paid
on portfolio transactions+++........... $0.0139 N/A
<FN>
- ------------------
++ Commencing October 22, 1992 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.
* Includes reimbursement by the Manager of Fund operating expenses of $0.005,
$0.02, $0.03 and $0.01 for the years ended October 31, 1993, 1992, 1991 and
for the period from September 25, 1990 to October 31, 1990, respectively.
Without such reimbursements, the expense ratios would have been 1.93%,
2.20%, 2.46% and 2.40% and the net investment income to average net assets
would have been 3.20%, 3.70%, 4.40% and 1.04% for the years ended October
31, 1993, 1992, 1991 and for the period from September 25, 1990 to October
31, 1990, respectively.
** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
*** Includes reimbursement by the Manager of Fund operating expenses of $0.005.
Without such reimbursements, the expense ratio would have been 2.6%, and
the net investment income to average net assets would have been 2.5%.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the year.
(b) Not annualized.
(c) Annualized.
(d) Ratios are not meaningful due to short period of operation of Class B
shares.
(e) Total investment return does not include sales charges.
(f) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
N/A Not applicable.
</TABLE>
Prospectus Page 7
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is long-term capital appreciation together with
current income. The Fund seeks its objective by investing in a global portfolio
of both equity and debt securities, allocated among diverse international
markets. There is no assurance that the Fund's investment objective will be
achieved.
At least 65% of the Fund's total assets normally will be invested in a
combination of blue-chip equity securities and high quality government bonds.
The Fund considers an equity security to be "blue chip" if: (i) during the
issuer's most recent fiscal year the security offered an above average dividend
yield relative to the latest reported dividend yield on the Morgan Stanley
Capital International World Index; AND (ii) the total equity market
capitalization of the issuer is at least $1 billion. Government bonds are deemed
to be high quality if at the time of the Fund's investment they are rated within
one of the two highest ratings categories of Moody's Investors Service, Inc.
("Moody's") or by Standard & Poor's Ratings Group ("S&P"), or, if not rated, are
deemed to be of equivalent quality in the judgment of the Manager.
Up to 35% of the Fund's total assets may be invested in other equity securities
and investment grade government and corporate debt obligations which the Manager
believes will assist the Fund in achieving its objective. "Investment grade"
debt securities are those rated within one of the four highest ratings
categories of Moody's or S&P, or, if not rated, deemed to be of equivalent
quality in the judgment of the Manager.
Equity securities that the Fund may purchase include common stocks, preferred
stocks and warrants to acquire such stocks and other equity securities.
Government bonds that the Fund may purchase include debt obligations issued or
guaranteed by the United States or foreign governments (including foreign
states, provinces or municipalities) or their agencies, authorities or
instrumentalities and debt obligations of supranational entities organized or
supported by several national governments, such as the World Bank and the Asian
Development Bank. The debt obligations held by the Fund may include debt
obligations convertible into equity securities or having attached warrants or
rights to purchase equity securities. The Fund may purchase securities that are
issued by the government or a corporation or financial institution of one nation
but denominated in the currency of another nation (or a multinational currency
unit).
According to the Manager, as of the date of this prospectus, more than 50% of
the total equity market capitalization worldwide is represented by non-U.S.
equity securities, and more than 50% of the value of all outstanding government
debt obligations throughout the world is represented by obligations denominated
in currencies other than the U.S. dollar. Moreover, from time to time the equity
and debt securities of issuers located outside the United States have
substantially outperformed the equity and debt securities of U.S. issuers.
Accordingly, the Manager believes that the Fund's policy of investing in a
global portfolio of equity and debt securities may enable the achievement of
long-term results superior to those produced by mutual funds with similar
objectives to that of the Fund that invest solely in U.S. equity and debt
securities.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. Consistent with the Fund's
investment objective, the Manager employs a conservative investment style in
managing the Fund's assets. In so doing the Manager attempts to limit volatility
and risk to capital. The Manager allocates the Fund's assets among securities of
countries and in currency denominations where opportunities for meeting the
Fund's investment objective are expected to be the most attractive. The Manager
attempts to identify those countries and industries where economic and political
factors are likely to produce above-average growth rates and to further identify
companies in such countries and industries that are best positioned and managed
to benefit from these factors.
The Fund currently contemplates that it will invest principally in securities of
issuers in the United States, Canada, Japan, Western Europe, New Zealand and
Australia. The Fund may invest substantially in securities denominated in one or
more currencies. Under normal conditions, the Fund invests in issuers of not
less than three different countries and issuers of any one country, other than
the United States, will represent no more than 40% of the Fund's total assets.
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GT GLOBAL GROWTH & INCOME FUND
The relative proportions of equity and debt securities held by the Fund at any
one time will vary, depending upon the Manager's assessment of global political
and economic conditions and the relative strengths and weaknesses of the world
equity and debt markets. To enable the Fund to respond to general economic
changes and market conditions around the world, the Fund is authorized to invest
up to 100% of its total assets in either equity securities or debt securities.
In selecting equity securities for investment, the Manager attempts to identify
and acquire only securities it deems to represent high or improving investment
quality. Securities representing high investment quality generally will include
those of well-known, established and successful issuers that the Manager
believes will continue to be successful in the future. Securities representing
improving investment quality may include those of an issuer that has improved
its sales or earnings or of an issuer the balance sheet and financial condition
of which is improving. The Manager seeks to avoid investing in equity securities
that appear overly speculative or risky, even if they have attractive features
or investment potential.
In evaluating debt securities considered for the Fund, the Manager analyzes
their yield, maturity, issue classification and quality characteristics, coupled
with expectations regarding local and world economies, movements in the general
level and term of interest rates, currency values, political developments, and
variations in the supply of funds available for investment in the world bond
market relative to the demands placed upon it. There are no limitations on the
maximum or minimum maturities of the debt securities considered by the Fund or
on the average weighted maturity of the debt portion of the Fund's portfolio.
Should the rating of a debt security be revised while such security is owned by
the Fund, the Manager will evaluate what action, if any, is appropriate with
respect to such security.
The Manager generally evaluates currencies on the basis of fundamental economic
criteria (e.g., relative inflation and interest rate levels and trends, growth
rate forecasts, balance of payments status and economic policies) as well as
technical and political data. The Fund may seek to protect itself against
negative currency movements by engaging in hedging techniques through the use of
options, futures and forward currency contracts.
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, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and/or invest any portion or
all of its assets in high quality money market instruments of U.S. or foreign
issuers. In addition, for temporary defensive purposes, most or all of the
Fund's investments may be made in the United States and denominated in U.S.
dollars. To the extent the Fund adopts a temporary defensive posture, it will
not be invested so as to directly achieve its investment objective. In addition,
pending investment of proceeds from new sales of Fund shares or in order to meet
ordinary daily cash needs, the Fund may hold cash (U.S. dollars, foreign
currencies or multinational currency units) and may invest in foreign or
domestic high quality money market instruments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of Fund
shares. The Fund also may borrow up to 5% of its total assets for temporary or
emergency purposes other than to meet redemptions. The Fund may borrow up to
33 1/3% of its total assets. However, the Fund will not purchase securities
while borrowings in excess of 5% of the Fund's total assets are outstanding. Any
borrowing by the Fund may cause greater fluctuation in the value of its shares
than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows the Fund to
retain ownership of the securities loaned and, at the same time, earn additional
income that may be used to offset the Fund's custody fees. The Fund 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 Fund's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable letters of credit equal
to at least 100% of the value of the borrowed securities, plus any accrued
interest. The risks in lending portfolio
Prospectus Page 9
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GT GLOBAL GROWTH & INCOME FUND
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.
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 Fund's net investment income from foreign issuers may be subject
to non-U.S. withholding taxes, thereby reducing the Fund's net investment
income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Fund, political or social instability, or diplomatic or
economic developments which could affect the Fund's investments in those
countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, rate of savings and capital reinvestment, resource
self-sufficiency and balance of payments positions. Investments in foreign
government securities involve special risks, including the risk that the
government issuers may be unable or unwilling to repay principal and interest
when due.
The Fund will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. To attempt to increase
return, the Fund may write call options on securities. This strategy will be
employed only when, in the opinion of the Manager, the size of the premium the
Fund receives for writing the option is adequate to compensate the Fund against
the risk that appreciation in the underlying security may not be fully realized
if the option is exercised. The Fund also is authorized to write put options to
attempt to enhance return, although it does not have the current intention of so
doing.
The Fund may also use forward currency contracts, futures contracts, options on
securities, options on currencies, options on indices and options on futures
contracts to attempt to hedge against the overall level of investment and
currency risk normally associated with the Fund's investments. These instruments
are often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency or an index of securities). The
Fund may enter into such instruments up to the full value of its portfolio
assets. See "Options, Futures and Currency Strategies" in the Statement of
Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar, or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to the
Fund's portfolio positions. The Fund also may purchase and sell put and call
options on currencies, futures contracts on currencies and options on such
futures contracts to hedge the Fund's portfolio against movements in exchange
rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Manager intends to include in the Fund's
portfolio. The Fund also may purchase and sell put and call options on stock
indices to hedge against overall fluctuations in the securities markets or in a
specific market sector.
Further, the Fund may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or a specific market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general market or market sector advance and thereby attempt to lessen the cost
of future securities acquisitions. Similarly, the Fund may use interest rate
futures contracts
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GT GLOBAL GROWTH & INCOME FUND
and options thereon to hedge the debt portion of its portfolio against changes
in the general level of interest rates.
Although the Fund is authorized to enter into options, futures and forward
currency transactions, the Fund 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
and movements in interest rates and currency markets; (2) imperfect correlation,
or even no correlation, between movements in the price of forward contracts,
options, futures contracts or options thereon and movements in the price of the
currency or security hedged or used for cover; (3) the fact that the skills and
techniques needed to trade options, futures contracts and options thereon or to
use forward currency contracts are different from those needed to select the
securities in which the Fund invests; (4) the lack of assurance that a liquid
secondary market will exist for any particular option, futures contract or
option thereon at any particular time; (5) the possible loss of principal under
certain conditions; (6) the possible inability of the Fund to purchase or sell a
portfolio security at a time when it would otherwise be favorable for it to do
so, or the possible need for the Fund to sell a security at a disadvantageous
time, due to the need for the Fund to maintain "cover" or to set aside
securities in connection with hedging transactions; and (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.
OTHER POLICIES AND RISKS. The Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its portfolio positions. Equity securities,
particularly common stocks, generally represent the most junior position in an
issuer's capital structure, and entitle holders to an interest in the assets of
an issuer, if any, remaining after all more senior claims have been satisfied.
In addition, the value of debt securities held by the Fund generally will
fluctuate with changes in the perceived creditworthiness of the issuers of such
securities and movements in interest rates. Investment grade debt securities
rated Baa by Moody's are described by Moody's as having speculative
characteristics, and therefore may be affected by economic conditions and
changes in the circumstances of their issuers to a greater extent than higher
rated bonds.
The Fund may invest up to 10% of its net assets in illiquid securities and other
securities for which no readily available market exists. The Fund may also
invest up to 5% of its total assets in a combination of securities purchased on
a when-issued basis or with respect to which it has entered into forward
commitment agreements.
The Fund is classified under the Investment Company Act of 1940 ("1940 Act"), as
a "non-diversified" fund. As a result, the Fund will be able to invest in a
fewer number of issuers than if it were classified under the 1940 Act as a
"diversified" fund. To the extent that the Fund invests in a smaller number of
issuers, the value of the Fund's shares may fluctuate more widely and the Fund
may be subject to greater investment and credit risk with respect to its
portfolio.
OTHER INFORMATION. The Fund's investment objective may not be changed without
the approval of a majority of the Fund's outstanding voting securities. A
"majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the outstanding
shares. In addition, the Fund has adopted certain investment limitations which
also may not be changed without shareholder approval. A complete description of
these limitations is included in the Statement of Additional Information. Unless
specifically noted, the Fund's investment policies described in this Prospectus
and in the Statement of Additional Information may be changed by a vote of a
majority of the Company's Board of Directors without shareholder approval. The
Fund's policies regarding lending, and the percentage of Fund assets that may be
committed to borrowing, are fundamental policies and may not be changed without
shareholder approval.
Prospectus Page 11
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GT GLOBAL GROWTH & INCOME FUND
HOW TO INVEST
- --------------------------------------------------------------------------------
GENERAL. Advisor Class shares are offered through this Prospectus to (a)
trustees or other fiduciaries purchasing shares for employee benefit plans that
are sponsored by organizations that 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." Investors in Wrap Fee Accounts and Advisory
Accounts may only purchase Advisor Class shares through Financial Advisors who
have entered into agreements with GT Global and certain of its affiliates.
Investors may be charged a fee by their agents or brokers if they effect
transactions other than through a dealer.
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 FUND 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 Fund 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 contact your
Financial Advisor or GT Global.
PURCHASE BY BANK WIRE. Shares of the Fund may also be purchased through GT
Global by bank wire. Bank wire purchases will be effected at the next determined
public offering price after the bank wire is received. A wire investment is
considered received when the Transfer Agent is notified that the bank wire has
been credited to the Fund. Prior telephonic or facsimile notice that a bank wire
is being sent must be provided to the Transfer Agent. A bank may charge a
service fee for wiring money to the Fund. The Transfer Agent currently does not
charge a service fee for facilitating wire purchases, but reserves the right to
do so in the future. For more information, please refer to the Shareholder
Account Manual in this Prospectus.
CERTIFICATES. Physical certificates representing the Fund's shares will not be
issued unless a written request is submitted to the Transfer Agent. Shares of
the Fund are recorded on a register by the Transfer Agent, and shareholders who
do not elect to receive certificates have the same rights of ownership as if
certificates had been issued to them. Redemptions and exchanges by shareholders
who hold certificates may take longer to effect than similar transactions
involving non-certificated shares because the physical delivery and processing
of properly executed certificates is required. ACCORDINGLY, THE FUND AND GT
GLOBAL RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
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
Prospectus Page 12
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GT GLOBAL GROWTH & INCOME FUND
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 shareholders' 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.
Prospectus Page 13
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GT GLOBAL GROWTH & INCOME FUND
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Advisor Class shares of the Fund may be exchanged for Advisor Class shares of
any of the other GT Global Mutual 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 Fund, the GT Global Mutual Funds currently
include:
-- GT GLOBAL AMERICA SMALL CAP GROWTH FUND
-- GT GLOBAL AMERICA MID CAP GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
-- GT GLOBAL DOLLAR FUND
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL WORLDWIDE GROWTH FUND
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 instructions to his or
her Financial Advisor. Exchange orders will be accepted by telephone provided
that the exchange involves only uncertificated shares on deposit in the
shareholder's account or for which certificates previously have been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Fund, GT Global and the Transfer Agent will not be liable for any loss or damage
for acting in good faith upon instructions received by telephone and reasonably
believed to be genuine. The Fund employs reasonable procedures to confirm that
instructions communicated by telephone are genuine 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 prospectuses of
the other GT Global Mutual Fund(s) being considered. Other investors should
contact GT Global. See the Shareholder Account Manual in this Prospectus.
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 reserves 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 reserves 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, the Fund and GT Global reserve the right to reject
any purchase order.
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GT GLOBAL GROWTH & INCOME FUND
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value and redemption proceeds
will be sent within seven days of the execution of a redemption request.
Redemption requests may be transmitted to the Transfer Agent by telephone or by
mail, in accordance with the instructions provided in the Shareholder Account
Manual. Redemptions will be effected at the net asset value next determined
after the Transfer Agent has received the request and any required supporting
documentation. Redemption requests will not require a signature guarantee if the
redemption proceeds are to be sent either: (i) to the redeeming shareholder at
the shareholder's address of record as maintained by the Transfer Agent,
provided the shareholder's address of record has not been changed within the
preceding thirty days; or (ii) directly to a pre-designated bank, savings and
loan or credit union account ("Pre-Designated Account"). ALL OTHER REDEMPTION
REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE REDEEMING
SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from any bank,
U.S. trust company, a member firm of a U.S. stock exchange or a foreign branch
of any of the foregoing or other eligible guarantor institutions. A notary
public is not an acceptable guarantor.
Shareholders with Pre-Designated Accounts should request that redemption
proceeds be sent either by bank wire or by check. The minimum redemption amount
for a bank wire is $1,000. Shareholders requesting a bank wire should allow two
business days from the time the redemption request is effected for the proceeds
to be deposited in the shareholder's Pre-Designated Account. See "How to Redeem
Shares -- Other Important Redemption Information." Shareholders may change their
Pre-Designated Accounts only by a letter of instruction to the Transfer Agent
containing all account signatures, each of which must be guaranteed. The
Transfer Agent currently does not charge a bank wire service fee for each wire
redemption sent but reserves the right to do so in the future. The shareholder's
bank may 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 Fund, GT Global and the Transfer Agent shall not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine 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 a Wrap Fee Account or Advisory Account who is in doubt
as to what documents are required should contact his Financial Advisor.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares
Prospectus Page 15
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GT GLOBAL GROWTH & INCOME FUND
redeemed by telephone or in writing will be made promptly after receipt of a
redemption request, if in good order, but not later than seven days after the
date the request is executed. Requests for redemption which are subject to any
special conditions or which specify a future or past effective date cannot be
accepted.
If the Transfer Agent is requested to redeem shares for which the Fund has not
yet received good payment, the Fund may delay payment of redemption proceeds
until it has assured itself that good payment has been collected for the
purchase of the shares. In the case of purchases by check it can take up to 10
business days to confirm that the check has cleared and good payment has been
received. Redemption proceeds will not be delayed when shares have been paid for
by wire or when the investor's account holds a sufficient number of shares for
which funds already have been collected.
GT Global reserves the right to redeem the shares of any Advisory Account or
Wrap Fee Account if the amount invested in GT Global Mutual Funds through such
account is reduced to less than $500 through redemptions or other action by the
shareholder. Written notice will be given to the shareholder at least 60 days
prior to the date fixed for such redemption, during which time the shareholder
may increase the amount invested in GT Global Mutual Funds through such account
to an aggregate amount of $500 or more.
For more information on how to redeem Fund shares, see the Shareholder Account
Manual in this Prospectus, or contact your Financial Advisor.
Prospectus Page 16
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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
Acounts make such orders through their Financial Advisor. INVESTORS SHOULD
REFERENCE "ADVISOR CLASS" IN ALL INSTRUCTIONS PROVIDED. See "How to Invest;"
"How to Make Exchanges;" "How to Redeem Shares;" and "Dividends, Other
Distributions and Federal Income Taxation -- Taxes" for more information.
The Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send completed Account Application (if initial purchase) or letter stating Fund
name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global
P.O. Box 7345
San Francisco, California 94120-7345
INVESTMENTS BY BANK WIRE
A new account may be opened by calling 1-800-223-2138 to obtain an account
number. WITHIN SEVEN DAYS OF PURCHASE A COMPLETED ACCOUNT APPLICATION CONTAINING
THE INVESTOR'S CERTIFIED TAXPAYER IDENTIFICATION NUMBER MUST BE SENT TO GT
GLOBAL AT THE ADDRESS PROVIDED ABOVE UNDER "INVESTMENTS BY MAIL." Wire
instructions must state Fund name, class of shares, shareholder's registered
name and account number. Bank wires should be sent through the Federal Reserve
Bank Wire System to:
WELLS FARGO BANK N.A.
ABA 121000248
Attn: GT GLOBAL
Account No. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, class of
shares, amount of exchange, name of the GT Global Mutual Fund exchanging into,
shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT Global at 1-800-223-2138
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the instructions
but send to the following:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call GT Global at 1-800-223-2138.
Prospectus Page 17
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund calculates its net asset value as of the close of normal trading on the
NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. The
Fund's net asset value per share is computed by determining the value of its
total assets (the securities it holds plus any cash or other assets, including
the interest accrued but not yet received), subtracting all of its liabilities
(including accrued expenses), and dividing the result by the total number of
shares outstanding at such time. Net asset value is determined separately for
each class of the Fund.
Equity securities are valued at the last sale price on the exchange or in the
over-the-counter market in which such securities are primarily traded, as of the
close of business on the day the securities are being valued or, lacking any
sales, at the last available bid price. Long-term obligations are valued at the
mean of representative quoted bid and asked prices for such securities or, if
such prices are not available, at prices for securities of comparable maturity,
quality and type; however, when 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 the Fund
are readily available, those positions are valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under the
direction of the Company's Board of Directors. Securities and other assets
quoted in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
The Fund's portfolio securities, from time to time, may be listed primarily on
foreign exchanges or over-the-counter dealer markets that trade on days when the
NYSE is closed (such as a Saturday). As a result, the net asset values of the
Fund may be significantly affected by such trading on days when shareholders
cannot purchase or redeem shares of the Fund.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund declares and pays quarterly
dividends from its net investment income, if any, which includes dividends,
accrued interest and earned discount (including both original issue and market
discounts) less applicable expenses. The Fund also annually distributes
substantially all of its realized net short-term capital gain (the excess of
short-term capital gains over short-term capital losses), net capital gain (the
excess of net long-term capital gain over net short-term capital loss) and net
gains from foreign currency transactions, if any. The Fund may make an
additional dividend or other distribution if necessary to avoid a 4% excise tax
on certain undistributed income and gain.
Dividends and other distributions paid by the Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Advisor Class shares will be higher than the per share
income dividends on other classes of the Fund's shares as a result of the
service and distribution fees applicable to those other shares. SHAREHOLDERS MAY
ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Advisor Class shares of the Fund (or other GT Global Mutual
Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Advisor Class shares of the Fund (or other GT
Global Mutual Funds); or
Prospectus Page 18
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Advisor Class shares of the Fund (or other GT
Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional Advisor Class shares are made at net asset
value without imposition of a sales charge. IF NO ELECTION IS MADE BY A
SHAREHOLDER, ALL DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY
REINVESTED IN ADDITIONAL ADVISOR CLASS SHARES OF THE FUND. Reinvestments in
another GT Global Mutual Fund may only be directed to an account with the
identical shareholder registration and account number. These elections may be
changed by a shareholder at any time; to be effective with respect to a
distribution, the shareholder or the shareholder's broker must contact the
Transfer Agent by mail or telephone at least 15 Business Days prior to the
payment date. THE FEDERAL INCOME TAX 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 the Fund has the effect of reducing
the net asset value per share on the ex-dividend date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent the distribution is paid on the shares so purchased), even though
subject to income tax, as discussed below.
TAXES. The Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that the Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transactions and net short-term capital gain) and net capital gain that is
distributed to its shareholders.
Dividends from the Fund's investment company taxable income (whether paid in
cash or reinvested in additional shares) are taxable to its shareholders as
ordinary income to the extent of the Fund's earnings and profits. Distributions
of the Fund's net capital gain when designated as such, are taxable to its
shareholders as long-term capital gain, regardless of how long they have held
their Fund shares and whether paid in cash or reinvested in additional shares.
The Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, the shareholders' respective
shares of any foreign taxes paid by the Fund, in which event each shareholder
would be required to include in his or her gross income his or her pro rata
share of those taxes but might be entitled to claim a credit or deduction for
them.
The Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest
- -- Purchases Through the Distributor") are considered to have uncertified
taxpayer identification numbers unless a completed Form W-8 or W-9 or Account
Application is received by the Transfer Agent within seven days after the
purchase. A shareholder should contact the Transfer Agent if the shareholder is
uncertain whether a proper taxpayer identification number is on file with the
Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares. An exchange of
Fund shares for shares of another GT Global Mutual Fund generally will have
similar tax consequences. In addition, if Fund shares are purchased within 30
days before or after redeeming other Fund shares (regardless of class) at a
loss, all or a part of the loss will not be deductible and instead will increase
the basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its shareholders. See "Taxes" in
the Statement of Additional Information for a further discussion. There may be
other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
Prospectus Page 19
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors has overall responsibility for the operation of
the Fund. Pursuant to such responsibility, the Board has approved contracts with
various financial organizations to provide, among other things, day to day
management services required by the Fund. See "Directors and Executive Officers"
in the Statement of Additional Information for a complete description of the
Directors of the Company.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by Chancellor LGT
Asset Management, Inc. (the "Manager") as the Fund's investment manager and
administrator include, but are not limited to, determining the composition of
the Fund's portfolio and placing orders to buy, sell or hold particular
securities; furnishing corporate officers and clerical staff; providing office
space, services and equipment; and supervising all matters relating to the
Fund's operation. For these services, the Fund pays the Manager investment
management and administration fees, computed daily and paid monthly, based on
the average daily net assets, at the annualized rate of .975% on the first $500
million, .95% on the next $500 million, .925% on the next $500 million and .90%
on amounts thereafter. This rate is higher than that paid by most mutual funds.
The Manager has undertaken to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the annual rate of
1.50% of the average daily net assets of the Fund's Advisor Class shares. This
undertaking may be changed or eliminated in the future.
The Manager also serves as the Fund'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 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
Prospectus Page 20
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 Fund are as follows:
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ------------------ ------------------------------------ ------------------------------------------------------------
<S> <C> <C>
Nicholas S. Train Portfolio Manager since Fund Portfolio Manager for the Manager since 1991.
London inception in 1991
Paul Griffiths Portfolio Manager since 1995 Portfolio Manager for LGT Asset Management PLC (London) and
London the Manager since 1994; from 1993 to 1994, Global Bond Fund
Manager, Lazard Investors; from 1991 to 1993, Global Bond
Fund Manager, Sanwa International PLC.
</TABLE>
In placing securities orders for the Fund's portfolio 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.
DISTRIBUTION OF FUND SHARES. GT Global is the distributor of the Fund's Advisor
Class shares. GT Global is a subsidiary of Liechtenstein Global Trust with
offices at 50 California Street, 27th Floor, San Francisco, California 94111.
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 brokers
that sell shares of the Fund and/or shares of the other GT Global Mutual Funds.
In some instances compensation or promotional incentives may be offered to
brokers that have sold or may sell significant amounts of shares during
specified periods of time. Such compensation and incentives may include, but are
not limited to, cash, merchandise, trips and financial assistance to brokers in
connection with preapproved conferences or seminars, sales or training programs
for invited sales personnel, payment for travel expenses (including meals and
lodging) incurred by sales personnel and members of their families or other
invited guests to various locations for such seminars or training programs,
seminars for the public, advertising and sales campaigns regarding one or more
of the GT Global Mutual Funds, and/or other events sponsored by the broker.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. Banks and broker/ dealer affiliates of banks may also
execute dealer agreements with GT Global for the purpose of selling shares of
the Fund. If a bank were prohibited from so acting, its shareholder clients
would be permitted to remain shareholders, and alternative means for continuing
the servicing of such shareholders would be sought. It is not expected that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences.
Prospectus Page 21
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
OTHER INFORMATION
- --------------------------------------------------------------------------------
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in the Fund, the shareholder will receive from
the Transfer Agent a confirmation statement reflecting the transaction.
Confirmations for transactions effected pursuant to the Fund's automatic
dividend reinvestment program may be provided quarterly. Shortly after the end
of the Fund's fiscal year on October 31 and fiscal half-year on April 30 of each
year, shareholders receive an annual and semiannual report, respectively. In
addition, the federal income tax status of distributions made by the Fund to
shareholders are reported after the end of each calendar year on Form 1099-DIV.
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 the
Fund are entitled to one vote per share (with proportional voting for fractional
shares) and are freely transferable. Shareholders have no preemptive or
conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, each class of shares of the Fund has
exclusive voting rights with respect to its distribution plan. The shares of the
Company's funds will be voted in the aggregate on other matters, such as the
election of Directors and ratification of the Board of Directors' selection of
the Company's independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. The Company would be required to hold a
shareholders' meeting in the event that at any time less than a majority of the
Directors holding office had been elected by shareholders. Directors shall
continue to hold office until their successors are elected and have qualified.
Shares of the Company's funds do not have cumulative voting rights, which means
that the holders of a majority of the shares voting for the election of
Directors can elect all the Directors. A Director may be removed upon a majority
vote of the shareholders qualified to vote in the election. Shareholders holding
10% of the Company's outstanding voting securities may call a meeting of
shareholders for the purpose of voting upon the question of removal of any
Director or for any other purpose. The 1940 Act requires the Company to assist
shareholders in calling such a meeting.
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 the Fund generally will be higher than that of the Class A and B
shares of the Fund because of the higher expenses borne by the Class A and B
shares. The per share dividends on Advisor Class shares of the Fund will
generally be higher than the per share dividends on Class A and B shares of the
Fund as a result of the service and distribution fees applicable with respect to
Class A and B shares. Consequently, during comparable periods, the Fund expects
that the total return on an investment in shares of the Advisor Class will be
higher than the total return on Class A or Class B shares.
Pursuant to the Company's Articles of Incorporation, it may issue six billion
shares. Of this number, 300 million shares have been classified as shares of the
Fund; 100 million shares have been classified as Class A shares, 100 million
shares have been classified as Class B shares and 100 million shares have been
classified as Advisor Class shares. This amount may be increased from time to
time in the discretion of the Board of Directors. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.0001 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and other distributions out of the income
earned and gain realized on the assets belonging to the Fund as may
Prospectus Page 22
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
be declared at the discretion of the Board of Directors. Each Class A, Class B
and Advisor Class share of the Fund is equal as to earnings, assets and voting
privileges, except as noted above, and each class bears the expenses, if any,
related to the distribution of its shares. Shares of the Fund when issued are
fully paid and nonassessable.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Fund
toll free at (800) 223-2138 or by writing to the Fund at P.O. Box 7893, San
Francisco, California 94120-7893.
PERFORMANCE INFORMATION. The Fund, from time to time, may include information on
its investment results and/or comparisons of its investment results to various
unmanaged indices or results of other mutual funds or groups of mutual funds in
advertisements, sales literature or reports furnished to present or prospective
shareholders.
In such materials, the Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of the Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of 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 the Fund. Standardized Return
assumes reinvestment of all dividends and other distributions.
In addition, in order to more completely represent the Fund's performance or
more accurately compare such performance to other measures of investment return,
the Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized return reflects percentage rates of return encompassing all
elements of total return (e.g., income and capital appreciation or
depreciation); it assumes reinvestment of all dividends and other distributions.
Non-Standardized Return may be quoted for the same or different periods as those
for which Standardized Return is quoted; it may consist of an aggregate or
average annual percentage rate of return, actual year-by-year rates or any
combination thereof. Non-Standardized Return may or may not take sales charges
into account; performance data calculated without taking the effect of sales
charges into account will be higher than data including the effect of such
charges.
The Fund's performance data reflects past performance and is not necessarily
indicative of future results. The Fund's investment results will vary from time
to time depending upon market conditions, the composition of its portfolio and
its operating expenses. These factors and possible differences in calculation
methods should be considered when comparing the Fund's investment results with
those published for other investment companies, other investment vehicles and
unmanaged indices. The Fund's results also should be considered relative to the
risks associated with its investment objective and policies. See "Investment
Results" in the Statement of Additional Information.
The Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Fund are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of the Manager and GT Global and a subsidiary of
Liechtenstein Global Trust, and maintains its offices at California Plaza, 2121
North California Boulevard, Suite 450, Walnut Creek, California 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is custodian of the Fund's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company and the Fund.
Kirkpatrick & Lockhart LLP also acts as counsel to the Manager, GT Global and
the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and the Fund's independent accountants
are Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109. Coopers & Lybrand L.L.P. conducts an annual audit of the Fund, assists in
the preparation of the Fund's federal and state income tax returns and consults
with the Company and the Fund as to matters of accounting, regulatory filings,
and federal and state income taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 23
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 24
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 25
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 26
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 27
<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>
[LOGO]
GT Global Mutual Funds 415 392 6181
Fifty California Street
27th Floor
SAN FRANCISCO, CA
94111-4624
GT GLOBAL DOLLAR COST AVERAGING PROGRAM
<TABLE>
<S> <C>
Between: GT Global, Inc.
General Distributor of
The GT Global Mutual Funds
Fifty California Street, 27th Floor
San Francisco, California 94111
415 392 6181; 800 824 1580
and: Company -------------------------------------------------------------------
Address --------------------------------------------------------------------
Phone ---------------------------- Fax ----------------------------
</TABLE>
You have entered into either a Dealer Agreement or a Bank and
Bank-Affiliated Dealer Agreement (each an "Agreement") pursuant to which we
agreed to sell to you Class A and Class B shares of the mutual funds that now or
hereafter may be included in the GT Global Mutual Funds (collectively the
"Funds"; individually a "Fund") or a Bank and Bank-Affiliated Dealer Agreement
pursuant to which you agreed to sell such shares issued by the Funds as agent
for your customers. This Supplement to the Agreement is for the purpose of
establishing contractual terms between us with respect to the GT Global Dollar
Cost Averaging Program ("Program"). All capitalized terms used in this
Supplement and not otherwise defined shall have the same meanings assigned to
them as in the Agreement. All terms of the Agreement shall remain in full force
and effect unless specifically modified or suspended by the terms of this
Supplement.
1. You agree to make available to your customers the Program as described
from time to time in the then current Prospectus of any Fund. We will
provide you with reasonable amounts of literature and an account application
covering the Program.
2. A customer participating in the Program will designate the size of his or
her monthly Funds' investment ("Monthly Amount") as well as the total
amount he or she expects to invest over a 24-month period after participation in
the Program begins ("Total Amount"). A sales charge will be applied to each
automatic monthly purchase of Fund Class A shares in an amount determined in
accordance with the Fund's Right of Accumulation privilege. We will pay you a
commission if you are an agent, or we will pay you an agency commission if you
are a bank or bank-affiliated dealer. This commission will be equal to the
dealer compensation schedule that would be paid if the Total Amount the
participating shareholder expects to invest in the 24 months under the Program
were invested, instead, in the Fund at one time. You agree to pass through to
your broker(s) or registered representative(s) a portion of this commission in
accordance with your established compensation arrangement.
3. If a customer discontinues participation in the Program or otherwise
fails to invest the Total Amount as provided in the customer's Program
agreement, and the selling representative is still employed by you, you agree to
repay to us the portion of the commission applicable to any amount not invested
by the customer. If the selling representative is not employed by you, you agree
to repay us an amount equal to the portion of the commission paid that was
retained by your firm.
4. You acknowledge that all payments due to you under this Supplement are
subject to the limitations contained in each Fund's Prospectus and may be
varied or discontinued at any time.
<PAGE>
5. This Supplement shall be binding upon receipt by us in San Francisco,
California, of a counterpart hereof duly accepted and signed by you.
6. Either of us may cancel this Supplement at any time by written notice to
the other, except that Section 3 shall still remain in effect.
7. All communications to us should be sent to the address below. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you on Page 1.
Accepted:
<TABLE>
<S> <C>
Company ---------------------------------- GT Global, Inc.
Address ------------------------------------ Fifty California Street, 27th Floor
Address ------------------------------------ San Francisco, California 94111
Phone ------------------------------------- 415-392-6181; 800-824-1580
Fax ---------------------------------------- 415-445-7566
By: ---------------------------------------- By: /s/ WILLIAM J. GUILFOYLE
Signature ----------------------------------------
William J. Guilfoyle
---------------------------------------- Date: --------------------------------------
Print Name & Date
</TABLE>
DCALR702.085
May 1996
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global, Inc.
P.O. Box 7345 DOLLAR COST
SAN FRANCISCO, CA 94120-7345 AVERAGING APPLICATION
800 223 2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / CORPORATION / / TRUST / / UTMA/UGMA / / OTHER
1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / IRA ACCOUNT / / ACCOUNT REVISION:
APPLICATION ATTACHED (ACCOUNT NO.:
----------------)
</TABLE>
NOTE: Joint tenant registration will be as "joint tenants with rights of
survivorship" unless otherwise specified. Trust registrations should specify
name of trustee(s), beneficiary(ies) and date of trust instrument.
Registration for Uniform Transfers/Gifts to Minors should be in the name of
one custodian and one minor and include the state under which the
custodianship is created (using the minor's social security number).
<TABLE>
<S> <C> <C> <C>
/ / / / / / - / / / / - / / / / / / / / OR / / / / - / / / / / / / / / / / / / /
---------------------------------------------------------------------------------------------------------------------------------
Owner Check appropriate box / / Social Security Number
or / / Tax I.D. Number
-------------------------------------- --------------------------------------------------------------------
Co-owner 1
-------------------------------------- --------------------------------------------------------------------
Co-owner 2 Home Telephone
-------------------------------------- --------------------------------------------------------------------
Street Address Business Telephone
-------------------------------------- --------------------------------------------------------------------
City, State, Zip Code Resident of / / U.S. / / Specify Other
</TABLE>
2. FUND SELECTION
TOTAL INITIAL INVESTMENT $
----------------------------- ($10,000 MINIMUM). The initial investment will
be made without imposition of any sales charge in the GT Global Dollar Fund.
Method of payment / / check or / / bank wire. Make checks and bank wires
payable to "GT Global." Do not send currency. Bank wires should be sent
through the Federal Reserve Bank wire system to: Wells Fargo Bank, NA,
ABA#121000248. ATTN: GT Global AC-4023-050701 (Stating Fund Name,
Shareholder's Registered Name and Account Number)
ALL GT GLOBAL MUTUAL FUNDS ISSUE TWO CLASSES OF SHARES. Class A shares are
sold with an initial sales charge while Class B shares are sold without an
initial sales charge but are subject to higher expense levels and to a
contingent deferred sales charge payable on certain redemptions. Please read
the prospectus of the applicable GT Global Mutual Fund carefully before you
invest.
MONTHLY TRANSFERS: Each month, GT Global Dollar Fund shares will be
redeemed and either Class A or Class B shares of the designated GT Global
Mutual Fund(s) will be purchased including the applicable sales charge, if
any, in the amounts indicated below ($1,000 minimum aggregate per month):
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / CLASS A SHARES
OR / / CLASS B SHARES
/ / New Account / / Existing Account #
-------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
FUND NAME MONTHLY FUND NAME MONTHLY
AMOUNT AMOUNT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 03 / / GT GLOBAL EUROPE GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 18 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional shares 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>
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Dollar Cost Averaging Application for the purchase of
Class A shares including shares purchased under Right of Accumulation or
Letter of Intent, or for the purchase of Class B shares in accordance with
the terms of our Dealer Agreement with GT Global, Inc., and the Prospectus
and Statement of Additional Information for each Fund. We agree to notify GT
Global, Inc., of any purchases properly made under a Letter of Intent or
Right of Accumulation. Class B shares are not available for Right of
Accumulation or Letter of Intent.
<TABLE>
<S> <C>
--------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
- --------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Name Representative's Number
- -----------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
-------------------------------------------------------------
Investment Dealer's Authorized Signature and Title GT Global Use: DLR------------ BR ------------ Rep
--------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
IRA INSTRUCTIONS
To open an IRA Dollar Cost Averaging account:
Read the GT Global IRA Disclosure Statement carefully.
Complete both this Dollar Cost Averaging Application and the GT Global IRA Application. Shareholder is to sign
both forms.
Mail completed applications with a check to GT Global.
3. AGREEMENT AND SIGNATURES
I/We authorize GT Global, Inc., to transfer shares from my/our GT Global Dollar Fund account, established
hereby, to purchase shares in the other GT Global Mutual Fund(s) and the class indicated on the reverse side of
this application. I/We understand that these transfers will occur on the 15th day of each month, or the prior
business day, and will continue until the funds in my/our GT Global Dollar Fund account fall below the transfer
amount, or until I/we terminate the Dollar Cost Averaging Program in writing. I/We further understand that
monthly purchases of the Class A shares of the other GT Global Mutual Fund(s) indicated will be subject to
applicable sales charges, and that the Class B shares purchased may be subject to a contingent deferred sales
charge when redeemed, as described in the Prospectus of each Fund purchased.
By the execution of this Application(s) I/we represent and warrant that I/we have full right, power, and
authority and am/are of legal age in my/our state(s) of residence to make the investment applied for pursuant to
this Application. The person(s), if any, signing on behalf of the investors 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(s). I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF THE GT GLOBAL MUTUAL FUND(S)
IN WHICH I/WE AM/ARE INVESTING.
I/We and my/our assigns and successors understand and agree that the account will be subject to the
telephone exchange and telephone redemption privilege described in the current Prospectus of the GT Global
Mutual Fund(s) in which I/we am/are investing 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 and their officers and
employees will not be liable for any loss or damages arising out of any such telephone, telex, or telegraph
instructions reasonably believed to be genuine, including any such loss due to negligence on the part of any
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., 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 are guaranteed.
Please indicate the number of signatures required to process written redemption
requests: / / one / / two / / three / / four
(If you do not indicate the number of required signatures, ALL account owners must sign 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 either because: (a) I am (or the payee is) exempt from
backup withholding; (b) the Internal Revenue Service ("IRS") 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 IRS has
notified me that I am (or the payee is) no longer subject to backup withholding OR; / / I am (the payee is)
subject to backup withholding.
Note:
Dollar Cost Averaging accounts held in the GT Global Dollar Fund have the following privilege restrictions:
Check writing, telephone redemptions and exchanges. The other GT Global Mutual Funds which receive the monthly
Dollar Cost Averaging transfers enjoy all regular account privileges, including telephone redemptions and
exchanges.
The Dollar Cost Averaging program does not assure a profit and does not protect against loss in declining
markets. Because such a program involves continuous investment in securities regardless of fluctuating price
levels of such securities, you should consider your financial ability to continue purchases through periods of
low price levels.
- ------------------------------------------------------- -------------------------------------------------------
Date For GT Global Use Only
X X
- ------------------------------------------------------- -------------------------------------------------------
X X
- ------------------------------------------------------- -------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
SAN FRANCISCO, CA
94111-4624
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION EXISTING
SHAREHOLDER ACCOUNT NUMBER
</TABLE>
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 same name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
-------------------------------------- / // // // // // // // // /
Owner Social Security Number / / or Tax I.D. Number "TIN" / / (Check applicable box) If
- -------------------------------------- more than one owner social security number or taxpayer identification number should
Co-owner 1 be provided for first owner listed. If a purchase is made under Uniform Gift/Transfer
- -------------------------------------- to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)---------------------------
-------------------------------------- Failure to provide TIN will result in 31% withholding on redemptions and exchanges.
Street Address ( ) ( )
- -------------------------------------- ------------------------------- -------------------------------
City, State, Zip Code Home Telephone Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund selected
for Class A and Class B shares.
Checks should be made payable to "GT Global."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A
Shares / / Class B Shares or / / Advisor Class Advisor Class shares are
sold through a different prospectus than Class A and Class B shares, are not
sold directly to the general public and only available through certain
employee benefit plans, financial institutions and other entities that have
entered into specific agreements with GT Global, Inc. Special account
requirements apply to Advisor Class shares. Please see an Advisor Class
prospectus for complete information.
If a class share box is not checked, your investment will be made in Class A
shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per fund.
<TABLE>
<S> <C> <C> <C> <C>
07 GT GLOBAL WORLDWIDE GROWTH FUND ---------- 13 GT GLOBAL LATIN AMERICA GROWTH FUND ----------
05 GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 24 GT GLOBAL AMERICA SMALL CAP GROWTH FUND ----------
16 GT GLOBAL EMERGING MARKETS FUND ---------- 06 GT GLOBAL AMERICA GROWTH FUND ----------
11 GT GLOBAL HEALTH CARE FUND ---------- 23 GT GLOBAL AMERICA VALUE FUND ----------
15 GT GLOBAL TELECOMMUNICATIONS FUND ---------- 04 GT GLOBAL JAPAN GROWTH FUND ----------
19 GT GLOBAL INFRASTRUCTURE FUND ---------- 10 GT GLOBAL GROWTH & INCOME FUND ----------
17 GT GLOBAL FINANCIAL SERVICES FUND ---------- 09 GT GLOBAL GOVERNMENT INCOME FUND ----------
21 GT GLOBAL NATURAL RESOURCES FUND ---------- 08 GT GLOBAL STRATEGIC INCOME FUND ----------
22 GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 18 GT GLOBAL HIGH INCOME FUND ----------
02 GT GLOBAL NEW PACIFIC GROWTH FUND ---------- 01 GT GLOBAL DOLLAR FUND ----------
03 GT GLOBAL EUROPE GROWTH FUND ----------
Rebalance frequency - check one
/ / Monthly / / Quarterly / / Semi annual / / Total percentage must equal 100%.
Annual
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains distributions and dividends will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions and
dividends in cash.
Investment will be split according to allocation.
</TABLE>
<TABLE>
<S> <C>
AGREEMENTS AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any change or revocation. ANY
CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING WITH ALL SIGNATURES GUARANTEED (IF APPLICABLE).
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock exchange;
(4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary public is NOT an
acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature guarantee requirement should
contact the Transfer Agent.
</TABLE>
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, 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 GROWTH & INCOME 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 TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
GROPV610003.5MC
<PAGE>
GT GLOBAL EMERGING MARKETS FUND: ADVISOR CLASS
GT GLOBAL LATIN AMERICA GROWTH FUND: ADVISOR CLASS
PROSPECTUS -- MARCH 1, 1997
- --------------------------------------------------------------------------------
GT GLOBAL EMERGING MARKETS FUND ("EMERGING MARKETS FUND") seeks long-term growth
of capital by investing primarily in equity securities of companies in emerging
markets.
GT GLOBAL LATIN AMERICA GROWTH FUND ("LATIN AMERICA GROWTH FUND") seeks capital
appreciation by investing primarily in equity and debt securities of a broad
range of Latin American issuers.
There can be no assurance that the Emerging Markets Fund or the Latin America
Growth Fund (each a "Fund," and collectively, the "Funds") will achieve its
investment objective.
The Funds are managed 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.
The Funds are designed for long term investors and not as trading vehicles. The
Funds do not represent a complete investment program nor are they suitable for
all investors. The Funds may invest significantly in lower quality and unrated
foreign government bonds whose credit quality is generally considered the
equivalent of U.S. corporate debt securities commonly known as "junk bonds."
Investments of this type are subject to a greater risk of loss of principal and
interest. An investment in either Fund should be considered speculative and
subject to special risk factors, related primarily to the Funds' investments in
emerging markets and Latin America. Purchasers should carefully assess the risks
associated with an investment in either Fund.
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a front-
end or contingent deferred sales charge or Rule 12b-1 fees.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information for each Fund dated March 1, 1997, has
been filed with the Securities and Exchange Commission ("SEC") and, as
supplemented or amended from time to time, is incorporated herein by reference.
The Statement of Additional Information is available without charge by writing
to the Funds at 50 California Street, 27th Floor, San Francisco, California
94111, or calling (800) 824-1580.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED BY THE FEDERAL RESERVE BOARD, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY OTHER GOVERNMENT AGENCY.
An investment in either Fund offers the following advantages:
/ / Access to Securities Markets Around the World
/ / Professional Management by a Leading Manager with Offices in the World's
Major Markets
/ / Automatic Dividend and Other Distribution Reinvestment
/ / Exchange Privileges with the Advisor Class of the Other GT Global Mutual
Funds
FOR FURTHER INFORMATION CALL
(800) 824-1580 OR CONTACT YOUR FINANCIAL 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 EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 7
Investment Objectives and Policies........................................................ 11
Risk Factors.............................................................................. 17
How to Invest............................................................................. 22
How to Make Exchanges..................................................................... 24
How to Redeem Shares...................................................................... 25
Shareholder Account Manual................................................................ 27
Calculation of Net Asset Value............................................................ 28
Dividends, Other Distributions and Federal Income Taxation................................ 28
Management................................................................................ 30
Other Information......................................................................... 32
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus.
<TABLE>
<S> <C> <C>
The Funds: The Emerging Markets Fund is a diversified series, and the Latin
America Growth Fund is a non-diversified series of G.T. Investment
Funds, Inc. (the "Company").
Investment Objectives: The Emerging Markets Fund seeks long-term growth of capital.
The Latin America Growth Fund seeks capital appreciation.
The Emerging Markets Fund normally invests at least 65% of its
Principal Investments: total assets in equity securities of companies in emerging
markets.
The Latin America Growth Fund normally invests at least 65% of its
total assets in equity and debt securities issued by Latin
American companies and governments.
There is no assurance that either Fund will achieve its investment
objective. The Funds' net asset values will fluctuate, reflecting
fluctuations in the market value of their portfolio holdings.
Principal Risk Factors: Each Fund will invest primarily 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 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 Fund may engage in certain foreign currency, options and
futures transactions to attempt to hedge against the overall level
of investment and currency risk associated with its present or
planned investments. Such transactions involve certain risks and
transaction costs.
The Emerging Markets Fund may invest up to 20% of its total assets
in below investment grade debt securities. There is no limitation
on the percentage of the Latin America Growth Fund's total assets
that may be invested in such 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."
</TABLE>
Prospectus Page 3
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
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 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 either Fund may be exchanged for Advisor
Class shares of other GT Global Mutual Funds, which are open-end
management investment companies advised and/or administered by the
Manager. See "How to Make Exchanges" and "Shareholder Account
Manual."
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 of other GT
Global Mutual Funds.
Net Asset Value: Advisor Class shares of each Fund are expected to be quoted daily
in the financial section of most newspapers.
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
GT GLOBAL EMERGING MARKETS FUND
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Advisor Class shares of the Emerging Markets Fund are
reflected in the following tables (1):
<TABLE>
<CAPTION>
ADVISOR
CLASS
-----------
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases (as a % of offering price)................................................ None
Sales charges on reinvested distributions to shareholders................................................... None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is less).... None
Redemption charges.......................................................................................... None
Exchange fees:
-- On first four exchanges each year...................................................................... None
-- On each additional exchange............................................................................ $ 7.50
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees............................................................... 0.98%
12b-1 distribution and service fees......................................................................... None
Other expenses.............................................................................................. 0.60%
-----
Total Fund Operating Expenses............................................................................... 1.58%
-----
-----
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares........................................ $16 $ 51 $ 87 $191
</TABLE>
- --------------
(1) THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. THE "HYPOTHETICAL
EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUND'S
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 Fund's projected or actual
performance.
(2) Expenses are based on the Fund's fiscal year ended October 31, 1996. "Other
expenses" include custody, transfer agent, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. Investors purchasing Advisor Class shares
through financial planners, trust companies, bank trust departments or
registered investment advisers, or under a "wrap fee" program, will be
subject to additional fees charged by such entities or by the sponsors of
such programs. Where any account advised by one of the companies composing
or affiliated with Liechtenstein Global Trust invests in Advisor Class
shares of the Fund, such account shall not be subject to duplicative
advisory fees.
Prospectus Page 5
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
GT GLOBAL LATIN AMERICA GROWTH FUND
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Advisor Class shares of the Latin America Growth Fund are
reflected in the following tables (1):
<TABLE>
<CAPTION>
ADVISOR
CLASS
-----------
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares (as a % of offering price)...................................... None
Sales charges on reinvested distributions to shareholders................................................... None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is less).... None
Redemption charges.......................................................................................... None
Exchange fees:
-- On first four exchanges each year.................................................................... None
-- On each additional exchange.......................................................................... $ 7.50
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees............................................................... 0.98%
12b-1 distribution and service fees......................................................................... None
Other expenses.............................................................................................. 0.62%
-----------
Total Fund Operating Expenses............................................................................... 1.60%
-----------
-----------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares..................................................................... $16 $ 51 $ 89 $193
</TABLE>
- ------------------
(1) THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. THE "HYPOTHETICAL
EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUND'S
ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. The table and the
assumption in the Hypothetical Example of a 5% annual return are required by
regulation of the SEC applicable to all mutual funds. The 5% annual return
is not a prediction of and does not represent the Fund's projected or actual
performance.
(2) Expenses are based on the Fund's fiscal year ended October 31, 1996. "Other
expenses" include custody, transfer agent, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. Investors purchasing Advisor Class shares
through financial planners, trust companies, bank trust departments or
registered investment advisers, or under a "wrap fee" program, will be
subject to additional fees charged by such entities or by the sponsors of
such programs. Where any account advised by one of the companies composing
or affiliated with Liechtenstein Global Trust invests in Advisor Class
shares of the Fund, such account shall not be subject to duplicative
advisory fees.
Prospectus Page 6
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 also is included in the Statement of Additional Information.
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
CLASS A+
--------------------------------------------------------
MAY 18, 1992
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
-------------------------------------- OPERATIONS) TO
1996 1995(E) 1994 1993 OCTOBER 31, 1992
-------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period.... $ 13.85 $ 18.81 $ 14.42 $ 11.10 $ 11.43
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss).......... 0.11 0.13 (0.02) 0.02* 0.07*
Net realized and unrealized gain
(loss) on investments................ 0.30 (4.32) 4.68 3.38 (0.40)
-------- -------- -------- -------- --------
Net increase (decrease) from
investment operations.............. 0.41 (4.19) 4.66 3.40 (0.33)
-------- -------- -------- -------- --------
Distributions:
From net investment income............ -- -- (0.01) (0.08) --
From net realized gain on
investments.......................... -- (0.77) (0.26) -- --
-------- -------- -------- -------- --------
Total distributions................. -- (0.77) (0.27) (0.08) --
-------- -------- -------- -------- --------
Net asset value, end of period.......... $ 14.26 $ 13.85 $ 18.81 $ 14.42 $ 11.10
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return (c)............. 2.96% (23.04)% 32.58% 30.90% (2.90)%(a)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $224,964 $252,457 $417,322 $187,808 $84,558
Ratio of net investment income (loss) to
average net assets.................... 0.76% 0.89% (0.11)% 0.1%* 1.7%*(b)
Ratio of expenses to average net assets:
With expense reductions............... 1.96% 2.12% 2.06% 2.4 (b) 2.4%*(b)
Without expense reductions............ 2.08% 2.14% -- (d) -- (d) --%(d)
Portfolio turnover rate +++............. 104% 114% 100% 99% 32%(b)
Average commission rate per share on
paid portfolio
transactions+++....................... $ 0.0040 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 $0.02
for the year ended October 31, 1993 and for the period from May 18, 1992
(commencement of operations) to October 31, 1992, respectively. Without such
reimbursements, the expense ratios would have been 2.61% and 2.91% and the
ratio of net investment income to average net assets would have been (0.11)%
and 1.21% for the year ended October 31, 1993 and for the period from May
18, 1992 (commencement of operations) to October 31, 1992, respectively.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
(e) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
N/A Not applicable.
Prospectus Page 7
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
GT GLOBAL EMERGING MARKETS FUND
(CONTINUED)
<TABLE>
<CAPTION>
CLASS B++ ADVISOR CLASS***
----------------------------------------- ----------------------
APRIL 1, YEAR JUNE 1, 1995
YEAR ENDED OCTOBER 31, 1993 TO ENDED TO
---------------------------- OCTOBER 31, OCTOBER OCTOBER 31,
1996 1995(E) 1994 1993 31, 1996 1995
-------- -------- -------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of period.... $ 13.68 $ 18.68 $ 14.39 $ 11.47 $ 13.88 $14.71
-------- -------- -------- ----------- -------- ------------
Income from investment operations:
Net investment income (loss).......... 0.04 0.06 (0.12) 0.00** 0.18 0.08
Net realized and unrealized gain
(loss) on
investments.......................... 0.30 (4.29) 4.67 2.92 0.32 (0.91)
-------- -------- -------- ----------- -------- ------------
Net increase (decrease) from
investment
operations......................... 0.34 (4.23) 4.55 2.92 0.50 (0.83)
-------- -------- -------- ----------- -------- ------------
Distributions:
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... -- (0.77) (0.26) -- -- --
-------- -------- -------- ----------- -------- ------------
Total distributions................. -- (0.77) (0.26) -- -- --
-------- -------- -------- ----------- -------- ------------
Net asset value, end of period.......... $ 14.02 $ 13.68 $ 18.68 $ 14.39 $ 14.38 $13.88
-------- -------- -------- ----------- -------- ------------
-------- -------- -------- ----------- -------- ------------
Total investment return (c)............. 2.49% (23.37)% 31.77% 25.50%(a) 3.60 % (5.71)%(a)
-------- -------- -------- ----------- -------- ------------
-------- -------- -------- ----------- -------- ------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $216,004 $225,861 $291,289 $32,318 $ 3,139 $1,675
Ratio of net investment income (loss) to
average
net assets............................ 0.26% 0.39% (0.61)% (0.4)% *(b) 1.26 % 1.39%(b)
Ratio of expenses to average net assets:
With expense reductions............... 2.46% 2.62% 2.56% 2.9%**(b) 1.46 % 1.62%(b)
Without expense reductions............ 2.58% 2.64% -- (d) --%(d) 1.58 % 1.64%(b)
Portfolio turnover rate +++............. 104% 114% 100% 99% 104 % 114%
Average commission rate per share paid
on portfolio transactions+++.......... $ 0.0040 N/A N/A N/A $0.0040 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.
** Includes reimbursement by the Manager of Fund operating expenses of $0.02.
Without such reimbursements, the expense ratio would have been 3.11% and the
ratio of net investment income to average net assets would have been
(0.61)%.
*** Commencing June 1, 1995, the Fund began offering Advisor Class shares.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
(e) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
N/A Not applicable.
Prospectus Page 8
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------
AUGUST 13, 1991
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
----------------------------------------------- OPERATIONS) TO
1996 1995(A) 1994(A) 1993(A) 1992 OCTOBER 31, 1991
-------- -------- -------- -------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $15.38 $26.11 $19.78 $15.59 $16.45 $14.29
-------- -------- -------- -------- ------- ----------------
Income from investment operations:
Net investment income (loss).......... 0.09 0.15 (0.08) 0.18 0.25 0.01
Net realized and unrealized gain
(loss) on investments................ 2.59 (9.28) 6.75 5.21 (0.98) 2.15
-------- -------- -------- -------- ------- ----------------
Net increase (decrease) from
investment operations.............. 2.68 (9.13) 6.67 5.39 (0.73) 2.16
-------- -------- -------- -------- ------- ----------------
Distributions:
From net investment income............ (0.08) 0.00 (0.19) (0.12) (0.13) 0.00
From net realized gain on
investments.......................... (0.00) (1.60) (0.15) (1.08) (0.00) 0.00
In excess of net investment income.... (0.03) (0.00) (0.00) (0.00) (0.00) (0.00)
-------- -------- -------- -------- ------- ----------------
Total distributions................. (0.11) (1.60) (0.34) (1.20) (0.13) 0.00
-------- -------- -------- -------- ------- ----------------
Net asset value, end of period.......... $17.95 $15.38 $26.11 $19.78 $15.59 $16.45
-------- -------- -------- -------- ------- ----------------
-------- -------- -------- -------- ------- ----------------
Total investment return (d)............. 17.52% (37.16)% 34.10% 37.10% (4.50)% 15.10%(b)
-------- -------- -------- -------- ------- ----------------
-------- -------- -------- -------- ------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $177,373 $182,462 $336,960 $129,280 $94,085 $125,038
Ratio of net investment income (loss) to
average net assets.................... 0.46% 0.86% (0.29)% 1.30%* 1.30%* 1.20%*(c)
Ratio of expenses to average net assets:
With expense reductions............... 2.03% 2.11% 2.04% 2.40%* 2.40%* 2.40%*(c)
Without expense reductions............ 2.10% 2.12% -- (e) -- (e) -- (e) --%(e)
Portfolio turnover rate +++............. 101% 125% 155% 112% 159% none
Average commission rate per share paid
on portfolio transactions+++.......... $ 0.0005 N/A 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 $0.02,
$0.04 and $0.01 for the years ended October 31, 1993 and 1992 and for the
period from August 13, 1991 to October 31, 1991, respectively. Without such
reimbursements, the expense ratios would have been 2.49%, 2.62% and 3.42%
and the ratios of net investment income to average net assets would have
been 1.25%, 1.07% and 0.l5% for the years ended October 31, 1993 and 1992
and for the period from August 31, 1991 to October 31, 1991, respectively.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
(e) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
N/A Not applicable.
Prospectus Page 9
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
(CONTINUED)
<TABLE>
<CAPTION>
CLASS B++ ADVISOR CLASS**
----------------------------------------- ----------------------
APRIL 1, YEAR JUNE 1, 1995
YEAR ENDED OCTOBER 31, 1993 TO ENDED TO
---------------------------- OCTOBER 31, OCTOBER OCTOBER 31,
1996 1995(A) 1994(A) 1993(A) 31, 1996 1995
-------- -------- -------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $15.21 $25.94 $19.75 $16.26 $15.40 $15.95
-------- -------- -------- ----------- -------- ------
Income from investment operations:
Net investment income (loss).......... (0.00) 0.06 (0.22) (0.07) 0.17 0.09
Net realized and unrealized gain
(loss) on investments................ 2.59 (9.19) 6.74 3.56 2.58 (0.64)
-------- -------- -------- ----------- -------- ------
Net increase (decrease) from
investment operations.............. 2.59 (9.13) 6.52 3.49 2.75 (0.55)
-------- -------- -------- ----------- -------- ------
Distributions:
From net investment income............ (0.01) (0.00) (0.18) (0.00) (0.14 ) (0.00)
From net realized gain on
investments.......................... (0.00) (1.60) (0.15) (0.00) (0.00 ) (0.00)
In excess of net investment income.... (0.01) (0.00) (0.00) (0.00) (0.07 ) (0.00)
-------- -------- -------- ----------- -------- ------
Total distributions................. (0.02) (1.60) (0.33) 0.00 (0.21 ) 0.00
-------- -------- -------- ----------- -------- ------
Net asset value, end of period.......... $17.78 $15.21 $25.94 $19.75 $17.94 $15.40
-------- -------- -------- ----------- -------- ------
-------- -------- -------- ----------- -------- ------
Total investment return (d)............. 17.02% (37.42)% 33.33% 21.50%(b) 18.16 % (3.45)%(b)
-------- -------- -------- ----------- -------- ------
-------- -------- -------- ----------- -------- ------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $137,400 $134,527 $211,673 $13,576 $ 818 $ 369
Ratio of net investment income (loss) to
average net assets.................... (0.04)% 0.36% (0.79)% (0.70)%(c) 0.96 % 1.36%(c)
Ratio of expenses to average net assets:
With expense reductions............... 2.53% 2.61% 2.54% 2.90%(c) 1.53 % 1.61%(c)
Without expense reductions............ 2.60% 2.62% -- (e) --%(e) 1.60 % 1.62%(c)
Portfolio turnover rate +++............. 101% 125% 155% 112% 101 % 125%
Average commission rate per share paid
on portfolio transactions+++.......... $ 0.0005 N/A N/A N/A $0.0005 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) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
(e) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reductions, if any.
N/A Not applicable.
Prospectus Page 10
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
EMERGING MARKETS FUND
The Emerging Markets Fund's investment objective is long-term growth of capital.
Under normal circumstances, the Emerging Markets Fund seeks its objective by
investing at least 65% of its total assets in equity securities of companies in
emerging markets. The Emerging Markets Fund may invest in the following types of
equity securities: common stock, preferred stock, securities convertible into
common stock, rights and warrants to acquire such securities and substantially
similar forms of equity with comparable risk characteristics.
For purposes of the Emerging Markets Fund's operations, "emerging markets"
consist of all countries determined by the Manager to have developing or
emerging economies and markets. These countries generally include every country
in the world except the United States, Canada, Japan, Australia, New Zealand and
most countries located in Western Europe. See "Investment Objective and
Policies" in the Statement of Additional Information for a complete list of all
the countries that the Emerging Markets Fund does not consider to be emerging
markets.
For purposes of the Emerging Markets Fund's policy of normally investing at
least 65% of its total assets in equity securities of issuers in emerging
markets, the Emerging Markets Fund will consider investment in the following
emerging markets:
<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>
Although the Emerging Markets Fund considers each of the above-listed countries
eligible for investment, it will not be invested in all such markets at all
times. Moreover, investing in some of those markets currently may not be
desirable or feasible, due to the lack of adequate custody arrangements for the
Emerging Markets Fund's assets, overly burdensome repatriation and similar
restrictions, the lack of organized and liquid securities markets, unacceptable
political risks or for other reasons.
As used in this Prospectus, an issuer in an emerging market is an entity: (i)
for which the principal securities trading market is an emerging market, as
defined above; (ii) that (alone or on a consolidated basis) derives 50% or more
of its total revenues from business in emerging markets, provided that, in the
Manager's view, the value of such issuer's securities will tend to reflect
emerging market development to a greater extent than developments elsewhere; or
(iii) organized under the laws of, or with a principal office in, an emerging
market.
The Emerging Markets Fund may also invest up to 35% of its total assets in (i)
debt securities of government or corporate issuers in emerging markets; (ii)
equity and debt securities of issuers in developed countries, including the
United States; (iii) securities of issuers in emerging markets not included in
the list of emerging markets above, if investing therein becomes feasible and
desirable subsequent to the date of this Prospectus; and (iv) cash and money
market instruments.
The Emerging Markets Fund invests in those emerging markets that the Manager
believes have strongly developing economies and in which the markets are
becoming more sophisticated. In selecting investments, the Manager seeks to
identify those countries and industries where economic and political factors,
including currency movements, are likely to produce above-average growth rates.
The Manager then invests in those companies in such countries and industries
that are best positioned and managed to take advantage of these economic and
political factors. The Emerging
Prospectus Page 11
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
Markets Fund ordinarily will be invested in the securities of issuers in at
least three different emerging markets. In evaluating investments in securities
of issuers in developed markets, the Manager will consider, among other things,
the business activities of the issuer in emerging markets and the impact that
developments in emerging markets are likely to have on the issuer.
The Manager believes that the issuers of securities in emerging markets often
have sales and earnings growth rates that exceed those in developed countries
and that such growth rates may in turn be reflected in more rapid share price
appreciation. Accordingly, the Manager believes that the Emerging Markets Fund's
policy of investing in equity securities of companies in emerging markets may
enable the Fund to achieve results superior to those produced by mutual funds
with similar objectives that invest solely in equity securities of issuers
domiciled in the United States and/or in other developed markets.
INVESTMENTS IN DEBT SECURITIES. The Emerging Markets Fund may invest in debt
securities of governmental and corporate issuers in emerging markets. Emerging
market debt securities often are rated below investment grade or not rated by
U.S. rating agencies. The Emerging Markets Fund may invest up to 20% of its
total assets in debt securities rated below investment grade. Investment in
below investment grade debt securities involves a high degree of risk and can be
speculative. These debt securities are the equivalent of high yield, high risk
bonds, commonly known as "junk bonds." See "Risk Factors -- Risks Associated
with Debt Securities."
If the rating of a debt security held by the Emerging Markets Fund drops below a
minimum rating considered acceptable by the Manager, the Fund will dispose of
any such security as soon as practicable and consistent with the best interests
of the Fund and its shareholders.
Growth of capital in debt securities may arise as a result of favorable changes
in relative foreign exchange rates, in relative interest rate levels and/ or in
the creditworthiness of issuers. The receipt of income from debt securities
owned by the Emerging Markets Fund is incidental to its objective of long-term
growth of capital.
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, the Emerging Markets Fund temporarily
may invest up to 100% of its assets in cash (U.S. dollars, foreign currencies,
multinational currency units) and/or high quality debt securities or money
market instruments of U.S. or foreign issuers. In addition, for temporary
defensive purposes, most or all of its investments may be made in the United
States and denominated in U.S. dollars. To the extent the Fund employs a
temporary defensive strategy, it will not be invested so as to achieve directly
its investment objective. In addition, pending investment of proceeds from new
sales of Fund shares or to meet ordinary daily cash needs, the Fund temporarily
may hold cash (U.S. dollars, foreign currencies or multinational currency units)
and may invest any portion of its assets in money market instruments.
LATIN AMERICA GROWTH FUND
The Latin America Growth Fund's investment objective is capital appreciation.
The Fund normally invests at least 65% of its total assets in the securities of
a broad range of Latin American issuers. The Fund may invest in common stock,
preferred stock, rights, warrants and securities convertible into common stock,
and other substantially similar forms of equity securities with comparable risk
characteristics, as well as bonds, notes, debentures or other forms of
indebtedness that may be developed in the future. Normally, the Fund will invest
a majority of its assets in equity securities. The Fund may also invest up to
35% of its total assets in a combination of equity and debt securities of U.S.
issuers.
For purposes of this Prospectus, unless otherwise indicated, the Latin America
Growth Fund defines Latin America to include the following countries: Argentina,
the Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica,
Dominican Republic, Ecuador, El Salvador, French Guiana, Guatemala, Guyana,
Haiti, Honduras, Jamaica, Mexico, the Netherlands Antilles, Nicaragua, Panama,
Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and Venezuela. Under
current market conditions, the Latin America Growth Fund expects to invest
primarily in securities issued by companies and governments in Mexico, Chile,
Brazil and Argentina. The Fund may invest more than 25% of its total assets in
any of these four countries but does not expect to invest more than 60% of its
total assets in any one country.
The Latin America Growth Fund defines securities of Latin American issuers to
include: (a) securities
Prospectus Page 12
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
of companies organized under the laws of, or having a principal office located
in, a Latin American country; (b) securities of companies that derive 50% or
more of their total revenues from business in Latin America, provided that, in
the Manager's view, the value of such issuers' securities reflect Latin American
developments to a greater extent than developments elsewhere; (c) securities
issued or guaranteed by the government of a country in Latin America, its
agencies or instrumentalities, or municipalities, or the central bank of such
country; (d) U.S. dollar-denominated securities or securities denominated in a
Latin American currency issued by companies to finance operations in Latin
America; and (e) securities of Latin American issuers, as defined herein, in the
form of depositary shares. For purposes of the foregoing definition, the Fund's
purchases of securities issued by companies outside of Latin America to finance
their Latin American operations will be limited to securities the performance of
which is materially related to such company's Latin American activities.
In allocating investments among the various Latin American countries, the
Manager looks principally at the stage of industrialization, potential for
productivity gains through economic deregulation, the impact of financial
liberalization and monetary conditions and the political outlook in each
country. In allocating assets between equity and debt securities, the Manager
will consider, among other factors: the level and anticipated direction of
interest rates; expected rates of economic growth and corporate profits growth;
changes in Latin American government policy including regulation governing
industry, trade, financial markets, and foreign and domestic investment;
substance and likely development of government finances; and the condition of
the balance of payments and changes in the terms of trade. In evaluating
investments in securities of U.S. issuers, the Manager will consider, among
other factors, the issuer's Latin American business activities and the impact
that development in Latin America may have on the issuer's operations and
financial condition.
Certain sectors of the economies of certain Latin American countries are closed
to equity investments by foreigners. Further, due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities in certain Latin American countries, the Latin
America Growth Fund may be able to invest in such countries solely or primarily
through governmentally approved investment vehicles or companies. In addition,
the portion of the Fund's assets invested directly in Chile may be less than the
portion invested in other Latin American countries because, at present, capital
directly invested in Chile normally cannot be repatriated for at least one year.
As a result, the Fund currently intends to limit most of its Chilean investments
to indirect investments through American Depositary Receipts ("ADRs") and
established Chilean investment companies, the shares of which are not subject to
repatriation restrictions.
INVESTMENTS IN DEBT SECURITIES. Under normal circumstances, the Latin America
Growth Fund may invest up to 50% of its total assets in debt securities. There
is no limitation on the percentage of its assets that may be invested in debt
securities that are rated below investment grade. Investment in below investment
grade debt securities involves a high degree of risk and can be speculative.
These debt securities are the equivalent of high yield, high risk bonds,
commonly known as "junk bonds." Most debt securities in which the Fund will
invest are not rated; if rated, it is expected that such ratings would be below
investment grade. However, the Fund will not invest in debt securities that are
in default in payment as to principal or interest. See "Risk Factors -- Risks
Associated with Debt Securities."
The Latin America Growth Fund may invest in "Brady Bonds," which are debt
restructurings that provide for the exchange of cash and loans for newly issued
bonds. Brady Bonds have been issued by the countries of, among others, Albania,
Argentina, Brazil, Bulgaria, Costa Rica, Dominican Republic, Ecuador, Ivory
Coast, Jordan, Mexico, Nigeria, Philippines, Poland, Russia, Uruguay, Venezuela
and Vietnam, and are expected to be issued by other emerging market countries.
As of the date of this Prospectus, the Fund is not aware of the occurrence of
any payment defaults on Brady Bonds. Investors should recognize, however, that
Brady Bonds have been issued only recently and, accordingly, do not have a long
payment history. In addition, Brady Bonds are often rated below investment
grade.
The Fund may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such
Prospectus Page 13
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
bonds generally are collateralized by cash or securities in an amount that, in
the case of fixed rate bonds, is equal to at least one year of rolling interest
payments or, in the case of floating rate bonds, initially is equal to at least
one year's rolling interest payments based on the applicable interest rate at
that time and is adjusted at regular intervals thereafter.
Capital appreciation in debt securities may arise as a result of a favorable
change in relative foreign exchange rates, in relative interest rate levels,
and/ or in the creditworthiness of issuers. The receipt of income from debt
securities owned by the Latin America Growth Fund is incidental to its objective
of capital appreciation.
TEMPORARY DEFENSIVE STRATEGIES. The Latin America Growth Fund may invest up to
100% of its assets in cash (U.S. dollars, foreign currencies, multinational
units) and/or high quality debt securities or money market instruments to
generate income to defray its expenses, for temporary defensive purposes and
pending investment in accordance with its investment objective and policies. In
addition, the Fund may be primarily invested in U.S. securities for temporary
defensive purposes or pending investment of the proceeds of sales of new Fund
shares. The Fund may assume a temporary defensive position when, due to
political, market or other factors broadly affecting Latin American markets, the
Manager determines that opportunities for capital appreciation in those markets
would be significantly limited over an extended period or that investing in
those markets presents undue risk of loss.
ADDITIONAL INVESTMENT POLICIES OF EMERGING MARKETS FUND AND LATIN AMERICA GROWTH
FUND
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Funds may be able to
invest in certain countries solely or primarily through governmentally
authorized investment vehicles or companies. Pursuant to the Investment Company
Act of 1940 (the "1940 Act"), a Fund generally may invest up to 10% of its total
assets in the aggregate in shares of other investment companies and up to 5% of
its total assets in any one investment company, as long as each investment does
not represent more than 3% of the outstanding voting stock of the acquired
investment company at the time of investment.
Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities and
is subject to limitations under the 1940 Act and market availability. The Funds
do not intend to invest in such investment companies unless, in the judgment of
the Manager, the potential benefits of such investment justify the payment of
any applicable premium or sales charge. As a shareholder in an investment
company, the Fund would bear its ratable share of that investment company's
expenses, including its advisory and administration fees. At the same time the
Fund would continue to pay its own management fees and other expenses.
SECURITIES LENDING. The Funds may lend their portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows a
Fund to retain ownership of the securities loaned and, at the same time, earn
additional income that may be used to offset the Fund's custody fees. At all
times a loan is outstanding, a Fund's borrower must maintain with the Fund's
custodian collateral consisting of cash, U.S. government securities or certain
irrevocable letters of credit equal to the value of the borrowed securities,
plus any accrued interest. Each Fund limits its loans of portfolio securities to
an aggregate of 30% of the value of its total assets, measured at the time any
such loan is made. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the loaned securities and possible loss of rights
in the collateral should the borrower fail financially.
PRIVATIZATIONS. The governments in some emerging markets and Latin American
countries have been engaged in programs of selling part or all of their stakes
in government owned or controlled enterprises ("privatizations"). The Manager
believes that privatizations may offer opportunities for significant capital
appreciation and intends to invest assets of the Funds in privatizations in
appropriate circumstances. In certain emerging markets and Latin American
countries, the ability of foreign entities such as the Funds to participate in
privatizations may be limited by local law, or the terms on which the Funds may
be permitted to participate may be less advantageous than those afforded local
investors. There can be no assurance that Latin American governments and
governments in emerging markets will continue to sell companies currently owned
or controlled by them or that privatization programs will be successful.
Prospectus Page 14
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
BORROWING. It is a fundamental policy of each Fund that it may borrow an amount
up to 33 1/3% of its total assets in order to meet redemption requests.
Borrowing may cause greater fluctuation in the value of the Funds' shares than
would be the case if the Funds did not borrow, but also may enable the Funds to
retain favorable securities positions rather than liquidating such positions to
meet redemptions. It is a nonfundamental policy of the Emerging Markets Fund and
a fundamental policy of the Latin America Growth Fund, that the Funds will not
purchase securities during times when outstanding borrowings represent 5% or
more of each Fund's total assets.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Funds may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Funds will
purchase or sell when-issued securities and forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Funds. If
a Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Funds enter 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 that
Fund's custodian bank and will be marked to market daily. There is a risk that
the securities may not be delivered and that the Funds may incur a loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Each Fund 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 risk normally associated with the
portfolio. These instruments are often referred to as "derivatives," which may
be defined as financial instruments whose performance is derived, at least in
part, from the performance of another asset (such as a security, currency or an
index of securities). Each Fund 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 Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. Each Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. Each Fund 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.
Only a limited market, if any, currently exists for options and futures
transactions relating to currencies of most emerging markets and most Latin
American markets, to securities denominated in such currencies or to securities
of issuers domiciled or principally engaged in business in such emerging
markets. To the extent that such a market does not exist, the Manager may not be
able to effectively hedge its investment in such markets.
Each Fund may purchase and sell put and call options on securities to hedge
against the risk of fluctuations in the prices of securities held by the Fund or
that the Manager intends to include in the Fund's portfolio. The Funds also may
purchase and sell put and call options on indices to hedge against overall
fluctuations in the securities markets generally or in a specific market sector.
Further, a Fund 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
adversely affect the Fund's portfolio. A Fund 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 Fund may
use interest rate futures contracts and options thereon
Prospectus Page 15
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
to hedge the debt portion of its portfolio against changes in the general level
of interest rates.
OTHER INFORMATION. The investment objective of the Emerging Markets Fund and of
the Latin America Growth Fund may not be changed without the approval of a
majority of the respective Fund's outstanding voting securities. A "majority of
the Fund's outstanding voting securities" means the lesser of (i) 67% of the
shares represented at a meeting at which more than 50% of the outstanding shares
are represented, or (ii) more than 50% of the outstanding shares. In addition,
the Emerging Markets Fund and the Latin America Growth Fund each have adopted
certain investment limitations as fundamental policies which also may not be
changed without shareholder approval. A complete description of these
limitations is included in the Statement of Additional Information. Unless
specifically noted, the Emerging Markets Fund's and the Latin America Growth
Fund's investment policies described in this Prospectus and in the Statement of
Additional Information may be changed by a vote of a majority of the Company's
Board of Directors without shareholder approval.
Prospectus Page 16
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There is no assurance that either Fund will achieve its investment
objective. Each Fund's net asset value will fluctuate, reflecting fluctuations
in the market value of its portfolio positions and its net currency exposure.
Investing in either Fund entails a substantial degree of risk, and an investment
in either Fund should be considered speculative. Investors are strongly advised
to consider carefully the special risks involved in emerging markets and Latin
America, which are in addition to the usual risks of investing in developed
markets around the world.
EMERGING MARKETS FUND. Investing in emerging markets involves risks relating to
potential political and economic instability within such markets and the risks
of expropriation, nationalization, confiscation of assets and property or the
imposition of restrictions on foreign investment and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation, the Emerging Markets Fund could lose its entire investment in that
market.
Economies in individual emerging markets may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross domestic product,
rates of inflation, currency depreciation, capital reinvestment, resource self-
sufficiency and balance of payments positions. Many emerging market countries
have experienced high rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain countries with
emerging markets.
Emerging markets generally are dependent heavily upon international trade and,
accordingly, have been and may continue to be affected adversely by trade
barriers, exchange controls, managed adjustments in relative currency values and
other protectionist measures imposed or negotiated by the countries with which
they trade.
Disclosure and regulatory standards in many respects are less stringent than in
the U.S. and other major markets. There also may be a lower level of monitoring
and regulation of emerging markets and the activities of investors in such
markets, and enforcement of existing regulations has been extremely limited. In
addition, the securities of non-U.S. issuers generally are not registered with
the SEC, nor are the issuers thereof usually subject to the SEC's reporting
requirements. Accordingly, there may be less publicly available information
about foreign securities and issuers than is available with respect to U.S.
securities and issuers. Foreign companies generally are not subject to uniform
accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies. The Emerging
Markets Fund's net investment income and/or capital gains from its foreign
investment activities may be subject to non-U.S. withholding taxes.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Emerging Markets Fund to make intended securities purchases due
to settlement problems could cause the Emerging Markets Fund to miss attractive
investment opportunities. Inability to dispose of a portfolio security caused by
settlement problems could result either in losses to the Emerging Markets Fund
due to subsequent declines in value of the portfolio security or, if the
Emerging Markets Fund has entered into a contract to sell the security, could
result in possible liability to the purchaser.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of
developed countries. The risk also exists that an emergency situation may arise
in one or more emerging markets as a result of which trading of securities may
cease or may be substantially curtailed and prices for the Emerging Markets
Fund's portfolio securities in such markets may not be readily available.
Section 22(e) of the 1940 Act permits a registered investment company, such as
Prospectus Page 17
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
the Emerging Markets Fund, to suspend redemption of its shares for any period
during which an emergency exists, as determined by the SEC. Accordingly, when
the Emerging Markets Fund believes that circumstances dictate, it will promptly
apply to the SEC for a determination that such an emergency exists within the
meaning of Section 22(e) of the 1940 Act. During the period commencing from the
Emerging Markets Fund's identification of such conditions until the date of any
SEC action, the Emerging Markets Fund's portfolio securities in the affected
markets will be valued at fair value determined in good faith by or under the
direction of the Company's Board of Directors.
LATIN AMERICA GROWTH FUND. The Latin America Growth Fund is classified under the
1940 Act as a "non-diversified" fund. As a result, the Latin America Growth Fund
will be able to invest in a fewer number of issuers than if it were classified
under the 1940 Act as a "diversified" fund. To the extent that the Latin America
Growth Fund invests in a smaller number of issuers, the value of its shares may
fluctuate more widely and it may be subject to greater investment and credit
risk with respect to its portfolio.
Investing in securities of Latin American issuers involve risks relating to
potential political and economic instability of certain Latin American countries
and the risks of expropriation, nationalization, confiscation of assets and
property or the imposition of restrictions on foreign investment and on
repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation, the Latin America Growth Fund could lose
its entire investment in any such country.
The securities markets of Latin American countries are substantially smaller,
less developed, less liquid and more volatile than the major securities markets
in the United States. Disclosure and regulatory standards are in many respects
less stringent than U.S. standards. Furthermore, there is a lower level of
monitoring and regulation of the markets and the activities of investors in such
markets, and enforcement of existing regulations has been extremely limited.
The limited size of many Latin American securities markets and limited trading
volume in issuers compared to volume of trading in U.S. securities could cause
prices to be erratic for reasons apart from factors that affect the quality of
the securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets.
Further, there is a risk that an emergency situation may arise in one or more
Latin American markets as a result of which prices for portfolio securities in
such markets may not be readily available. Accordingly, when the Latin America
Growth Fund believes that circumstances dictate, it will follow the procedures
as described above concerning the Emerging Markets Fund.
The economies of individual Latin American countries may differ favorably or
unfavorably from the U.S. economy in such respects as the rate of growth of
gross domestic product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. 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. Furthermore, certain
Latin American countries may impose withholding taxes on dividends payable to
the Latin America Growth Fund at a higher rate than those imposed by other
foreign countries. This may reduce the Latin America Growth Fund's investment
income available for distribution to shareholders.
Companies in Latin America are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. There is substantially less publicly available
information about Latin American companies and the governments of Latin American
countries than there is about U.S. companies and the U.S. Government.
Certain Latin American countries are among the largest debtors to commercial
banks and foreign governments. At times certain Latin American countries have
declared moratoria on the payment of principal and/or interest on external debt.
The Fund may invest in debt securities, including Brady Bonds, issued as part of
debt restructurings and such debt is to be considered speculative. There is a
history of defaults with
Prospectus Page 18
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
respect to commercial bank loans by public and private entities issuing Brady
Bonds.
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
the Emerging Markets Fund or by the Latin America Growth Fund generally will
vary inversely with market interest rates. If interest rates in a market fall,
the Funds' debt securities issued by governments or companies in that market
ordinarily will increase in value. If market interest rates increase, however,
the debt securities owned by the Funds in that market will likely decrease in
value.
The Emerging Markets Fund may invest up to 20% of its total assets in debt
securities rated below investment grade and the Latin America Growth Fund may
invest up to 50% of its total assets in debt securities of any rating. Such
investments involve a high degree of risk.
Debt rated Baa by Moody's Investors Service, Inc. ("Moody's") is considered by
Moody's to have speculative characteristics. Debt rated BB, B, CCC, CC or C by
Standard & Poor's Ratings Group ("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 foreign debt securities are the equivalent of high
yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. Similarly, certain emerging market and Latin American governments
that issue lower quality debt securities are among the largest debtors to
commercial banks, foreign governments and supranational organizations such as
the World Bank, and may not be able or willing to make principal and/or interest
repayments as they come due. The risk of loss due to default by the issuer is
significantly greater for the holders of lower quality securities because such
securities are generally unsecured and may be subordinated to the claims of
other creditors of the issuer.
Lower quality debt securities frequently have call or buy-back features which
would permit an issuer to call or repurchase the security from the Funds. In
addition, the Funds may have difficulty disposing of lower quality securities
because they may have a thin trading market. There may be no established retail
secondary market for many of these securities, and either Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for the Funds to obtain accurate market quotations for purposes of
valuing the Funds' portfolios. The Funds may also acquire lower quality debt
securities during an initial underwriting or which are sold without registration
under applicable securities laws. Such securities involve special considerations
and risks.
Prospectus Page 19
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Funds may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession.
A Fund may also incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal or interest on its portfolio
holdings, and a Fund may have limited legal recourse in the event of a default.
Debt securities issued by governments in emerging or Latin American markets can
differ from debt obligations issued by private entities in that remedies from
defaults generally must be pursued in the courts of the defaulting government,
and legal recourse is therefore somewhat diminished. Political conditions, in
terms of a government's willingness to meet the terms of its debt obligations,
also are of considerable significance. There can be no assurance that the
holders of commercial bank debt may not contest payments to the holders of debt
securities issued by governments in emerging or Latin American markets in the
event of default by the governments under commercial bank loan agreements.
ILLIQUID SECURITIES. The Emerging Markets Fund may invest up to 15% of its net
assets, and the Latin America Growth Fund may invest up to 10% of its net assets
in securities for which no readily available market exists, so-called "Illiquid
Securities." The Latin America Growth Fund may invest in joint ventures,
cooperatives, partnerships and state enterprises and other similar vehicles
which are illiquid (collectively, "Special Situations"). The Manager believes
that carefully selected investments in special situations could enable the Latin
America Growth Fund to achieve capital appreciation substantially exceeding the
appreciation the Fund would realize if it did not make such investments.
However, in order to limit investment risk, the Latin America Growth Fund will
invest no more than 5% of it 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.
CURRENCY RISK. Because the Emerging Markets Fund and the Latin America Growth
Fund may invest substantially in securities denominated in currencies other than
the U.S. dollar, and since the Funds may hold foreign currencies, each Fund will
be affected favorably or unfavorably by exchange control regulations or changes
in the exchange rates between such currencies and the U.S. dollar. Changes in
currency exchange rates will influence the value of each Fund's shares, and also
may affect the value of dividends and interest earned by the Funds and gains and
losses realized by the Funds. Currencies generally are evaluated on the basis of
fundamental economic criteria (e.g., relative inflation and interest rate levels
and trends, growth rate forecasts, balance of payments status and economic
policies) as well as technical and political data. Exchange rates are determined
by the forces of supply and demand in the foreign exchange markets. These forces
are affected by the international balance of payments and other economic and
financial conditions, government intervention, speculation and other factors. If
the currency in which a security is denominated appreciates against the U.S.
dollar, the dollar value of the security will increase. Conversely, a decline in
the exchange rate of the currency would adversely affect the value of the
security expressed in dollars.
Many of the currencies of emerging market and Latin American countries have
experienced steady devaluations relative to the U.S. dollar, and major
devaluations have historically occurred in certain countries. Any devaluations
in the currencies in which a Fund's portfolio securities are denominated may
have a detrimental impact on the Fund.
Some countries also may have fixed currencies whose values against the U.S.
dollar are not independently determined. In addition, there is a risk that
certain countries may restrict the free conversion of their currencies into
other currencies. Further, certain currencies may not be internationally traded.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. Although either Fund is
authorized to enter into options, futures and forward currency transactions, a
Fund might not enter into any such transactions. Options, futures and forward
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 and movements in
interest rates and currency markets; (2) imperfect correlation, or even no
correlation,
Prospectus Page 20
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
between movements in the price of forward contracts, options, futures contracts
or options thereon and movements in the price of the currency or security hedged
or used for cover; (3) the fact that skills and techniques needed to trade
options, futures contracts and options thereon or to use forward currency
contracts are different from those needed to select the securities in which the
Funds invest; (4) lack of assurance that a liquid secondary market will exist
for any particular option, futures contract or option thereon at any particular
time; (5) the possible loss of principal under certain conditions; (6) the
possible inability of a Fund to purchase or sell a portfolio security at a time
when it would otherwise be favorable for it to do so, or the possible need for a
Fund to sell a security at a disadvantageous time, due to the need for the Fund
to maintain "cover" or to set aside securities in connection with hedging
transactions; and (7) the possible need of a Fund 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.
Prospectus Page 21
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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." Investors in Wrap Fee Accounts and Advisory
Accounts may only purchase Advisor Class shares through Financial Advisors who
have entered into agreements with GT Global and certain of its affiliates.
Investors may be charged a fee by their agents or brokers if they effect
transactions other than through a dealer.
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 contact your
Financial Advisor or GT Global.
PURCHASES BY BANK WIRE. Shares of the Funds may also be purchased through GT
Global by bank wire. Bank wire purchases will be effected at the next determined
public offering price after the bank wire is received. A wire investment is
considered received when the Transfer Agent is notified that the bank wire has
been credited to a Fund. Prior telephonic or facsimile notice that a bank wire
is being sent must be provided to the Transfer Agent. An investor's bank may
charge a service fee for wiring money to the Funds. The Transfer Agent currently
does not charge a service fee for facilitating wire purchases, but reserves the
right to do so in the future. For more information, please refer to the
Shareholder Account Manual in this Prospectus.
CERTIFICATES. Physical certificates representing a Fund's shares will not be
issued unless a written request is submitted to the Transfer Agent. Shares of a
Fund are recorded on a register by the Transfer Agent, and shareholders who do
not elect to receive certificates have the same rights of ownership as if
certificates had been issued to them. Redemptions and exchanges by shareholders
who hold certificates may take longer to effect than similar transactions
involving non-certificated shares because the physical delivery and processing
of properly executed certificates is required. ACCORDINGLY, THE FUNDS AND GT
GLOBAL RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
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
Prospectus Page 22
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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/dealer or GT Global for more information.
Prospectus Page 23
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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 Fund) 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 AMERICA SMALL CAP GROWTH FUND
-- GT GLOBAL AMERICA MID CAP GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
-- GT GLOBAL DOLLAR FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL WORLDWIDE GROWTH FUND
Up to four exchanges each year may be made without charge. A $7.50 service
charge will be imposed on each subsequent exchange. Exchange requests received
in good order by the Transfer Agent before the close of regular trading on the
NYSE on any Business Day will be processed at the net asset value calculated on
that day. 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 instructions to his or
her Financial Advisor. Exchange orders will be accepted by telephone provided
that the exchange involves only uncertificated shares on deposit in the
shareholder's account or for which certificates previously have been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine 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 Advisor to request the prospectus of the
other GT Global Mutual Fund(s) being considered. Other investors should contact
GT Global. See the Shareholder Account Manual in this Prospectus for additional
information.
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 reserves 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 reserves 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, the Funds and GT Global reserve the right to reject
any purchase order.
Prospectus Page 24
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value and redemption proceeds
will be sent within seven days of the execution of a redemption request.
Redemption requests may be transmitted to the Transfer Agent by telephone or by
mail, in accordance with the instructions provided in the Shareholder Account
Manual. Redemptions will be effected at the net asset value next determined
after the Transfer Agent has received the request and any required supporting
documentation. Redemption requests will not require a signature guarantee if the
redemption proceeds are to be sent either: (i) to the redeeming shareholder at
the shareholder's address of record as maintained by the Transfer Agent,
provided the shareholder's address of record has not been changed within the
preceding thirty days; or (ii) directly to a pre-designated bank, savings and
loan or credit union account ("Pre-Designated Account"). ALL OTHER REDEMPTION
REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE REDEEMING
SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from any bank,
U.S. trust company, a member firm of a U.S. stock exchange or a foreign branch
of any of the foregoing or other eligible guarantor institution. A notary public
is not an acceptable guarantor.
Shareholders may qualify to have redemption proceeds sent to a Pre-Designated
Account by completing the appropriate section of the Account Application at the
end of this Prospectus. Shareholders with Pre-Designated Accounts should request
that redemption proceeds be sent either by bank wire or by check. The minimum
redemption amount for a bank wire is $1,000. Shareholders requesting a bank wire
should allow two business days from the time the redemption request is effected
for the proceeds to be deposited in the shareholder's Pre-Designated Account.
See "How to Redeem Shares -- Other Important Redemption Information."
Shareholders may change their Pre-Designated Accounts only by a letter of
instruction to the Transfer Agent containing all account signatures, each of
which must be guaranteed. The Transfer Agent currently does not charge a bank
wire service fee on each wire redemption sent, but reserves the right to do so
in the future. The shareholder's bank may charge a bank wire service fee.
REDEMPTIONS BY TELEPHONE. Redemption requests may be made by telephone by
calling the Transfer Agent at the appropriate toll free number provided in the
Shareholder Account Manual. Shareholders who hold certificates for shares may
not redeem by telephone. REDEMPTION REQUESTS MAY NOT BE MADE BY TELEPHONE FOR
THIRTY DAYS FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
Shareholders automatically have telephone privileges to authorize redemptions.
The Funds, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
believed to be genuine. The Funds employ reasonable procedures to confirm that
instructions communicated by telephone are genuine 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 preceeding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in a Wrap Fee Account or Advisory Account who is in doubt
as to what documents are required should contact his Financial Advisor.
Prospectus Page 25
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after the date the request is executed. Requests for redemption which are
subject to any special conditions or which specify a future or past effective
date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which a Fund has not yet
received good payment, the Fund may delay payment of redemption proceeds until
it has assured itself that good payment has been collected for the purchase of
the shares. In the case of purchases by check, it can take up to 10 business
days to confirm that the check has cleared and good payment has been received.
Redemption proceeds will not be delayed when shares have been paid for by wire
or when the investor's account holds a sufficient number of shares for which
funds already have been collected.
GT Global reserves the right to redeem the shares of any Advisory Account or
Wrap Fee Account if the amount invested in GT Global Mutual Funds through such
account is reduced to less than $500 through redemptions or other action by the
shareholder. Written notice will be given to the shareholder at least 60 days
prior to the date fixed for such redemption, during which time the shareholder
may increase the amount invested in GT Global Mutual Funds through such account
to an aggregate amount of $500 or more.
For additional information on how to redeem shares of the Funds, see the
Shareholder Account Manual in this Prospectus or contact your Financial Advisor.
Prospectus Page 26
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Purchase, exchange and redemption orders should be placed in accordance with
this Manual. 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 completed Account Application (if initial purchase) or letter stating Fund
name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
GT Global
P.O. Box 7345
San Francisco, California 94120-7345
INVESTMENTS BY BANK WIRE
A new account may be opened by calling 1-800-223-2138 to obtain an account
number. WITHIN SEVEN DAYS OF PURCHASE A COMPLETED ACCOUNT APPLICATION CONTAINING
THE APPROPRIATE CERTIFIED TAXPAYER IDENTIFICATION NUMBER MUST BE SENT TO GT
GLOBAL AT THE ADDRESS PROVIDED ABOVE UNDER "INVESTMENTS BY MAIL." Wire
instructions must state Fund name, class of shares, shareholder's registered
name and account number. Bank wires should be sent through the Federal Reserve
Bank Wire System to:
WELLS FARGO BANK, N.A.
ABA 121000248
Attn: GT GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call GT Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, amount of
exchange, name of the GT Global Mutual Fund exchanging into, shareholder's
registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call GT Global at 1-800-223-2138
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
GT Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the above
instructions but send to the following:
GT Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call GT Global at 1-800-223-2138.
Prospectus Page 27
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GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently, 4:00 p.m. Eastern time, unless weather, equipment failure
or other factors contribute to an earlier closing) each Business Day. Each
Fund's asset value per share is computed by determining the value of its total
assets (the securities it holds plus any cash or other assets, including
interest and dividends accrued but not yet received), subtracting all of its
liabilities (including accrued expenses), and dividing the result by the total
number of shares outstanding at such time. Net asset value is determined
separately for each class of shares of each Fund.
Equity securities held by a Fund are valued at the last sale price on the
exchange or in the OTC market in which such securities are primarily traded, as
of the close of business on the day the securities are being valued or, lacking
any sales, at the last available bid price. Long-term debt obligations are
valued at the mean of representative quoted bid or asked prices for such
securities, or, if such prices are not available, at prices for securities of
comparable maturity, quality and type; however, when 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 that
such valuations represent fair value. When market quotations for futures and
options positions held by a Fund are readily available, those positions are
valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under
direction of the Company's Board of Directors. Securities and other assets
quoted in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.
Each Fund's portfolio securities, from time to time, may be listed primarily on
foreign exchanges or OTC markets that trade on days when the NYSE is closed
(such as Saturday). As a result, the net asset values of the Funds may be
affected significantly by such trading on days when shareholders cannot purchase
or redeem shares of the Funds.
- --------------------------------------------------------------------------------
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 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
Prospectus Page 28
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
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.
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 gain regardless of how long they have held
their Fund shares and whether paid in cash or reinvested in additional Fund
shares.
Each Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, the shareholders' respective
shares of any foreign taxes paid by the Fund, in which event each shareholder
would be required to include in his or her gross income his or her pro rata
share of those taxes but might be entitled to claim a credit or deduction for
them.
Each Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest
- -- Purchases Through the Distributor") are considered to have uncertified
taxpayer identification numbers unless a completed Form W-8 or W-9 or Account
Application is received by the Transfer Agent within seven days after the
purchase. A shareholder should contact the Transfer Agent if the shareholder is
uncertain whether a proper taxpayer identification number is on file with a
Fund.
A redemption of a Fund's 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 a Fund's shares for shares of another GT Global Mutual Fund
(including the other Fund) generally will have similar tax consequences. In
addition, if shares of a Fund are purchased within 30 days before or after
redeeming other shares of that Fund (regardless of class) at a loss, all or a
part of the loss will not be deductible and instead will increase the basis of
the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
Prospectus Page 29
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors has overall responsibility for the operation of
the Funds. Pursuant to such responsibility, the Board has approved contracts
with various financial organizations to provide, among other things, day to day
management services required by the Funds. See "Directors and Executive
Officers" in the Statement of Additional Information for a complete description
of the Directors of the Company.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by Chancellor LGT
Asset Management, Inc. (the "Manager") as each Fund's investment manager and
administrator include, but are not limited to, determining the composition of
the Fund's portfolio and placing orders to buy, sell or hold particular
securities; furnishing corporate officers and clerical staff; providing office
space, services and equipment; and supervising all matters relating to the
Fund's operation. For these services, each of the Funds pays the Manager
investment management and administration fees, computed daily and paid monthly,
based on its average daily net assets, at the annualized rate of .975% on the
first $500 million, .95% on the next $500 million, .925% on the next $500
million, and .90% on amounts thereafter. These rates are higher than those paid
by most mutual funds. The Manager has undertaken to limit each Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the annual rate of 1.90% of the average daily net assets of the Fund's
Advisor Class shares. This undertaking may be changed or eliminated in the
future.
The Manager also serves as each Fund'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 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.
Prospectus Page 30
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
The investment professionals primarily responsible for the portfolio management
of the Funds are as follows:
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Jonathan Chew Portfolio Manager since Fund inception Portfolio Manager for the Manager, LGT
London in 1992 Asset Management PLC (London) and LGT
Asset Management Ltd. (Hong Kong).
James M. Bogin Portfolio Manager since 1993 Portfolio Manager for the Manager
San Francisco since 1993. From 1989 to 1993, Mr.
Bogin was a Fund Manager at Nomura
Investment Management Co. (Tokyo).
John R. Legat Portfolio Manager since 1995 Portfolio Manager for the Manager and
London LGT Asset Management PLC (London).
</TABLE>
LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Soraya M. Betterton Portfolio Manager since Fund inception Portfolio Manager for the Manager.
San Francisco in 1991
</TABLE>
------------------------
In placing securities orders for the Funds' portfolio 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 each Fund's 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,
California 94111.
The Latin America Growth Fund has previously suspended the offering of its
shares upon the advice of the Manager that doing so was in the best interests of
the portfolio management process. As of the date of this Prospectus, the Latin
America Growth Fund has resumed sales of its shares based upon the Manager's
advice that it is consistent with prudent portfolio management to do so.
However, the Latin America Growth Fund reserves the right to suspend sales again
and Emerging Markets Fund reserves the right to suspend sales in the future
based upon the foregoing portfolio considerations.
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 the Funds and/or shares of the other GT
Global Mutual Funds. In some instances compensation or promotional incentives
may be offered to brokers/ dealers that have sold or may sell significant
amounts of shares during specified periods of time. Such compensation and
incentives may include,
Prospectus Page 31
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
but are not limited to, cash, merchandise, trips and financial assistance to
broker/dealers in connection with preapproved conferences or seminars, sales or
training programs for invited sales personnel, payment for travel expenses
(including meals and lodging) incurred by sales personnel and members of their
families or other invited guests to various locations for such seminars or
training programs, seminars for the public, advertising and sales campaigns
regarding one or more of the GT Global Mutual Funds, and/or other events
sponsored by the broker/dealers.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. Banks and broker/ dealer affiliates of banks also may
execute dealer agreements with GT Global for the purpose of selling shares of
the Funds. While the matter is not free from doubt, the Board of Directors
believes that such laws should not preclude a bank from providing administration
or shareholder servicing support or preclude a bank's affiliates from acting as
a broker/dealer. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or their
subsidiaries or affiliates, could prevent a bank and its affiliates from
continuing to perform all or part of its servicing or broker/dealer activities.
If a bank were prohibited from so acting, its shareholder clients would be
permitted to remain shareholders, and alternative means for continuing the
servicing of such shareholders would be sought. It is not expected that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences.
- --------------------------------------------------------------------------------
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 the
Funds' fiscal year on October 31 and fiscal half-year on April 30 of each year,
shareholders will receive an annual and semiannual report, respectively. In
addition, the federal income tax status of distributions made by the relevant
Fund(s) to shareholders will be reported after the end of the fiscal year on
Form 1099-DIV. Under certain circumstances, duplicate mailings of 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 the
Emerging Markets Fund and the Latin America Growth Fund are entitled to one vote
per share (with proportional voting for fractional shares) and are freely
transferable. Shareholders have no preemptive or conversion rights.
On any matter submitted to a vote of shareholders, shares of each Fund will be
voted by that Fund's shareholders individually when the matter affects the
specific interest of that Fund only, such as approval of that Fund's investment
management arrangements. In addition, each class of shares of a Fund has
exclusive voting rights with respect to its distribution plan. The shares of the
Company's funds will be voted in the aggregate on other matters, such as the
election of Directors and ratification of the Board of Directors' selection of
the Company's independent accountants.
The Company normally will not hold annual meetings of shareholders, except as
required under the 1940 Act. The Company would be required to hold a
shareholders meeting in the event that at any time less than a majority of the
Directors holding office had been elected by shareholders. Directors shall
continue to hold office until their successors are elected and have qualified.
Shares of the Company's Funds do not have cumulative
Prospectus Page 32
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
voting rights, which means that the holders of a majority of the shares voting
for the election of Directors can elect all the Directors. A Director may be
removed upon a majority vote of the shareholders qualified to vote in the
election. Shareholders holding 10% of the Company's outstanding voting
securities may call a meeting of shareholders for the purpose of voting upon the
question of removal of any Director or for any other purpose. The 1940 Act
requires the Company to assist shareholders in calling such a meeting.
Each Fund offers Advisor Class shares through this Prospectus to certain
enumerated 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 B shares.
Pursuant to the Company's Articles of Incorporation, it may issue six billion
shares. Of this number, 300 million shares have been classified as shares of
each Fund. One hundred million shares have been classified as Class A shares of
each Fund, one hundred million shares have been classified as Class B shares of
each Fund, and one hundred million shares have been classified as Advisor Class
shares of each Fund. This amount may be increased from time to time in the
discretion of the Board of Directors. Each share of the Fund represents an
interest in that Fund only, has a par value of $0.0001 per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and other distributions out of the income earned and
gain realized on the assets belonging to the Fund as may be declared at the
discretion of the Board of Directors. Each Class A, Class B and Advisor Class
share of the Fund is equal as to earnings, assets and voting privileges, except
as noted above, and each class bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund when issued are fully paid and
nonassessable.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Funds
toll free at (800) 223-2138 or by writing to the Funds at P.O. Box 7893, San
Francisco, California 94120-7893.
PERFORMANCE INFORMATION. Each Fund, from time to time, may include information
on its investment results and/or comparisons of their investment results to
various unmanaged indices or results of other mutual funds or groups of mutual
funds in advertisements, sales literature or reports furnished to present or
prospective shareholders.
In such materials, a Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of each Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of a one-, five- and ten-year periods, reduced by the
maximum applicable sales charge imposed on sales of Fund shares. If a one-,
five- and/or ten-year period has not yet elapsed, data will be provided as of
the end of a shorter period corresponding to the life of the Fund. Standardized
Return assumes reinvestment of all dividends and other distributions.
In addition, in order to more completely represent a Fund's performance or more
accurately compare such performance to other measures of investment return, a
Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation); it
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without taking the effect of sales charges into
account will be higher than data including the effect of such charges.
Each Fund's performance data reflects past performance and is not necessarily
indicative of future results. A Fund's investment results will vary from time to
time depending upon market conditions, the composition of its portfolio and its
operating expenses. These factors and possible
Prospectus Page 33
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
differences in calculation methods should be considered when comparing a Fund's
investment results with those published for other investment companies, other
investment vehicles and unmanaged indices. A Fund's results also should be
considered relative to the risks associated with its investment objective and
policies. See "Investment Results" in the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of the Manager and GT Global and a subsidiary of
Liechtenstein Global Trust, and maintains its offices at California Plaza, 2121
N. California Boulevard, Suite 450, Walnut Creek, California 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is custodian of each Fund's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company and the Funds.
Kirkpatrick & Lockhart LLP also acts as counsel to the Manager, GT Global and
the Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and each Fund's independent accountants
are Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109. Coopers & Lybrand L.L.P., will conduct an annual audit of each Fund,
assist in the preparation of each Fund's federal and state income tax returns
and consult with the Company, or Trust, as applicable, and each Fund as to
matters of accounting, regulatory filings, and federal and state income
taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 34
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 35
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 36
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 37
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 38
<PAGE>
<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>
[LOGO]
GT Global Mutual Funds 415 392 6181
Fifty California Street
27th Floor
SAN FRANCISCO, CA
94111-4624
GT GLOBAL DOLLAR COST AVERAGING PROGRAM
<TABLE>
<S> <C>
Between: GT Global, Inc.
General Distributor of
The GT Global Mutual Funds
Fifty California Street, 27th Floor
San Francisco, California 94111
415 392 6181; 800 824 1580
and: Company -------------------------------------------------------------------
Address --------------------------------------------------------------------
Phone ---------------------------- Fax ----------------------------
</TABLE>
You have entered into either a Dealer Agreement or a Bank and
Bank-Affiliated Dealer Agreement (each an "Agreement") pursuant to which we
agreed to sell to you Class A and Class B shares of the mutual funds that now or
hereafter may be included in the GT Global Mutual Funds (collectively the
"Funds"; individually a "Fund") or a Bank and Bank-Affiliated Dealer Agreement
pursuant to which you agreed to sell such shares issued by the Funds as agent
for your customers. This Supplement to the Agreement is for the purpose of
establishing contractual terms between us with respect to the GT Global Dollar
Cost Averaging Program ("Program"). All capitalized terms used in this
Supplement and not otherwise defined shall have the same meanings assigned to
them as in the Agreement. All terms of the Agreement shall remain in full force
and effect unless specifically modified or suspended by the terms of this
Supplement.
1. You agree to make available to your customers the Program as described
from time to time in the then current Prospectus of any Fund. We will
provide you with reasonable amounts of literature and an account application
covering the Program.
2. A customer participating in the Program will designate the size of his or
her monthly Funds' investment ("Monthly Amount") as well as the total
amount he or she expects to invest over a 24-month period after participation in
the Program begins ("Total Amount"). A sales charge will be applied to each
automatic monthly purchase of Fund Class A shares in an amount determined in
accordance with the Fund's Right of Accumulation privilege. We will pay you a
commission if you are an agent, or we will pay you an agency commission if you
are a bank or bank-affiliated dealer. This commission will be equal to the
dealer compensation schedule that would be paid if the Total Amount the
participating shareholder expects to invest in the 24 months under the Program
were invested, instead, in the Fund at one time. You agree to pass through to
your broker(s) or registered representative(s) a portion of this commission in
accordance with your established compensation arrangement.
3. If a customer discontinues participation in the Program or otherwise
fails to invest the Total Amount as provided in the customer's Program
agreement, and the selling representative is still employed by you, you agree to
repay to us the portion of the commission applicable to any amount not invested
by the customer. If the selling representative is not employed by you, you agree
to repay us an amount equal to the portion of the commission paid that was
retained by your firm.
4. You acknowledge that all payments due to you under this Supplement are
subject to the limitations contained in each Fund's Prospectus and may be
varied or discontinued at any time.
<PAGE>
5. This Supplement shall be binding upon receipt by us in San Francisco,
California, of a counterpart hereof duly accepted and signed by you.
6. Either of us may cancel this Supplement at any time by written notice to
the other, except that Section 3 shall still remain in effect.
7. All communications to us should be sent to the address below. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you on Page 1.
Accepted:
<TABLE>
<S> <C>
Company ---------------------------------- GT Global, Inc.
Address ------------------------------------ Fifty California Street, 27th Floor
Address ------------------------------------ San Francisco, California 94111
Phone ------------------------------------- 415-392-6181; 800-824-1580
Fax ---------------------------------------- 415-445-7566
By: ---------------------------------------- By: /s/ WILLIAM J. GUILFOYLE
Signature ----------------------------------------
William J. Guilfoyle
---------------------------------------- Date: --------------------------------------
Print Name & Date
</TABLE>
DCALR702.085
May 1996
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global, Inc.
P.O. Box 7345 DOLLAR COST
SAN FRANCISCO, CA 94120-7345 AVERAGING APPLICATION
800 223 2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / CORPORATION / / TRUST / / UTMA/UGMA / / OTHER
1. ACCOUNT REGISTRATION / / NEW ACCOUNT / / IRA ACCOUNT / / ACCOUNT REVISION:
APPLICATION ATTACHED (ACCOUNT NO.:
----------------)
</TABLE>
NOTE: Joint tenant registration will be as "joint tenants with rights of
survivorship" unless otherwise specified. Trust registrations should specify
name of trustee(s), beneficiary(ies) and date of trust instrument.
Registration for Uniform Transfers/Gifts to Minors should be in the name of
one custodian and one minor and include the state under which the
custodianship is created (using the minor's social security number).
<TABLE>
<S> <C> <C> <C>
/ / / / / / - / / / / - / / / / / / / / OR / / / / - / / / / / / / / / / / / / /
---------------------------------------------------------------------------------------------------------------------------------
Owner Check appropriate box / / Social Security Number
or / / Tax I.D. Number
-------------------------------------- --------------------------------------------------------------------
Co-owner 1
-------------------------------------- --------------------------------------------------------------------
Co-owner 2 Home Telephone
-------------------------------------- --------------------------------------------------------------------
Street Address Business Telephone
-------------------------------------- --------------------------------------------------------------------
City, State, Zip Code Resident of / / U.S. / / Specify Other
</TABLE>
2. FUND SELECTION
TOTAL INITIAL INVESTMENT $
----------------------------- ($10,000 MINIMUM). The initial investment will
be made without imposition of any sales charge in the GT Global Dollar Fund.
Method of payment / / check or / / bank wire. Make checks and bank wires
payable to "GT Global." Do not send currency. Bank wires should be sent
through the Federal Reserve Bank wire system to: Wells Fargo Bank, NA,
ABA#121000248. ATTN: GT Global AC-4023-050701 (Stating Fund Name,
Shareholder's Registered Name and Account Number)
ALL GT GLOBAL MUTUAL FUNDS ISSUE TWO CLASSES OF SHARES. Class A shares are
sold with an initial sales charge while Class B shares are sold without an
initial sales charge but are subject to higher expense levels and to a
contingent deferred sales charge payable on certain redemptions. Please read
the prospectus of the applicable GT Global Mutual Fund carefully before you
invest.
MONTHLY TRANSFERS: Each month, GT Global Dollar Fund shares will be
redeemed and either Class A or Class B shares of the designated GT Global
Mutual Fund(s) will be purchased including the applicable sales charge, if
any, in the amounts indicated below ($1,000 minimum aggregate per month):
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / CLASS A SHARES
OR / / CLASS B SHARES
/ / New Account / / Existing Account #
-------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
FUND NAME MONTHLY FUND NAME MONTHLY
AMOUNT AMOUNT
07 / / GT GLOBAL WORLDWIDE GROWTH FUND $ 03 / / GT GLOBAL EUROPE GROWTH FUND $
---------- ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND $ 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND $
---------- ----------
16 / / GT GLOBAL EMERGING MARKETS FUND $ 06 / / GT GLOBAL AMERICA GROWTH FUND $
---------- ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND $ 18 / / GT GLOBAL AMERICA SMALL CAP GROWTH $
---------- FUND ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND $ 18 / / GT GLOBAL AMERICA VALUE FUND $
---------- ----------
11 / / GT GLOBAL HEALTH CARE FUND $ 04 / / GT GLOBAL JAPAN GROWTH FUND $
---------- ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND $ 10 / / GT GLOBAL GROWTH & INCOME FUND $
---------- ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND $ 08 / / GT GLOBAL STRATEGIC INCOME FUND $
---------- ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND $ 09 / / GT GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND $ 18 / / GT GLOBAL HIGH INCOME FUND $
---------- ----------
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional shares 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>
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this Dollar Cost Averaging Application for the purchase of
Class A shares including shares purchased under Right of Accumulation or
Letter of Intent, or for the purchase of Class B shares in accordance with
the terms of our Dealer Agreement with GT Global, Inc., and the Prospectus
and Statement of Additional Information for each Fund. We agree to notify GT
Global, Inc., of any purchases properly made under a Letter of Intent or
Right of Accumulation. Class B shares are not available for Right of
Accumulation or Letter of Intent.
<TABLE>
<S> <C>
--------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
- --------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number Representative's Name Representative's Number
- -----------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
-------------------------------------------------------------
Investment Dealer's Authorized Signature and Title GT Global Use: DLR------------ BR ------------ Rep
--------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
IRA INSTRUCTIONS
To open an IRA Dollar Cost Averaging account:
Read the GT Global IRA Disclosure Statement carefully.
Complete both this Dollar Cost Averaging Application and the GT Global IRA Application. Shareholder is to sign
both forms.
Mail completed applications with a check to GT Global.
3. AGREEMENT AND SIGNATURES
I/We authorize GT Global, Inc., to transfer shares from my/our GT Global Dollar Fund account, established
hereby, to purchase shares in the other GT Global Mutual Fund(s) and the class indicated on the reverse side of
this application. I/We understand that these transfers will occur on the 15th day of each month, or the prior
business day, and will continue until the funds in my/our GT Global Dollar Fund account fall below the transfer
amount, or until I/we terminate the Dollar Cost Averaging Program in writing. I/We further understand that
monthly purchases of the Class A shares of the other GT Global Mutual Fund(s) indicated will be subject to
applicable sales charges, and that the Class B shares purchased may be subject to a contingent deferred sales
charge when redeemed, as described in the Prospectus of each Fund purchased.
By the execution of this Application(s) I/we represent and warrant that I/we have full right, power, and
authority and am/are of legal age in my/our state(s) of residence to make the investment applied for pursuant to
this Application. The person(s), if any, signing on behalf of the investors 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(s). I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT PROSPECTUS OF THE GT GLOBAL MUTUAL FUND(S)
IN WHICH I/WE AM/ARE INVESTING.
I/We and my/our assigns and successors understand and agree that the account will be subject to the
telephone exchange and telephone redemption privilege described in the current Prospectus of the GT Global
Mutual Fund(s) in which I/we am/are investing 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 and their officers and
employees will not be liable for any loss or damages arising out of any such telephone, telex, or telegraph
instructions reasonably believed to be genuine, including any such loss due to negligence on the part of any
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., 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 are guaranteed.
Please indicate the number of signatures required to process written redemption
requests: / / one / / two / / three / / four
(If you do not indicate the number of required signatures, ALL account owners must sign 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 either because: (a) I am (or the payee is) exempt from
backup withholding; (b) the Internal Revenue Service ("IRS") 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 IRS has
notified me that I am (or the payee is) no longer subject to backup withholding OR; / / I am (the payee is)
subject to backup withholding.
Note:
Dollar Cost Averaging accounts held in the GT Global Dollar Fund have the following privilege restrictions:
Check writing, telephone redemptions and exchanges. The other GT Global Mutual Funds which receive the monthly
Dollar Cost Averaging transfers enjoy all regular account privileges, including telephone redemptions and
exchanges.
The Dollar Cost Averaging program does not assure a profit and does not protect against loss in declining
markets. Because such a program involves continuous investment in securities regardless of fluctuating price
levels of such securities, you should consider your financial ability to continue purchases through periods of
low price levels.
- ------------------------------------------------------- -------------------------------------------------------
Date For GT Global Use Only
X X
- ------------------------------------------------------- -------------------------------------------------------
X X
- ------------------------------------------------------- -------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL MUTUAL FUNDS
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
SAN FRANCISCO, CA
94111-4624
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION EXISTING
SHAREHOLDER ACCOUNT NUMBER
</TABLE>
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 same name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C>
-------------------------------------- / // // // // // // // // /
Owner Social Security Number / / or Tax I.D. Number "TIN" / / (Check applicable box) If
- -------------------------------------- more than one owner social security number or taxpayer identification number should
Co-owner 1 be provided for first owner listed. If a purchase is made under Uniform Gift/Transfer
- -------------------------------------- to Minors Act, social security number of the minor must be provided.
Co-owner 2 Resident of / / U.S. / / Other (specify)---------------------------
-------------------------------------- Failure to provide TIN will result in 31% withholding on redemptions and exchanges.
Street Address ( ) ( )
- -------------------------------------- ------------------------------- -------------------------------
City, State, Zip Code Home Telephone Business Telephone
</TABLE>
FUND SELECTION $500 minimum initial investment required for each Fund selected
for Class A and Class B shares.
Checks should be made payable to "GT Global."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A
Shares / / Class B Shares or / / Advisor Class Advisor Class shares are
sold through a different prospectus than Class A and Class B shares, are not
sold directly to the general public and only available through certain
employee benefit plans, financial institutions and other entities that have
entered into specific agreements with GT Global, Inc. Special account
requirements apply to Advisor Class shares. Please see an Advisor Class
prospectus for complete information.
If a class share box is not checked, your investment will be made in Class A
shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per fund.
<TABLE>
<S> <C> <C> <C> <C>
07 GT GLOBAL WORLDWIDE GROWTH FUND ---------- 13 GT GLOBAL LATIN AMERICA GROWTH FUND ----------
05 GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 24 GT GLOBAL AMERICA SMALL CAP GROWTH FUND ----------
16 GT GLOBAL EMERGING MARKETS FUND ---------- 06 GT GLOBAL AMERICA GROWTH FUND ----------
11 GT GLOBAL HEALTH CARE FUND ---------- 23 GT GLOBAL AMERICA VALUE FUND ----------
15 GT GLOBAL TELECOMMUNICATIONS FUND ---------- 04 GT GLOBAL JAPAN GROWTH FUND ----------
19 GT GLOBAL INFRASTRUCTURE FUND ---------- 10 GT GLOBAL GROWTH & INCOME FUND ----------
17 GT GLOBAL FINANCIAL SERVICES FUND ---------- 09 GT GLOBAL GOVERNMENT INCOME FUND ----------
21 GT GLOBAL NATURAL RESOURCES FUND ---------- 08 GT GLOBAL STRATEGIC INCOME FUND ----------
22 GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 18 GT GLOBAL HIGH INCOME FUND ----------
02 GT GLOBAL NEW PACIFIC GROWTH FUND ---------- 01 GT GLOBAL DOLLAR FUND ----------
03 GT GLOBAL EUROPE GROWTH FUND ----------
Rebalance frequency - check one
/ / Monthly / / Quarterly / / Semi annual / / Total percentage must equal 100%.
Annual
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains distributions and dividends will be reinvested in additional shares of the same class unless appropriate
boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in cash / / Pay capital gain distributions and
dividends in cash.
Investment will be split according to allocation.
</TABLE>
<TABLE>
<S> <C>
AGREEMENTS AND SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any change or revocation. ANY
CHANGE IN THESE INSTRUCTIONS MUST BE IN WRITING WITH ALL SIGNATURES GUARANTEED (IF APPLICABLE).
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
- ------------------------------------------------------------ -----------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S. stock exchange;
(4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution. A notary public is NOT an
acceptable guarantor. An investor with questions concerning the GT Global Mutual Funds signature guarantee requirement should
contact the Transfer Agent.
</TABLE>
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT LATIN AMERICA GROWTH FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, 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 EMERGING MARKETS FUND, GT GLOBAL LATIN AMERICA GROWTH 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 TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
LEMPV703 MC
<PAGE>
GT GLOBAL THEME FUNDS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
March 1, 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Class A and Class B
shares of GT Global Financial Services Fund ("Financial Services Fund"), GT
Global Infrastructure Fund ("Infrastructure Fund"), GT Global Natural Resources
Fund ("Natural Resources Fund"), GT Global Consumer Products and Services Fund
("Consumer Products and Services Fund"), GT Global Health Care Fund ("Health
Care Fund") and GT Global Telecommunications Fund ("Telecommunications Fund")
(each, a "Fund" or "Theme Fund," and, collectively, the "Funds" or "Theme
Funds"). Each Fund is a diversified series of GT 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 Class A and Class B 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.
--------
<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................................................................................................. 31
Information Relating to Sales and Redemptions............................................................................ 33
Taxes.................................................................................................................... 35
Additional Information................................................................................................... 38
Investment Results....................................................................................................... 39
Description of Debt Ratings.............................................................................................. 49
Financial Statements..................................................................................................... 51
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL THEME FUNDS
INVESTMENT OBJECTIVES
AND POLICIES
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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 Resources 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
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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
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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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GT GLOBAL THEME FUNDS
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
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SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon 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, the Theme Portfolio might be required to
maintain assets as "cover," maintain segregated accounts or make margin
payments when it takes positions in instruments involving obligations to
third parties (I.E., instruments other than purchased options). If the Theme
Portfolio were unable to close out its positions in such instruments, it
might be required to continue to maintain such assets or accounts or make
such payments until the position expired or matured. The requirements might
impair the Theme Portfolio's ability to sell a portfolio security or make an
investment at a time when it would otherwise be favorable to do so, or
require that the Theme Portfolio sell a portfolio security at a
disadvantageous time. The Theme Portfolio's ability to close out a position
in an instrument prior to expiration or maturity depends on the existence of
a liquid secondary market or, in the absence of such a market, the ability
and willingness of the other party to the transaction ("contra party") to
enter into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Theme Portfolio.
WRITING CALL OPTIONS
Each Theme Portfolio may write (sell) call options on securities, indices and
currencies. Call options generally will be written on securities and currencies
that, in the opinion of 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 on (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he or she may be
assigned an exercise notice, requiring him or her to deliver the underlying
security or currency against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by purchasing an option
identical to that previously sold.
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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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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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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 the Theme Portfolio writes a put
on an index, it receives a premium and the purchaser has the right, prior to the
expiration date, to require the Theme Portfolio to deliver to it an amount of
cash
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equal to the difference between the closing level of the index and the exercise
price times the multiplier, if the closing level is less than the exercise
price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Theme Portfolio
writes a call on an index it cannot provide in advance for its potential
settlement obligations by acquiring and holding the underlying securities. A
Theme Portfolio can offset some of the risk of writing a call index option
position by holding a diversified portfolio of securities similar to those on
which the underlying index is based. However, a Theme Portfolio cannot, as a
practical matter, acquire and hold a portfolio containing exactly the same
securities as underlie the index and, as a result, bears a risk that the value
of the securities held will vary from the value of the index.
Even if a Theme Portfolio could assemble a securities portfolio that exactly
reproduced the composition of the underlying index, it still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in writing
index options. When an index option is exercised, the amount of cash that the
holder is entitled to receive is determined by the difference between the
exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Theme Portfolio, as the call
writer, will not know that it has been assigned until the next business day at
the earliest. The time lag between exercise and notice of assignment poses no
risk for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Theme Portfolio has purchased an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the Theme Portfolio will be required
to pay the difference between the closing index value and the exercise price of
the option (times the applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
Each Theme Portfolio may enter into interest rate or currency futures contracts,
and may enter into stock index futures contracts (collectively, "Futures" or
"Futures Contracts"), as a hedge against changes in prevailing levels of
interest rates, currency exchange rates or stock price levels in order to
establish more definitely the effective return on securities or currencies held
or intended to be acquired by the Theme Portfolio. A Theme Portfolio's hedging
may include sales of Futures as an offset against the effect of expected
increases in interest rates, and decreases in currency exchange rates and stock
prices, and purchases of Futures as an offset against the effect of expected
declines in interest rates, and increases in currency exchange rates or stock
prices.
Each Theme Portfolio only will enter into Futures Contracts that are traded on
futures exchanges and are standardized as to maturity date and underlying
financial instrument. Futures exchanges and trading thereon in the United States
are regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce a Theme Portfolio's exposure to interest rate, currency exchange
rate and stock market fluctuations, that Theme Portfolio may be able to hedge
its exposure more effectively and at a lower cost through using Futures
Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is
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effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Theme Portfolio realizes a gain;
if it is more, the Theme Portfolio realizes a loss. Conversely, if the
offsetting sale price is more than the original purchase price, the Theme
Portfolio realizes a gain; if it is less, the Theme Portfolio realizes a loss.
The transaction costs must also be included in these calculations. There can be
no assurance, however, that a Theme Portfolio will be able to enter into an
offsetting transaction with respect to a particular Futures Contract at a
particular time. If a Theme Portfolio is not able to enter into an offsetting
transaction, that Theme Portfolio will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Theme
Portfolio.
Each Theme Portfolio's Futures transactions will be entered into for hedging
purposes; that is, Futures Contracts will be sold to protect against a decline
in the price of securities or currencies that a Theme Portfolio owns, or Futures
Contracts will be purchased to protect the Theme Portfolio against an increase
in the price of securities or currencies it has committed to purchase or expects
to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Theme Portfolio in order to initiate Futures trading and maintain
the Theme Portfolio's open positions in Futures Contracts. A margin deposit made
when the Futures Contract is entered into ("initial margin") is intended to
ensure the Theme Portfolio's performance under the Futures Contract. The margin
required for a particular Futures Contract is set by the exchange on which the
Futures Contract is traded and may be significantly modified from time to time
by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Theme Portfolio entered into the Futures
Contract will be made on a daily basis as the price of the underlying security,
currency or index fluctuates making the Futures Contract more or less valuable,
a process known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in a Theme Portfolio's
portfolio being hedged. The degree of imperfection of correlation depends upon
circumstances such as variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contracts prices during a single trading day.
The daily limit establishes the maximum amount that the price of a Futures
Contract or option may vary either up or down from the previous day's settlement
price at the end of a trading session. Once the daily limit has been reached in
a particular type of Futures Contract or option, no trades may be made on that
day at a price beyond that limit. The daily limit governs only price movement
during a particular trading day and therefore does not limit potential losses,
because the limit may prevent the liquidation of unfavorable positions. Futures
Contract and option prices have occasionally moved to the daily limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of positions and subjecting some traders to substantial
losses.
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GT GLOBAL THEME FUNDS
If a Theme Portfolio were unable to liquidate a Futures or option on Futures
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Theme Portfolio would
continue to be subject to market risk with respect to the position. In addition,
except in the case of purchased options, the Theme Portfolio would continue to
be required to make daily variation margin payments and might be required to
maintain the position being hedged by the Future or option or to maintain cash
or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Theme Portfolio writes an option on a Futures Contract, it will be required
to deposit initial and variation margin pursuant to requirements similar to
those applicable to Futures Contracts. Premiums received from the writing of an
option on a Futures Contract are included in the initial margin deposit.
A Theme Portfolio may seek to close out an option position by selling an option
covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Theme Portfolio enters into Futures Contracts, options on
Futures Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Theme Portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Theme
Portfolio has entered into. In general, a call option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract exceeds the
strike, I.E., exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors and the Portfolio's Board of Trustees, as applicable, without
a shareholder vote. This limitation does not limit the percentage of a Theme
Portfolio's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. A Theme Portfolio
either may
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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, the Theme Portfolio could be disadvantaged by dealing in the odd lot
market (generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Theme Portfolio might be required to accept or
make delivery of the underlying foreign currency in accordance with any U.S. or
foreign regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that a Theme Portfolio has purchased) expose the Theme Portfolio to an
obligation to another party. A Theme Portfolio will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities, currencies, or other options, Forward Contracts or Futures
Contracts, or (2) cash, receivables and short-term debt securities with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. Each Theme Portfolio will comply with SEC guidelines
regarding cover for these instruments and, if the guidelines so require, set
aside cash 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 securities for approximately the
amount at which that Theme Portfolio values such securities. See "Investment
Limitations." The sale of illiquid securities, if they can be sold at all,
generally will require more time and result in higher brokerage charges or
dealer discounts and other selling expenses than will the sale of liquid
securities such as securities eligible for trading on U.S. securities exchanges
or in OTC markets. Moreover, restricted securities, which may be illiquid for
purposes of this limitation, often sell, if at all, at a price lower than
similar securities that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Theme Portfolio may be obligated to pay all or part
of the registration expenses and a considerable period may elapse between the
time of the decision to sell
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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 investments in certain
securities and may increase the cost and expenses of a Theme Portfolio. For
example, certain countries require prior governmental approval before
investments by foreign persons may be made, or may limit the amount of
investment by foreign persons in a particular company or limit the investment by
foreign persons to only a specific class of securities of a company that may
have less advantageous terms than securities of the company available for
purchase by nationals. Moreover, the national policies of certain countries may
restrict investment opportunities in issuers or industries deemed sensitive to
national interests. In addition, some countries require governmental approval
for the repatriation of investment income, capital or the proceeds of securities
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sales by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
restrictions on foreign capital remittances abroad. A Theme Portfolio could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by a Theme Portfolio
will not be registered with the SEC or regulators of any foreign country, nor
will the issuers thereof be subject to the SEC's reporting requirements. Thus,
there will be less available information concerning most foreign issuers of
securities held by a Theme Portfolio than is available concerning U.S. issuers.
In instances where the financial statements of an issuer are not deemed to
reflect accurately the financial situation of the issuer, 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 pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although each Theme Portfolio values its assets daily in terms of U.S. dollars,
the Portfolios do not intend to convert their holdings of foreign currencies
into U.S. dollars on a daily basis. Each Portfolio will do so, from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference ("spread") between the prices at which
they buy and sell various currencies. Thus, a dealer may offer to sell a foreign
currency to a Portfolio at one rate, while offering a lesser rate of exchange
should a Portfolio desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions usually are subject to fixed
commissions, which generally are higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of a Theme Portfolio
are uninvested and no return is earned thereon. The inability of a Theme
Portfolio to make intended security purchases due to settlement problems could
cause that Theme Portfolio to miss attractive investment opportunities.
Inability to dispose of a portfolio security due to settlement problems either
could result in losses to that Theme Portfolio due to subsequent declines in
value of the portfolio security or, if that Theme Portfolio has entered into a
contract to sell the security, could result in possible liability to the
purchaser. 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
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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 value in issuers compared to the
volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities there may
be share registration and delivery delays or failures.
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 economies and securities
markets of certain emerging market countries.
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INVESTMENT LIMITATIONS
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FEEDER FUNDS
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund each has the following fundamental
investment policy to enable it to invest in the Financial Services Portfolio,
Infrastructure Portfolio, Natural Resources Portfolio and Consumer Products and
Services Portfolio, respectively:
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
All other fundamental investment policies, and the non-fundamental policies, of
each Feeder Fund and its corresponding Portfolio are identical. Therefore,
although the following discusses the investment policies of each Portfolio and
its Board of Trustees, it applies equally to each Feeder Fund and its Board of
Directors.
Each Portfolio has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the affirmative vote of the lesser of (i) 67% of that Portfolio's shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (ii) more than 50% of the outstanding shares. Whenever a Feeder
Fund is requested to vote on a change in the investment limitations of its
corresponding Portfolio, such Fund will hold a meeting of its shareholders and
will cast its votes as instructed by its shareholders.
Each Portfolio may not:
(1) Buy or sell real estate (including real estate limited
partnerships); however, each Portfolio may invest in debt securities secured
by real estate or interests therein or issued by companies which invest in
real estate or interests therein, including real estate investment trusts;
(2) Buy or sell commodities or commodity contracts, except that each
Portfolio may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in other transactions
in foreign currencies;
(3) Underwrite securities of other issuers, except to the extent that
the disposition of an investment position may technically cause it to be
considered an underwriter as that term is defined under the 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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In addition, each Portfolio has adopted as a fundamental investment policy a
classification as a "diversified" portfolio under the 1940 Act. This means that,
with respect to 75% of the Portfolio's total assets, no more than 5% will be
invested in the securities of any one issuer, and the Portfolio will purchase no
more than 10% of the outstanding voting securities of any one issuer. This
policy cannot be changed without approval by the holders of a majority of the
Portfolio's outstanding voting securities as defined above and in the
Prospectus.
The following investment policies of each Portfolio are not fundamental policies
and may be changed by vote of the Portfolios' Board of Trustees without
shareholder approval. No Portfolio may:
(1) Invest in securities of an issuer if the investment would cause the
Portfolio to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Portfolio, the Portfolio's investment adviser,
or distributor, each owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of the securities of
such issuer;
(6) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Portfolio's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the
Portfolio has entered into;
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Portfolio's total
assets (while borrowings exceed 5% of the Infrastructure Portfolio's and
Natural Resources Portfolio's total assets, such Portfolio will not make any
additional investments); and
(8) Invest more than 10% of its total assets in shares of other
investment companies and may not invest more than 5% of its total assets in
any one investment company or acquire more than 3% of the outstanding voting
securities of any one investment company.
Investors should refer to the Prospectus for further information with respect to
the investment objective of each Feeder Fund, which may not be changed without
the approval of Fund shareholders, and its corresponding Portfolio's investment
objective, which may be changed without the approval of its shareholders, and
other investment policies, techniques and limitations, which may or may not be
changed without shareholder approval.
HEALTH CARE FUND
The Health Care Fund has adopted the following investment limitations as
fundamental policies, which (unless otherwise noted) may not be changed without
approval by the affirmative vote of the lesser of (i) 67% of 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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(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 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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(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.
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL THEME FUNDS
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Fund's or Portfolio's investment policies or
restrictions. A Fund or Portfolio may exchange securities, exercise conversion
or subscription rights, warrants or other rights to purchase common stock or
other equity securities and may hold, except to the extent limited by the 1940
Act, any such securities so acquired without regard to the Fund's or Portfolio's
investment policies and restrictions. The original cost of the securities so
acquired will be included in any subsequent determination of a Fund's or
Portfolio's compliance with the investment percentage limitations referred to
above and in the Prospectus.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors and the
Portfolios' Board of Trustees, 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.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL THEME FUNDS
Each Theme Portfolio contemplates purchasing most foreign equity securities in
OTC markets or stock exchanges located in the countries in which the respective
principal offices of the issuers of the various securities are located, if that
is the best available market. The fixed commissions paid in connection with most
such foreign stock transactions generally are higher than negotiated commissions
on U.S. transactions. There generally is less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
Foreign equity securities may be held by a Theme Portfolio in the form of ADRs,
ADSs, EDRs, CDRs or securities convertible into foreign equity securities. ADRs,
ADSs, EDRs and CDRs may be listed on stock exchanges, or traded in the 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, 1995 and 1996, the
Telecommunications Fund's portfolio turnover rates were 62% and 37%,
respectively. For the fiscal years ended October 31, 1995 and 1996, the Health
Care Fund's portfolio turnover rates were 99% and 157%, respectively. For the
fiscal years ended October 31, 1995 and 1996, the portfolio turnover rates for
the Financial Services Portfolio, Infrastructure Portfolio and Natural Resources
Portfolio were 170% and 103%, 45% and 41%, and 87% and 94%, 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 portfolio turnover
rates for the Consumer Products and Services Portfolio were 240% and 169%,
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 THE 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) since 1995; President, GT Global since 1995;
50 California Street President and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice President
San Francisco, CA 94111 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, 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 THE PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
James R. Tufts, 38 Chief Information Officer for the Manager since October 1996; President,
Vice President and GT Services since 1995; Senior Vice President -- Finance and
Chief 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,
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 Principal Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
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, GT 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 administered 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, 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 accrued 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,
with the exception of the Financial Services Fund and the Consumer Products and
Services Fund.
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 a Portfolio for
additional one-year terms, provided that any such renewal has been specifically
approved at least annually by (i) the Portfolios' Board of Trustees or the vote
of a majority of the Portfolio's outstanding voting securities (as defined in
the 1940 Act) and (ii) a majority of Trustees who are not parties to the
Portfolio Management Contract or "interested persons" of any such party (as
defined in the 1940 Act), cast in person at a meeting called for the specific
purpose of voting on such approval. The Portfolio Management Contract provides
that with respect to each Portfolio, and the Administration Contract provides
that with respect to each Feeder Fund, either the Company, each Portfolio or 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 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>
AMOUNT PAID
--------------
<S> <C>
Year ended October 31, 1996............................................................................... $ 99,991
Year ended October 31, 1995............................................................................... 51,353
May 31, 1994 (commencement of operations) to October 31, 1994............................................. 8,249
</TABLE>
INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
Year ended October 31, 1996............................................................................... $ 635,456
Year ended October 31, 1995............................................................................... 601,421
May 31, 1994 (commencement of operations) to October 31, 1994............................................. 3,021
</TABLE>
NATURAL RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
Year ended October 31, 1996............................................................................... $ 425,745
Year ended October 31, 1995............................................................................... 213,856
May 31, 1994 (commencement of operations) to October 31, 1994............................................. 28,500
</TABLE>
CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
Year ended October 31, 1996............................................................................... $ 422,640
December 30, 1994 (commencement of operations) to October 31, 1995........................................ 16,284
</TABLE>
For the fiscal period May 31, 1994 (commencement of operations) to October 31,
1994, and for the fiscal years ended October 31, 1995 and October 31, 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, $213,856 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 amounts 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 Class A and Class B shares are offered continuously through each
Fund's principal underwriter and distributor, GT Global, on a "best efforts"
basis pursuant to separate Distribution Contracts between the Company and GT
Global.
As described in the Prospectus, the Company has adopted a separate Distribution
Plan with respect to the Class A and Class B shares of each Fund in accordance
with Rule 12b-1 under the 1940 Act (each a "Class A Plan" and "Class B Plan,"
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL THEME FUNDS
respectively, and collectively, "Plans"). The rate of payments by the Funds
under the Plans, as described in the Prospectus, may not be increased without
the approval of the majority of the outstanding voting securities of the
affected class. All expenses for which GT Global is reimbursed under a Class A
Plan will have been incurred within one year of such reimbursement. The
following table discloses payments made by the Theme Funds to GT Global under
each Fund's Class A Plan and Class B Plan for the Fund's fiscal year ended
October 31, 1996:
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- --------------
<S> <C> <C>
Health Care Fund.......................................................................... $ 2,335,519 $ 969,596
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- --------------
<S> <C> <C>
Telecommunications Fund................................................................... $ 6,774,499 $ 11,294,711
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- --------------
<S> <C> <C>
Financial Services Fund................................................................... $ 31,297 $ 76,454
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- --------------
<S> <C> <C>
Infrastructure Fund....................................................................... $ 177,035 $ 518,147
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- --------------
<S> <C> <C>
Natural Resources Fund.................................................................... $ 139,991 $ 296,729
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- --------------
<S> <C> <C>
Consumer Products and Services Fund....................................................... $ 144,407 $ 285,201
</TABLE>
In approving the Plans, the Directors determined that the adoption of the Plans
was in the best interests of the shareholders of that Fund. Agreements related
to the Plans must also be approved by such vote of the Directors, including a
majority of Directors who are not "interested persons" of the Company (as
defined in the 1940 Act) and who have no direct or indirect financial interests
in the operation of the Plans, or in any agreement related thereto.
Each Plan requires that, at least quarterly, the Directors review the amounts
expended thereunder and the purposes for which such expenditures were made. Each
Plan requires that so long as it is in effect the selection and nomination of
Directors who are not "interested persons" of the Company will be committed to
the discretion of the Directors who are not "interested persons" of the Company,
as defined in the 1940 Act.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL THEME FUNDS
As discussed in the Prospectus, GT Global collects sales charges on sales of
Class A shares of each Fund, retains certain amounts of such charges and
reallows other amounts of such charges to broker/dealers that sell shares. The
following table reviews the extent of such activity during the Health Care
Fund's last three fiscal years:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNT AMOUNTS
YEAR ENDED OCTOBER 31, COLLECTED RETAINED REALLOWED
- -------------------------------------------------------------------------- -------------- ------------- --------------
<S> <C> <C> <C>
1996...................................................................... $ 301,166 $ 90,926 $ 210,240
1995...................................................................... 469,186 67,325 401,861
1994...................................................................... 1,544,456 131,040 1,413,416
</TABLE>
The following table reviews the extent of such activity during the
Telecommunications Fund's last three fiscal years:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNT AMOUNTS
YEAR ENDED OCTOBER 31, COLLECTED RETAINED REALLOWED
- -------------------------------------------------------------------------- -------------- ------------- --------------
<S> <C> <C> <C>
1996...................................................................... $ 966,041 $ 231,226 $ 734,815
1995...................................................................... 4,151,523 578,450 3,573,073
1994...................................................................... 15,634,626 2,477,493 13,157,133
</TABLE>
The following table reviews the extent of such activity for the Financial
Services Fund, Infrastructure Fund and Natural Resources Fund for each Fund's
fiscal years ended October 31, 1996 and October 31, 1995 and for the fiscal
period May 31, 1994 (commencement of operations) to October 31, 1994:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNT AMOUNTS
YEAR ENDED OCTOBER 31, 1996 COLLECTED RETAINED REALLOWED
- -------------------------------------------------------------------------- -------------- ------------- --------------
<S> <C> <C> <C>
Financial Services Fund................................................... $ 23,418 $ 4,721 $ 18,697
Infrastructure Fund....................................................... 92,340 19,811 72,529
Natural Resources Fund.................................................... 140,061 49,532 90,529
<CAPTION>
YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Financial Services Fund................................................... $ 50,104 $ 6,892 $ 43,212
Infrastructure Fund....................................................... 584,424 67,021 517,403
Natural Resources Fund.................................................... 143,672 16,516 127,156
<CAPTION>
MAY 31, 1994 TO OCTOBER 31, 1994
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Financial Services Fund................................................... $ 53,670 $ 4,672 $ 48,998
Infrastructure Fund....................................................... 494,689 51,215 443,474
Natural Resources Fund.................................................... 203,926 14,471 189,455
</TABLE>
The following table reviews the extent of such activity for the Consumer
Products and Services Fund for the fiscal year ended October 31, 1996 and for
the fiscal period December 30, 1994 (commencement of operations) to October 31,
1995:
<TABLE>
<CAPTION>
SALES
CHARGES AMOUNT AMOUNTS
COLLECTED RETAINED REALLOWED
----------- ---------- -----------
<S> <C> <C> <C>
Year ended October 31, 1996................................ $ 387,504 $ 115,133 $ 272,371
December 30, 1994 to October 31, 1995...................... 28,566 3,380 25,186
</TABLE>
GT Global receives any contingent deferred sales charges ("CDSCs") payable with
respect to redemptions of Class B shares and certain Class A shares. The
following table discloses the amount of CDSCs collected by GT Global with regard
to the GT Global Theme Funds for the periods shown.
HEALTH CARE FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
Year ended October 31, 1996............................................................................. $ 291,802
Year ended October 31, 1995............................................................................. 182,201
Year ended October 31, 1994............................................................................. 49,801
</TABLE>
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL THEME FUNDS
TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
Year ended October 31, 1996............................................................................. $ 5,636,470
Year ended October 31, 1995............................................................................. 4,820,173
Year ended October 31, 1994............................................................................. 1,731,244
</TABLE>
FINANCIAL SERVICES FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
Year ended October 31, 1996............................................................................. $ 25,023
Year ended October 31, 1995............................................................................. 7,543
May 31, 1994 (commencement of operations) to October 31, 1994........................................... 847
</TABLE>
INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
Year ended October 31, 1996............................................................................. $ 243,564
Year ended October 31, 1995............................................................................. 193,268
May 31, 1994 (commencement of operations) to October 31, 1994........................................... 1,528
</TABLE>
NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
Year ended October 31, 1996............................................................................. $ 94,094
Year ended October 31, 1995............................................................................. 73,935
May 31, 1994 (commencement of operations) to October 31, 1994........................................... 779
</TABLE>
CONSUMER PRODUCTS AND SERVICES FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
Year ended October 31, 1996............................................................................. $ 45,035
December 30, 1994 (commencement of operations) to October 31, 1995...................................... 986
</TABLE>
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, 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 transfer
agency and 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 $1,481,877 and $1,555,664; $7,389,836
and $7,139,417; $53,523 and $57,347; $398,968 and $344,920; $149,111 and
$227,522; and $30,047 and $249,464, 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 discussed above, legal and audit expenses, custodian fees,
trustees' fees, organizational fees, fidelity bond and other insurance premiums,
taxes, extraordinary expenses and expenses of reports and prospectuses sent to
existing investors. The allocation of general Company expenses and expenses
shared among the Funds and other funds organized as series of the Company are
allocated on a basis deemed fair and equitable, which may be based on the
relative net assets of the Funds or the nature of the service performed and
relative applicability to the Funds. Expenditures, including costs incurred in
connection with the purchase or sale of portfolio securities, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses. The ratio of each Fund's expenses to its relative net assets can be
expected to be higher than the expense ratios of funds investing solely in
domestic securities, since the cost of maintaining the custody of foreign
securities and the rate of investment management fees paid by the Funds or the
Portfolios generally are higher than the comparable expenses of such other
funds.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL THEME 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 dealer's price will be
used, in the case of OTC options. When market quotations for futures and options
on futures held by a Theme Portfolio are readily available, those positions will
be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available (including restricted securities that are subject to limitations as to
their sale) are valued at fair value as determined in good faith by or under the
direction of the Portfolios' Board of Trustees or the Company's Board of
Directors, as applicable. The valuation procedures applied in any specific
instance are likely to vary from case to case. However, consideration is
generally given to the financial position of the issuer and other fundamental
analytical data relating to the investment and to the nature of the restrictions
on disposition of the securities (including any registration expenses that might
be borne by the Theme Portfolios in connection with such disposition). In
addition, other factors, such as the cost of the investment, the market value of
any unrestricted securities of the same class (both at the time of purchase and
at the time of valuation), the size of the holding, the prices of any recent
transactions or offers with respect to such securities and any available
analysts' reports regarding the issuer, generally are considered.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of each Fund's total assets (which, for each
Feeder Fund is the value of its investment in its corresponding Portfolio). Each
Fund's liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of a Fund's net assets is so determined, that value
is then divided by the total number of shares outstanding (excluding treasury
shares), and the result, rounded to the nearer cent, is the net asset value per
share.
Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or, alternatively, at
the mean of the current bid and asked prices of such currencies against the U.S.
dollar last quoted by a major bank that is a regular participant in the foreign
exchange market or on the basis of a pricing service that takes into account the
quotes provided by a number of such major banks. If none of these alternatives
are available or none are deemed to provide a suitable methodology for
converting a foreign currency into U.S. dollars, the Portfolios' Board of
Trustees or the Company's Board of Directors, as applicable, in good faith, will
establish a conversion rate for such currency.
European, Far Eastern, or Latin American securities trading may not take place
on all days on which the NYSE is open. Further, trading takes place in various
foreign markets on days on which the NYSE is not open. Trading in securities on
European and Far Eastern securities exchanges and OTC markets generally is
completed well before the close of business
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL THEME FUNDS
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 33
<PAGE>
GT GLOBAL THEME FUNDS
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Class A or Class B shares of a Fund purchased should accompany the
purchase order, or funds should be wired to the Transfer Agent as described in
the Prospectus. Payment, other than by wire transfer, must be made by check or
money order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.
As a condition of this offering, if an order to purchase either class of shares
is canceled due to nonpayment (for example, on account of a check returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been canceled due to nonpayment may be prohibited
from placing future orders.
Each Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on a Fund
until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, each Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law. Such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.
AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in the Fund's Automatic Investment Plan ("AIP"),
investors or their broker/dealers should specify whether investment will be in
Class A shares or Class B shares and should send the following documents to the
Transfer Agent: (1) an AIP Application; (2) a Bank Authorization Form; and (3) a
voided personal check from the pertinent bank account. The necessary forms are
provided at the back of the Fund's Prospectus. Provided that an investor's bank
accepts the Bank Authorization Form, investment amounts will be drawn on the
designated dates (monthly on the 25th day or beginning quarterly on the 25th day
of the month the investor first selects) in order to purchase full and
fractional shares of the Fund at the public offering price determined on that
day. In the event that the 25th day falls on a Saturday, Sunday or holiday,
shares will be purchased on the next business day. If an investor's check is
returned because of insufficient funds or a stop payment order or if the account
is closed, the AIP may be discontinued, and any share purchase made upon deposit
of such check may be cancelled. Furthermore, the shareholder will be liable for
any loss incurred by the Fund by reason of such cancellation. Investors should
allow one month for the establishment of an AIP. An AIP may be terminated by the
Transfer Agent or the Fund upon thirty days' written notice or by the
participant at any time without penalty, upon written notice to the Fund or the
Transfer Agent.
LETTER OF INTENT -- CLASS A SHARES
The Letter of Intent ("LOI") is not a binding obligation to purchase the
indicated amount. During such time as Class A shares are held in escrow under an
LOI to ensure payment of applicable sales charges if the indicated amount is not
met, all dividends and capital gain distributions on escrowed shares will be
reinvested in additional Class A shares or paid in cash, as specified by the
shareholder. If the intended investment is not completed within the specified
thirteen-month period, the purchaser must remit to GT Global the difference
between the sales charge actually paid and the sales charge which would have
been applicable if the total Class A purchases had been made at a single time.
If this amount is not paid to GT Global within twenty days after written
request, the appropriate number of escrowed shares will be redeemed and the
proceeds paid to GT Global.
A registered investment adviser, trust company or trust department seeking to
execute an LOI as a single purchaser with respect to accounts over which it
exercises investment discretion is required to provide the Transfer Agent with
information establishing that it has discretionary authority with respect to the
money invested (e.g., by providing a copy of the pertinent investment advisory
agreement). Class A shares purchased in this manner must be registered with the
Transfer
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL THEME FUNDS
Agent so that only the investment adviser, trust company or trust department,
and not the beneficial owner, will be able to place purchase, redemption and
exchange orders.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Class A or Class B shares of a Fund may be purchased as the underlying
investment for an IRA meeting the requirements of section 408(a) of the Code.
IRA applications are available from brokers or GT Global.
EXCHANGES BETWEEN FUNDS
Shares of a Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Class A shares of a
Fund may be exchanged only for Class A shares of other GT Global Mutual Funds.
Class B shares of a Fund may be exchanged only for Class B shares of other GT
Global Mutual Funds. The exchange privilege is not an option or right to
purchase shares but is permitted under the current policies of the respective GT
Global Mutual Funds. The privilege may be discontinued or changed at any time by
any of the funds upon sixty days prior written notice to the shareholders of
such fund and is available only in states where the exchange may be made
legally. Before purchasing shares through the exercise of the exchange
privilege, a shareholder should obtain and read a copy of the prospectus of the
fund to be purchased and should consider the investment objective(s) of the
fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by that Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Funds and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon thirty days' written notice.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders owning Class A or Class B shares of a Fund with a value of $10,000
or more may establish a Systematic Withdrawal Plan ("SWP"). Under an SWP, a
shareholder will receive monthly or quarterly payments, in amounts of not less
than $100 per payment, through the automatic redemption of the necessary number
of shares on the designated dates (monthly on the 25th day or quarterly on the
25th day of January, April, July and October). In the event that the 25th day
falls on a Saturday, Sunday or holiday, the redemption will take place on the
prior business day. Certificates, if any, for the shares being redeemed must be
held by the Transfer Agent. Checks will be made payable to the designated
recipient and mailed within seven days. If the recipient is other than the
registered shareholder, the signature of each shareholder must be guaranteed on
the SWP application (see "How to Redeem Shares" in the Prospectus). A
corporation (or partnership) must also submit a "Corporation Resolution" (or
"Certificate of Partnership") indicating the names, titles, and signatures of
the individuals authorized to act on its behalf, and the SWP application must be
signed by a duly authorized officer(s) and the corporate seal affixed.
With respect to a SWP, the maximum annual SWP withdrawal is 12% of the initial
account value. Withdrawals in excess of 12% of the initial account value
annually may result in assessment of a contingent deferred sales charge. See
"How to Invest" in the Prospectus.
Shareholders should be aware that such systematic withdrawals may deplete or use
up entirely the initial investment and result in realized long-term or
short-term capital gains or losses. The SWP may be terminated at any time by the
Transfer Agent or the Fund upon thirty days' written notice or by a shareholder
upon written notice to the Fund or its Transfer Agent. Applications and further
details regarding establishment of an SWP are provided at the back of the Fund's
Prospectus.
SUSPENSION OF REDEMPTION PRIVILEGES
Each Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
exists, as defined by the SEC, which would prohibit the Funds or the Portfolios
from disposing of portfolio securities owned by them or in fairly determining
the value of its assets, or (3) as the SEC may otherwise permit.
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL THEME FUNDS
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for a Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of a Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that each Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the net asset value of
a Fund at the beginning of such period. This election will be irrevocable so
long as Rule 18f-1 remains in effect, unless the SEC by order upon application
permits the withdrawal of such election.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Code, each Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income, net short-term capital gain and net gains
from certain foreign currency transactions) ("Distribution Requirement") and
must meet several additional requirements. With respect to each Fund, these
requirements include the following: (1) the Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities loans and gains from the sale or other disposition of securities
or foreign currencies, or other income (including gains from options, Futures or
Forward Contracts) derived with respect to its business of investing in
securities or those currencies ("Income Requirement"); (2) the Fund must derive
less than 30% of its gross income each taxable year from the sale or other
disposition of securities, or any of the following, that were held for less than
three months -- options or Futures (other than those on foreign currencies), or
foreign currencies (or options, Futures or Forward Contracts thereon) that are
not directly related to the Fund's principal business of investing in securities
(or options and Futures with respect to securities) ("Short-Short Limitation");
(3) at the close of each quarter of the Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
government securities, securities of other RICs and other securities, with these
other securities limited, in respect of any one issuer, to an amount that does
not exceed 5% of the value of the Fund's total assets and that does not
represent more than 10% of the issuer's outstanding voting securities; and (4)
at the close of each quarter of the Fund's taxable year, not more than 25% of
the value of its total assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer. Each
Feeder Fund, as an investor in its corresponding Portfolio, is deemed to own a
proportionate share of the Portfolio's assets, and to earn a proportionate share
of the Portfolio's income, for purposes of determining whether the Fund
satisfies all the requirements described above to qualify as a RIC.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
See the next section for a discussion of the tax consequences to each Feeder
Fund of hedging transactions engaged in, and investments in passive foreign
investment companies ("PFICs") and other foreign securities by, its
corresponding Portfolio and to the Health Care Fund and Telecommunications Fund
of those transactions and investments.
TAXATION OF THE THEME PORTFOLIOS
THE PORTFOLIOS AND THEIR RELATIONSHIP TO THE FEEDER FUNDS. Each Portfolio is
treated as a separate partnership for federal income tax purposes and is not a
"publicly traded partnership." As a result, each Portfolio is not subject to
federal income tax; instead, each Feeder Fund, as an investor in its
corresponding Portfolio, is required to take into account in determining its
federal income tax liability its share of the Portfolio's income, gains, losses,
deductions and credits, without regard
Statement of Additional Information Page 36
<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 37
<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 the disposition of foreign currencies (except certain
gains that may be excluded by future regulations), and gains from 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 38
<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 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"
names and has reserved the right to withdraw its consent to the use of such
names by the Company at any time or to grant the use of such names to any other
company.
Statement of Additional Information Page 39
<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 and Class B 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) reinvestment of dividends and other distributions at net asset value
on the reinvestment date determined by the Company's Board of Directors; and (4)
a complete redemption at the end of any period illustrated.
The Standardized Returns for the Class A and Class B shares of Health Care Fund
and Telecommunications Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
HEALTH HEALTH TELECOM-
CARE CARE MUNICATIONS
FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A)
- --------------------------------------------------------------------------------- ------------ ------------ -------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996............................................... 17.30% 17.59% 1.92%
October 31, 1991 through October 31, 1996........................................ 7.61% n/a n/a
April 1, 1993 (commencement of operations) through October 31, 1996.............. n/a 17.78 % n/a
January 27, 1992 (commencement of operations) through October 31, 1996........... n/a n/a 10.21 %
August 7, 1989 (commencement of operations) through October 31, 1996............. 13.53 % n/a n/a
<CAPTION>
TELECOM-
MUNICATIONS
FUND
PERIOD (CLASS B)
- --------------------------------------------------------------------------------- -------------
<S> <C>
Fiscal year ended October 31, 1996............................................... 1.46%
October 31, 1991 through October 31, 1996........................................ n/a
April 1, 1993 (commencement of operations) through October 31, 1996.............. 10.44 %
January 27, 1992 (commencement of operations) through October 31, 1996........... n/a
August 7, 1989 (commencement of operations) through October 31, 1996............. n/a
</TABLE>
The Standardized Returns for the Class A and Class B shares of the Financial
Services Fund, Infrastructure Fund and Natural Resources Fund, stated as average
annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL FINANCIAL INFRA- INFRA- NATURAL
SERVICES SERVICES STRUCTURE STRUCTURE RESOURCES
FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A)
- -------------------------------------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Fiscal year ended October 31, 1996............................ 14.50% 14.81% 13.42% 13.37% 45.77 %
May 31, 1994 (commencement of operations) through
October 31, 1996............................................. 7.61% 8.20% 7.86% 8.41% 17.02 %
<CAPTION>
NATURAL
RESOURCES
FUND
PERIOD (CLASS B)
- -------------------------------------------------------------- ------------
<S> <C>
Fiscal year ended October 31, 1996............................ 47.39 %
May 31, 1994 (commencement of operations) through
October 31, 1996............................................. 17.84 %
</TABLE>
The Standardized Returns for the Class A and Class B shares of the Consumer
Products and Services Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
CONSUMER PRODUCTS
AND
SERVICES FUND
PERIOD (CLASS A)
- ------------------------------------------------------------------------------------------ ---------------------
<S> <C>
Fiscal year ended October 31, 1996........................................................ 41.75%
December 30, 1994 (commencement of operations) to October 31, 1996........................ 38.07%
<CAPTION>
CONSUMER PRODUCTS
AND
SERVICES FUND
PERIOD (CLASS B)
- ------------------------------------------------------------------------------------------ ---------------------
<S> <C>
Fiscal year ended October 31, 1996........................................................ 43.11%
December 30, 1994 (commencement of operations) to October 31, 1996........................ 39.45%
</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 and Class B 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 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.
Average annual Non-Standardized 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
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL THEME FUNDS
formula: (1) no deduction of sales charges; (2) reinvestment of dividends and
other distributions at net asset value on the reinvestment date determined by
the Board; and (3) a complete redemption at the end of any period illustrated.
The average annual Non-Standardized Returns for the Class A and Class B shares
of the Health Care Fund and Telecommunications Fund, stated as average
annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH HEALTH TELECOM-
CARE CARE MUNICATIONS
FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A)
- ------------------------------------------------------------------------------- ---------- ---------- -------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996............................................. 23.14 % 22.59 % 7.00%
October 31, 1991 through October 31, 1996...................................... 8.66 % n/a n/a
April 1, 1993 (commencement of operations) through October 31, 1996............ n/a 18.32 % n/a
January 27, 1992 (commencement of operations) through October 31, 1996......... n/a n/a 11.34 %
August 7, 1989 (commencement of operations) through October 31, 1996........... 14.29 % n/a n/a
<CAPTION>
TELECOM-
MUNICATIONS
FUND
PERIOD (CLASS B)
- ------------------------------------------------------------------------------- -------------
<S> <C>
Fiscal year ended October 31, 1996............................................. 6.46%
October 31, 1991 through October 31, 1996...................................... n/a
April 1, 1993 (commencement of operations) through October 31, 1996............ 11.09 %
January 27, 1992 (commencement of operations) through October 31, 1996......... n/a
August 7, 1989 (commencement of operations) through October 31, 1996........... n/a
</TABLE>
The average annual Non-Standardized Returns for the Class A and Class B shares
of the Financial Services Fund, Infrastructure Fund and Natural Resources Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
FINANCIAL FINANCIAL INFRA- INFRA- NATURAL
SERVICES SERVICES STRUCTURE STRUCTURE RESOURCES
FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A)
- ------------------------------------------------------------ ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Fiscal year ended October 31, 1996.......................... 20.21% 19.81% 19.08 % 18.37 % 53.04%
May 31, 1994 (commencement of operations) through October
31, 1996................................................... 9.79% 9.30% 10.05 % 9.51 % 19.40%
<CAPTION>
NATURAL
RESOURCES
FUND
PERIOD (CLASS B)
- ------------------------------------------------------------ ------------
<S> <C>
Fiscal year ended October 31, 1996.......................... 52.39%
May 31, 1994 (commencement of operations) through October
31, 1996................................................... 18.82%
</TABLE>
The average annual Non-Standardized Returns for the Class A and Class B shares
of the Consumer Products and Services Fund, stated as average annualized total
returns for the periods shown, were:
<TABLE>
<CAPTION>
CONSUMER PRODUCTS
AND
SERVICES FUND
PERIOD (CLASS A)
- ------------------------------------------------------------------------------------------ ---------------------
<S> <C>
Fiscal year ended October 31, 1996........................................................ 48.82%
December 30, 1994 (commencement of operations) to October 31, 1996........................ 41.77%
<CAPTION>
CONSUMER PRODUCTS
AND
SERVICES FUND
PERIOD (CLASS B)
- ------------------------------------------------------------------------------------------ ---------------------
<S> <C>
Fiscal year ended October 31, 1996........................................................ 48.11%
December 30, 1994 (commencement of operations) to October 31, 1996........................ 41.09%
</TABLE>
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 and, as set
forth below, may or may not take sales charges into account.
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Class B shares of the Health Care Fund and
Telecommunications Fund, stated as aggregate total returns for the periods
shown, were:
<TABLE>
<CAPTION>
HEALTH HEALTH TELECOM-
CARE CARE MUNICATIONS
FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A)
- -------------------------------------------------------------------------------- ---------- ------------ -------------
<S> <C> <C> <C>
April 1, 1993 (commencement of operations) through October 31, 1996............. n/a 82.73% n/a
January 27, 1992 (commencement of operations) through October 31, 1996.......... n/a n/a 66.80 %
August 7, 1989 (commencement of operations) through October 31, 1996............ 162.82 % n/a n/a
<CAPTION>
TELECOM-
MUNICATIONS
FUND
PERIOD (CLASS B)
- -------------------------------------------------------------------------------- -------------
<S> <C>
April 1, 1993 (commencement of operations) through October 31, 1996............. 45.75 %
January 27, 1992 (commencement of operations) through October 31, 1996.......... n/a
August 7, 1989 (commencement of operations) through October 31, 1996............ n/a
</TABLE>
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Class B shares of the Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as aggregate total
returns for the period shown were:
<TABLE>
<CAPTION>
FINANCIAL FINANCIAL INFRA- INFRA- NATURAL
SERVICES SERVICES STRUCTURE STRUCTURE RESOURCES
FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A)
- -------------------------------------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
May 31, 1994 (commencement of operations) through October 31,
1996......................................................... 25.36% 24.01% 26.07% 24.58% 53.57%
<CAPTION>
NATURAL
RESOURCES
FUND
PERIOD (CLASS B)
- -------------------------------------------------------------- ------------
<S> <C>
May 31, 1994 (commencement of operations) through October 31,
1996......................................................... 51.76%
</TABLE>
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL THEME FUNDS
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Class B shares of the Consumer Products and Services Fund,
stated as aggregate total returns for the period shown, were:
<TABLE>
<CAPTION>
CONSUMER PRODUCTS CONSUMER PRODUCTS
AND AND
SERVICES FUND SERVICES FUND
PERIOD (CLASS A) (CLASS B)
- ------------------------------------------------------------------------------------------ ------------------- -------------------
<S> <C> <C>
December 30, 1994 (commencement of operations) to October 31, 1996........................ 89.97% 88.28%
</TABLE>
The aggregate Non-Standardized Returns (taking sales charges into account) for
the Class A and Class B shares of the Health Care Fund and Telecommunications
Fund, stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH HEALTH TELECOM-
CARE CARE MUNICATIONS
FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A)
- -------------------------------------------------------------------------------- ---------- ------------ -------------
<S> <C> <C> <C>
April 1, 1993 (commencement of operations) through October 31, 1996............. n/a 79.73% n/a
January 27, 1992 (commencement of operations) through October 31, 1996.......... n/a n/a 58.87 %
August 7, 1989 (commencement of operations) through October 31, 1996............ 150.34 % n/a n/a
<CAPTION>
TELECOM-
MUNICATIONS
FUND
PERIOD (CLASS B)
- -------------------------------------------------------------------------------- -------------
<S> <C>
April 1, 1993 (commencement of operations) through October 31, 1996............. 42.75 %
January 27, 1992 (commencement of operations) through October 31, 1996.......... n/a
August 7, 1989 (commencement of operations) through October 31, 1996............ n/a
</TABLE>
The aggregate Non-Standardized Returns (taking sales charges into account) for
the Class A and Class B shares of the Financial Services Fund, Infrastructure
Fund and Natural Resources Fund, stated as aggregate total returns for the
periods shown were:
<TABLE>
<CAPTION>
FINANCIAL FINANCIAL INFRA- INFRA- NATURAL
SERVICES SERVICES STRUCTURE STRUCTURE RESOURCES
FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A)
- -------------------------------------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
May 31, 1994 (commencement of operations) through October 31,
1996......................................................... 19.41% 21.01% 20.08% 21.58% 46.27 %
<CAPTION>
NATURAL
RESOURCES
FUND
PERIOD (CLASS B)
- -------------------------------------------------------------- ------------
<S> <C>
May 31, 1994 (commencement of operations) through October 31,
1996......................................................... 48.76 %
</TABLE>
The aggregate Non-Standardized Returns (taking sales charges into account) for
the Class A and Class B shares of the Consumer Products and Services Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
CONSUMER PRODUCTS
AND
SERVICES FUND
PERIOD (CLASS A)
- ------------------------------------------------------------------------------------------ ---------------------
<S> <C>
December 30, 1994 (commencement of operations) to October 31, 1996........................ 80.94%
<CAPTION>
CONSUMER PRODUCTS
AND
SERVICES FUND
PERIOD (CLASS B)
- ------------------------------------------------------------------------------------------ ---------------------
<S> <C>
December 30, 1994 (commencement of operations) to October 31, 1996........................ 84.28%
</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 MARKET
Each Fund and GT Global may from time to time in advertisements, sales
literature and reports furnished to present or prospective shareholders compare
a Fund with, but not limited to, the following:
(1) The Salomon Brothers Non-U.S. Dollars Indices, which are measures of
the total return performance of high quality non-U.S. dollar denominated
securities in major sectors of the worldwide bond markets.
(2) The Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's Investors Service,
Inc. ("Moody's") or BBB by Standard and Poor's 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.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL THEME FUNDS
(4) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Companies Service ("CDA/Wiesenberger"), Morningstar, Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard each Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger, Morningstar and/or other
firms, as applicable, or to specific funds or groups of funds within or
outside of such peer group. Lipper generally ranks funds on the basis of
total return, assuming reinvestment of distributions, but does not take
sales charges or redemption fees into consideration, and is prepared without
regard to tax consequences. In addition to the mutual fund rankings, the
Fund's performance may be compared to mutual fund performance indices
prepared by Lipper. Morningstar is a mutual fund rating service that also
rates mutual funds on the basis of risk-adjusted performance. Morningstar
ratings are calculated from a fund's three, five and ten year average annual
returns with appropriate fee adjustments and a risk factor that reflects
fund performance relative to the three-month U.S. Treasury bill monthly
returns. Ten percent of the funds in an investment category receive five
stars and 22.5% receive four stars. The ratings are subject to change each
month.
(5) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and 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 United States.
(8) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-backed
fixed income securities.
(9) Dow Jones Industrial Average.
(10) CNBC/Financial News Composite Index.
(11) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies 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
telecommunications companies in the developing and emerging countries.
(15) Datastream and Worldscope each is an on-line database retrieval
service for information including, but not limited to, international
financial and economic data.
(16) International Financial Statistics, which is produced by the
International Monetary Fund.
(17) Various publications and annual reports, produced by the World Bank
and its affiliates.
(18) Various publications from the International Bank for Reconstruction
and Development.
(19) Various publications including, but not limited to ratings agencies
such as Moody's, 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.
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GT GLOBAL THEME FUNDS
(23) Various publications from the Organization for Economic Cooperation
and Development ("OECD").
(24) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc., J.P. Morgan, Morgan
Stanley, Smith Barney Shearson, S.G. Warburg, Jardine Flemming, The Bank for
International Settlements, Asian Development Bank, Bloomberg, L.P., and
Ibbottson Associates, may be used, as well as information reported by the
Federal Reserve and the respective Central Banks of various nations. In
addition, GT Global may use performance rankings, ratings and commentary
reported periodically in national financial publications, including but not
limited to, Money Magazine, Mutual Fund 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 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
Statement of Additional Information Page 43
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GT GLOBAL THEME FUNDS
to those of the funds. Ibbotson calculates total returns in the same method as
the funds. The funds may also compare performance to that of other compilations
or indices that may be developed and made available in the future.
Each Fund may quote various measures of volatility and benchmark correlation
such as beta, standard deviation and R(2) in advertising. In addition, each Fund
may compare these measures to those of other funds. Measures of volatility seek
to compare each Fund's historical share price fluctuations or total returns
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
Each Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging programs. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after-tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
Each Fund may describe in its sales material and advertisements how an investor
may invest in 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 roll over (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible 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.
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GT GLOBAL THEME FUNDS
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.
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 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 Industry
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
Statement of Additional Information Page 45
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GT GLOBAL THEME FUNDS
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 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's area of concentration without national or regional restrictions. The
ability of each Theme Portfolio to invest worldwide may allow the portfolio
managers to select industries in different economic cycles and varying stages of
development, though there is no assurance that the managers will be successful
in this selection.
Each Theme Portfolio's area of concentration reflects the underlying theme of
the 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
Statement of Additional Information Page 46
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GT GLOBAL THEME FUNDS
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 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 to similarly to be realized by the established telecommunications
companies in established economies, although no assurances can be made in this
regard.
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
From time to time the Fund and GT Global will quote information including 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
Statement of Additional Information Page 47
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GT GLOBAL THEME FUNDS
/ / 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
/ / 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
Statement of Additional Information Page 48
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GT GLOBAL THEME FUNDS
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 senior
short-term debt obligations. Prime-1 repayment ability will often be evidenced
by many of the following characteristics: leading market positions in
well-established industries; high rates of return on funds employed;
conservative capitalization structure with moderate reliance on debt and ample
asset protection; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issuers rated
Prime-2 (or supporting institutions) have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P rates commercial paper in four categories ranging from "A-1" for the highest
quality obligations to "D" for the lowest. A-1 -- This highest category
indicates that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics will be
denoted with a plus sign (+) designation. A-2 -- Capacity for timely payment on
issues with this designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1." A-3 -- Issues carrying
this designation have adequate capacity for timely payment. They are, however,
more vulnerable to the adverse effects of changes in circumstances than
obligations carrying the higher designations. B -- Issues rated "B" are regarded
as having only speculative capacity for timely payment. C -- This rating is
assigned to short-term debt obligations with a doubtful capacity for payment. D
- -- Debt rated "D" is in payment default. The "D" rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment Grade Ratings are the first four categories:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risk appear somewhat larger than the Aaa securities.
A -- Upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium-grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba -- Have speculative elements and their future cannot be considered as
well-assured. Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B -- Generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small.
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GT GLOBAL THEME FUNDS
Caa -- Poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca -- Speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
C -- Lowest rated class of bonds. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- Very strong capacity to pay interest and repay principal and
differs from the higher rated issues only in a small degree.
A -- Has a strong capacity to pay interest and repay principal although
it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" is
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of the
obligation. "BB" indicates the lowest degree of speculation and "C" the
highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
BB -- Has less near-term vulnerability to default than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The "BB" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "BBB-" rating.
B -- Has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
CCC -- Has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The "CCC" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "B" or "B-" rating.
Statement of Additional Information Page 50
<PAGE>
GT GLOBAL THEME FUNDS
CC -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC" rating.
C -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC-" debt rating. The "C" rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1 -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" category is used when interest payments
or principal payments are not made on the date due even if the applicable
grace period has not expired, unless S&P believes that such payments will be
made during such grace period. This rating will also be used 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.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of each Theme Fund as of October 31, 1996 and
for the fiscal year then ended appear on the following pages.
Statement of Additional Information Page 51
<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, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL GT GLOBAL
DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA 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 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.
THESA703 MC
<PAGE>
GT GLOBAL INCOME FUNDS
50 California Street, 27th Floor
San Francisco, California 94111-4624
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
March 1, 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Class A and Class B
shares of GT Global Government Income Fund ("Government Income Fund"), GT Global
Strategic Income Fund ("Strategic Income Fund") and GT Global High Income Fund
("High Income Fund") (each, a "Fund," and collectively, the "Funds"). Each Fund
is a non-diversified series of G.T. Investment Funds, Inc. (the "Company"), a
registered open-end management investment company. This Statement of Additional
Information, which is not a Prospectus, supplements and should be read in
conjunction with the Funds' current Class A and B Prospectus dated March 1,
1997, a copy of which is available without charge by writing to the above
address or by calling the Funds at the toll-free telephone number listed above.
Chancellor LGT Asset Management, Inc. (the "Manager") serves as the investment
manager and administrator for the Government Income Fund, the Strategic Income
Fund and the Global High Income Portfolio (the "Portfolio") and also serves as
the administrator of the High Income Fund. The distributor of the shares of each
Fund is GT Global, Inc. ("GT Global"). The Funds' transfer agent is GT Global
Investor Services, Inc. ("GT Services" or the "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objectives and Policies............................................................... 2
Options, Futures and Currency Strategies......................................................... 6
Risk Factors..................................................................................... 15
Investment Limitations........................................................................... 20
Execution of Portfolio Transactions.............................................................. 24
Directors, Trustees and Executive Officers....................................................... 26
Management....................................................................................... 28
Valuation of Fund Shares......................................................................... 31
Information Relating to Sales and Redemptions.................................................... 32
Taxes............................................................................................ 34
Additional Information........................................................................... 37
Investment Results............................................................................... 38
Description of Debt Ratings...................................................................... 46
Financial Statements............................................................................. 48
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL INCOME FUNDS
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
The Government Income Fund primarily seeks high current income and secondarily
seeks capital appreciation and protection of principal through active management
of the maturity structure and currency exposure of its portfolio. The Strategic
Income Fund and the High Income Fund primarily seek high current income and
secondarily seek capital appreciation. The High Income Fund seeks to achieve its
investment objectives by investing all of its investable assets in the
Portfolio, which is a non-diversified open-end management investment company
with investment objectives identical to those of the Fund. Whenever the phrase
"all of the High Income Fund's investable assets" is used herein and in the
Prospectus, it means that the only investment securities held by the High Income
Fund will be its interest in the Portfolio. The High Income Fund may withdraw
its investment in the Portfolio at any time, if the Board of Directors of the
Company determines that it is in the best interests of the Fund and its
shareholders to do so. Upon any such withdrawal, the High Income Fund's assets
would be invested in accordance with the investment policies of the Portfolio
described below and in the Prospectus.
INVESTMENT IN EMERGING MARKETS
The Portfolio seeks its objectives by investing, under normal circumstances, at
least 65% of its total assets in debt securities of issuers in emerging markets.
The Strategic Income Fund may invest up to 50% of its assets in debt securities
of issuers in emerging markets. The Strategic Income Fund and the Portfolio do
not consider the following countries to be emerging markets: Australia, Austria,
Belgium, Canada, Denmark, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, United Kingdom,
and United States.
In addition to the factors set forth in the Prospectus, the Manager will also
consider, when determining what countries constitute emerging markets, data,
analysis, and classification of countries published or disseminated by the
International Bank for Reconstruction and Development (commonly known as the
World Bank) and the International Finance Corporation.
SELECTION OF DEBT INVESTMENTS
In determining the appropriate distribution of investments among various
countries and geographic regions for the Government Income Fund, the Strategic
Income Fund and the Portfolio, the Manager ordinarily considers the following
factors: prospects for relative economic growth among the different countries in
which the Government Income Fund, the Strategic Income Fund and the Portfolio
may invest; expected levels of inflation; government policies influencing
business conditions; the outlook for currency relationships; and the range of
the individual investment opportunities available to international investors.
The Government Income Fund, the Strategic Income Fund and the Portfolio may
invest in the following types of money market instruments (i.e., debt
instruments with less than 12 months remaining until maturity) denominated in
U.S. dollars or other currencies: (a) obligations issued or guaranteed by the
U.S. or foreign governments, their agencies, instrumentalities or
municipalities; (b) obligations of international organizations designed or
supported by multiple foreign governmental entities to promote economic
reconstruction or development; (c) finance company obligations, corporate
commercial paper and other short-term commercial obligations: (d) bank
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances), subject to the restriction that the Government Income
Fund, the Strategic Income Fund and the Portfolio may not invest more than 25%
of their respective total assets in bank securities; (e) repurchase agreements
with respect to the foregoing; and (f) other substantially similar short-term
debt securities with comparable characteristics.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by the Government Income Fund,
the Strategic Income Fund and the Portfolio presently may be made only by
acquiring shares of other investment companies with local governmental approval
to invest in those countries. At such time as direct investment in these
countries is allowed, the Government Income Fund, the Strategic Income Fund and
the Portfolio anticipate investing directly in these markets. The Government
Income Fund, the Strategic Income Fund and the Portfolio may also invest in the
securities of closed-end investment
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL INCOME FUNDS
companies within the limits of the Investment Company Act of 1940, as amended
("1940 Act"). These limitations currently provide that, in part, a Fund or the
Portfolio may purchase shares of another investment company unless (a) such a
purchase would cause the Government Income Fund, the Strategic Income Fund or
the Portfolio to own in the aggregate more than 3% of the total outstanding
voting securities of the investment company or (b) such a purchase would cause
the Government Income Fund, the Strategic Income Fund or the Portfolio to have
more than 5% of its total assets invested in the investment company or more than
10% of its aggregate assets invested in an aggregate of all such investment
companies. The foregoing limitations do not apply to the investment by the High
Income Fund in the Portfolio. Investment in investment companies may involve the
payment of substantial premiums above the value of such companies' portfolio
securities. The Government Income Fund, the Strategic Income Fund and the
Portfolio do not intend to invest in such investment companies unless, in the
judgment of 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.
SAMURAI AND YANKEE BONDS
The Government Income Fund, the Strategic Income Fund and the Portfolio may
invest in yen-denominated bonds sold in Japan by non-Japanese issuers ("Samurai
bonds"), and may invest in dollar-denominated bonds sold in the United States by
non-U.S. issuers ("Yankee bonds"). It is the policy of the Government Income
Fund, the Strategic Income Fund and the Portfolio to invest in Samurai or Yankee
bond issues only after taking into account considerations of quality and
liquidity, as well as yield.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Government Income Fund, the Strategic
Income Fund or the Portfolio in connection with other securities or separately
and provide a Fund or the Portfolio with the right to purchase at a later date
other securities of the issuer.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Strategic Income Fund or the
Portfolio may make secured loans of portfolio securities amounting to not more
than 30% of its total assets. Securities loans are made to broker/dealers or
institutional investors pursuant to agreements requiring that the loans
continuously be secured by collateral at least equal at all times to the value
of the securities lent plus any accrued interest, "marked to market" on a daily
basis. The Fund may pay reasonable administrative and custodial fees in
connection with loans of its securities. While the securities loan is
outstanding, the Strategic Income Fund and the Portfolio will continue to
receive the equivalent of the interest or dividends paid by the issuer on the
securities, as well as interest on the investment of the collateral or a fee
from the borrower. The Strategic Income Fund and the Portfolio each will have a
right to call each loan and obtain the securities on five business days' notice.
The Government Income Fund, the Strategic Income Fund and the Portfolio will not
have the right to vote equity securities while they are lent, but each may call
in a loan in anticipation of any important vote. Loans will be made only 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 the Strategic Income Fund's and the Portfolio's investment
policies with respect to bank obligations, obligations of foreign branches of
U.S. banks and of foreign banks are obligations of the issuing bank and may be
general obligations of the parent bank. Such obligations, however, may be
limited by the terms of a specific obligation and by government regulation. As
with investment in non-U.S. securities in general, investments in the
obligations of foreign branches of U.S. banks and of foreign banks may subject
the the Strategic Income Fund and the Portfolio to investment risks that are
different in some respects from those of investments in obligations of domestic
issuers. Although the Strategic Income Fund and the Portfolio typically will
acquire obligations issued and supported by the credit of U.S. or foreign banks
having total assets at the time of purchase in excess of $1 billion, this $1
billion figure is not an investment policy or restriction of either Fund or the
Portfolio. For the purposes of calculation with respect to the $1 billion
figure, the assets of a bank will be deemed to include the assets of its U.S.
and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which the Fund or Portfolio buys a
security from a bank or recognized securities dealer and simultaneously commits
to resell that security to the bank or dealer at an agreed upon price, date and
market rate of interest unrelated to the coupon rate or maturity of the
purchased security. Although repurchase agreements carry certain risks not
associated with direct investments in securities, including possible decline in
the market value of the underlying securities and delays and costs to the Funds
or Portfolio if the other party to the repurchase agreement becomes bankrupt,
the Government Income Fund, the Strategic Income Fund and the Portfolio intend
to enter into
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL INCOME FUNDS
repurchase agreements only with banks and broker/dealers believed by the Manager
to present minimal credit risks in accordance with guidelines approved by the
Company's Board of Directors. The Manager reviews and monitors the
creditworthiness of such institutions under the Board's general supervision.
The Government Income Fund, the Strategic Income Fund and the Portfolio will
invest only in repurchase agreements collateralized at all times in an amount at
least equal to the repurchase price plus accrued interest. To the extent that
the proceeds from any sale of such collateral upon a default in the obligation
to repurchase were less than the repurchase price, the Government Income Fund,
the Strategic Income Fund or the Portfolio would suffer a loss. If the financial
institution which is party to the repurchase agreement petitions for bankruptcy
or otherwise becomes subject to bankruptcy or other liquidation proceedings
there may be restrictions on the Government Income Fund, the Strategic Income
Fund's or the Portfolio's ability to sell the collateral and the Government
Income Fund, the Strategic Income Fund or the Portfolio could suffer a loss.
However, with respect to financial institutions whose bankruptcy or liquidation
proceedings are subject to the U.S. Bankruptcy Code, the Government Income Fund,
the Strategic Income Fund and the Portfolio intend to comply with provisions
under such Code that would allow the immediate resale of such collateral. The
Government Income Fund will not enter into a repurchase agreement with a
maturity of more than seven days if, as a result, more than 10% of the value of
its total assets would be invested in such repurchase agreements and other
illiquid investments and securities for which no readily available market
exists.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Government Income Fund's borrowings will not exceed 30% of the Fund's total
assets, i.e., the Fund's total assets at all times will equal at least 300% of
the amount of outstanding borrowings. If market fluctuations in the value of the
Fund's portfolio holdings or other factors cause the ratio of the Fund's total
assets to outstanding borrowings to fall below 300%, within three days
(excluding Sundays and holidays) of such event the Fund may be required to sell
portfolio securities to restore the 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. The Strategic Income
Fund's and the Portfolio's borrowings will not exceed 33 1/3% of the Strategic
Income Fund's or the Portfolio's, respective total assets. The Government Income
Fund, the Strategic Income Fund and the Portfolio each may borrow up to 5% of
its respective total assets for temporary or emergency purposes other than to
meet redemptions. Any borrowing by a Fund or the Portfolio may cause greater
fluctuation in the value of its shares than would be the case if the Fund or the
Portfolio did not borrow.
The Government Income Fund's, the Strategic Income Fund's and the Portfolio's
fundamental investment limitations permit it to borrow money for leveraging
purposes. The Government Income Fund, however, currently is prohibited, pursuant
to a non-fundamental investment policy, from borrowing money in order to
purchase securities. Nevertheless, this policy may be changed in the future by a
vote of a majority of the Company's Board of Directors. The Strategic Income
Fund and Portfolio may borrow for leveraging purposes. In the event that the
Strategic Income Fund or the Portfolio employs leverage, it would be subject to
certain additional risks. Use of leverage creates an opportunity for greater
growth of capital but would exaggerate any increases or decreases in the Fund's
or the Portfolio's net asset value. When the income and gains on securities
purchased with the proceeds of borrowings exceed the costs of such borrowings,
the Government Income Fund's, the Strategic Income Fund's or the Portfolio's
earnings or net asset value will increase faster than otherwise would be the
case; conversely, if such income and gains fail to exceed such costs, the Fund's
or the Portfolio's earnings or net asset value would decline faster than would
otherwise be the case.
The Government Income Fund, the Strategic Income Fund and the Portfolio may
enter into reverse repurchase agreements. A reverse repurchase agreement is a
borrowing transaction in which a Fund or the Portfolio transfers possession of a
security to another party, such as a bank or broker/dealer, in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. The Government Income Fund, the Strategic
Income Fund and the Portfolio also may engage in "roll" borrowing transactions
which involve a Fund's or the Portfolio's sale of Government National Mortgage
Association certificates or other securities together with a commitment (for
which a Fund or the Portfolio may receive a fee) to purchase similar, but not
identical, securities at a future date. The Government Income Fund, the
Strategic Income Fund and the Portfolio will maintain, in a segregated account
with a custodian, cash 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
The Government Income Fund, the Strategic Income Fund and the Portfolio are
authorized to make short sales of securities, although they have no current
intention of doing so. A short sale is a transaction in which a Fund or the
Portfolio sells a security in anticipation that the market price of that
security will decline. The Government Income Fund, the Strategic Income Fund and
the Portfolio may make short sales as a form of hedging to offset potential
declines in long
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positions in securities it owns, or anticipates acquiring, and in order to
maintain portfolio flexibility. The Government Income Fund, the Strategic Income
Fund and the Portfolio only may make short sales "against the box." In this type
of short sale, at the time of the sale, the Fund or the Portfolio owns the
security it has sold short or has the immediate and unconditional right to
acquire the identical security at no additional cost.
In a short sale, the seller does not immediately deliver the securities sold and
does not receive the proceeds from the sale. To make delivery to the purchaser,
the executing broker borrows the securities being sold short on behalf of the
seller. The seller is said to have a short position in the securities sold until
it delivers the securities sold, at which time it receives the proceeds of the
sale. To secure its obligation to deliver securities sold short, the Government
Income Fund, the Strategic Income Fund or the Portfolio will deposit in a
separate account with its custodian an equal amount of the securities sold short
or securities convertible into or exchangeable for such securities at no cost.
The Government Income Fund, the Strategic Income Fund or the Portfolio could
close out a short position by purchasing and delivering an equal amount of the
securities sold short, rather than by delivering securities already held by the
Fund or the Portfolio, because the Fund or the Portfolio might want to continue
to receive interest and dividend payments on securities in its portfolio that
are convertible into the securities sold short.
The Government Income Fund, the Strategic Income Fund and the Portfolio might
make a short sale "against the box" in order to hedge against market risks when
the Manager believes that the price of a security may decline, causing a decline
in the value of a security owned by the Government Income Fund, the Strategic
Income Fund or the Portfolio or a security convertible into or exchangeable for
such security, or when the Manager wants to sell the security the Fund or the
Portfolio owns at a current attractive price, but also wishes to defer
recognition of gain or loss for federal income tax purposes and for purposes of
satisfying certain tests applicable to regulated investment companies under the
Internal Revenue Code of 1986, as amended (the "Code"). In such case, any future
losses in the Government Income Fund's, the Strategic Income Fund's Fund or the
Portfolio's long position should be reduced by a gain in the short position.
Conversely, any gain in the long position should be reduced by a loss in the
short position. The extent to which such gains or losses in the long position
are reduced will depend upon the amount of the securities sold short relative to
the amount of the securities the Fund or the Portfolio owns, either directly or
indirectly, and, in the case where a Fund or the Portfolio owns convertible
securities, changes in the investment values or conversion premiums of such
securities. There will be certain additional transaction costs associated with
short sales "against the box," but a Fund or the Portfolio will endeavor to
offset these costs with income from the investment of the cash proceeds of short
sales.
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GT GLOBAL INCOME FUNDS
OPTIONS, FUTURES AND CURRENCY
STRATEGIES
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SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon 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 Fund or the Portfolio
entered into a short hedge because the Manager projected a decline in the
price of a security in the Fund's or the Portfolio's portfolio, and the
price of that security increased instead, the gain from that increase might
by wholly or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined by
more than the increase in the price of the security, the Fund or the
Portfolio could suffer a loss. In either such case, the Fund or the
Portfolio would have been in a better position had it not hedged at all.
(4) As described below, a Fund or the Portfolio might be required to
maintain assets as "cover," maintain segregated accounts or make margin
payments when it takes positions in instruments involving obligations to
third parties (I.E., instruments other than purchased options). If a Fund or
the Portfolio were unable to close out its positions in such instruments, it
might be required to continue to maintain such assets or accounts or make
such payments until the position expired or matured. The requirements might
impair the Fund's ability or the Portfolio's ability to sell a portfolio
security or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund or the Portfolio sell a
portfolio security at a disadvantageous time. The Fund's or the Portfolio's
ability to close out a position in an instrument prior to expiration or
maturity depends on the existence of a liquid secondary market or, in the
absence of such a market, the ability and willingness of the other party to
the transaction ("contra party") to enter into a transaction closing out the
position. Therefore, there is no assurance that any position can be closed
out at a time and price that is favorable to the Fund or the Portfolio.
WRITING CALL OPTIONS
The Government Income Fund, the Strategic Income Fund and the Portfolio may
write (sell) call options on securities, indices and currencies. Call options
generally will be written on securities and currencies that, in the opinion of
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
Government Income Fund, the Strategic Income Fund and the Portfolio.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
Style) or on (European Style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
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GT GLOBAL INCOME FUNDS
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with a
Fund's or the Portfolio's investment objectives. When writing a call option, the
Government Income Fund, the Strategic Income Fund or the Portfolio, in return
for the premium, gives up the opportunity for profit from a price increase in
the underlying security or currency above the exercise price, and retains the
risk of loss should the price of the security or currency decline. Unlike one
who owns securities or currencies not subject to an option, a Fund or the
Portfolio has no control over when it may be required to sell the underlying
securities or currencies, since most options may be exercised at any time prior
to the option's expiration. If a call option that a Fund or the Portfolio has
written expires, the Fund or the Portfolio will realize a gain in the amount of
the premium; however, such gain may be offset by a decline in the market value
of the underlying security or currency during the option period. If the call
option is exercised, the Fund or the Portfolio will realize a gain or loss from
the sale of the underlying security or currency, which will be increased or
offset by the premium received. The Government Income Fund, the Strategic Income
Fund and the Portfolio do not consider a security or currency covered by a call
option to be "pledged" as that term is used in the Government Income Fund's, the
Strategic Income Fund's and the Portfolio's fundamental investment policy that
limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund or the Portfolio will
be obligated to sell the security or currency at less than its market value.
The premium that the Government Income Fund, the Strategic Income Fund or the
Portfolio receives for writing a call option is deemed to constitute the market
value of an option. The premium a Fund or the Portfolio will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, 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 the Government Income
Fund, the Strategic Income Fund or the Portfolio to write another call option on
the underlying security or currency with either a different exercise price,
expiration date or both.
The Government Income Fund, the Strategic Income Fund and the Portfolio will pay
transaction costs in connection with the writing of options and in entering into
closing purchase contracts. Transaction costs relating to options activity
normally are higher than those applicable to purchases and sales of portfolio
securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, a Fund or the Portfolio may purchase an
underlying security or currency for delivery in accordance with the exercise of
an option, rather than delivering such security or currency from its portfolio.
In such cases, additional costs will be incurred.
A Fund or the Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more, respectively, than
the premium received from writing the option. Because increases in the market
price of a call option generally will reflect increases in the market price of
the underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by a Fund or the Portfolio.
WRITING PUT OPTIONS
The Government Income Fund, the Strategic Income Fund and the Portfolio may
write put options on securities, indices and currencies. A put option gives the
purchaser of the option the right to sell, and the writer (seller) the
obligation to buy, the underlying security or currency at the exercise price at
anytime until (American Style) or on (European Style) the expiration date. The
operation of put options in other respects, including their related risks and
rewards, is substantially identical to that of call options.
A Fund or the Portfolio generally would write put options in circumstances where
the Manager wishes to purchase the underlying security or currency for the
Fund's or the Portfolio's portfolio at a price lower than the current market
price of the security or currency. In such event, the Fund or the Portfolio
would write a put option at an exercise price that, reduced by the premium
received on the option, reflects the lower price it is willing to pay. Since the
Fund or the Portfolio also would receive interest on debt securities or
currencies maintained to cover the exercise price of the option, this technique
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GT GLOBAL INCOME FUNDS
could be used to enhance current return during periods of market uncertainty.
The risk in such a transaction would be that the market price of the underlying
security or currency would decline below the exercise price less the premium
received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Fund or the Portfolio
will be obligated to purchase the security or currency at greater than its
market value.
PURCHASING PUT OPTIONS
The Government Income Fund, the Strategic Income Fund and the Portfolio may
purchase put options on securities, indices and currencies. As the holder of a
put option, the Government Income Fund, the Strategic Income Fund or the
Portfolio would have the right to sell the underlying security or currency at
the exercise price at any time until (American Style or on (European Style) the
expiration date. The Government Income Fund, the Strategic Income Fund or the
Portfolio may enter into closing sale transactions with respect to such options,
exercise them or permit them to expire.
A Fund or the Portfolio may purchase a put option on an underlying security or
currency ("protective put") owned by the Fund or the Portfolio as a hedging
technique in order to protect against an anticipated decline in the value of the
security or currency. Such hedge protection is provided only during the life of
the put option when the Fund or the Portfolio, as the holder of the put option,
is able to sell the underlying security or currency at the put exercise price
regardless of any decline in the underlying security's market price or
currency's exchange value. For example, a put option may be purchased in order
to protect unrealized appreciation of a security or currency when 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 eventually is sold.
The Government Income Fund, the Strategic Income Fund and the Portfolio also may
purchase put options at a time when that Fund or the Portfolio does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, a Fund or the Portfolio seeks to benefit from a
decline in the market price of the underlying security or currency. If the put
option is not sold when it has remaining value, and if the market price of the
underlying security or currency remains equal to or greater than the exercise
price during the life of the put option, the Fund or the Portfolio will lose its
entire investment in the put option. In order for the purchase of a put option
to be profitable, the market price of the underlying security or currency must
decline sufficiently below the exercise price to cover the premium and
transaction costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
The Government Income Fund, the Strategic Income Fund or the Portfolio may
purchase call options on securities, indices and currencies. As the holder of a
call option, a Fund or the Portfolio would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American Style) or on (European Style) the expiration date. A Fund or the
Portfolio may enter into closing sale transactions with respect to such options,
exercise them or permit them to expire.
Call options may be purchased by a Fund or the Portfolio for the purpose of
acquiring the underlying security or currency for its portfolio. Utilized in
this fashion, the purchase of call options would enable the Fund or the
Portfolio to acquire the security or currency at the exercise price of the call
option plus the premium paid. At times, the net cost of acquiring the security
or currency in this manner may be less than the cost of acquiring the security
or currency directly. This technique also may be useful to a Fund or the
Portfolio in purchasing a large block of securities that would be more difficult
to acquire by direct market purchases. So long as it holds such a call option,
rather than the underlying security or currency itself, a Fund or the Portfolio
is partially protected from any unexpected decline in the market price of the
underlying security or currency and, in such event, could allow the call option
to expire, incurring a loss only to the extent of the premium paid for the
option.
The Government Income Fund, the Strategic Income Fund and the Portfolio also may
purchase call options on underlying securities or currencies it owns in order to
protect unrealized gains on call options previously written by it. A call option
could be purchased for this purpose where tax considerations make it inadvisable
to realize such gains through a closing purchase transaction. Call options also
may be purchased at times to avoid realizing losses that would result in a
reduction of a Fund's or the Portfolio's current return. For example, where a
Fund or the Portfolio has written a call option on an underlying security or
currency having a current market value below the price at which such security or
currency was purchased by the Fund or the Portfolio, an increase in the market
price could result in the exercise of the call option written by the Fund or the
Portfolio and the realization of a loss on the underlying security or currency.
Accordingly, the
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GT GLOBAL INCOME FUNDS
Fund or the Portfolio could purchase a call option on the same underlying
security or currency, which could be exercised to fulfill the Fund's or the
Portfolio's delivery obligations under its written call (if it is exercised).
This strategy could allow the Fund or the Portfolio to avoid selling the
portfolio security or currency at a time when it has an unrealized loss;
however, the Fund or the Portfolio would have to pay a premium to purchase the
call option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of a Fund's
or the Portfolio's total assets at the time of purchase.
The Government Income Fund, the Strategic Income Fund or the Portfolio may
attempt to accomplish objectives similar to those involved in using Forward
Contracts by purchasing put or call options on currencies. A put option gives a
Fund or the Portfolio as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
Style) or on (European Style) the expiration of the option. A call option gives
a Fund or the Portfolio as purchaser the right (but not the obligation) to
purchase a specified amount of currency at the exercise price at any time until
(American Style) or on (European Style) the expiration of the option. A Fund or
the Portfolio might purchase a currency put option, for example, to protect
itself against a decline in the dollar value of a currency in which it holds or
anticipates holding securities. If the currency's value should decline against
the dollar, the loss in currency value should be offset, in whole or in part, by
an increase in the value of the put. If the value of the currency instead should
rise against the dollar, any gain to the Fund or the Portfolio would be reduced
by the premium it had paid for the put option. A currency call option might be
purchased, for example, in anticipation of, or to protect against, a rise in the
value against the dollar of a currency in which the Fund or the Portfolio
anticipates purchasing securities.
Options may be either listed on an exchange or traded 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. The Funds and the Portfolio will not purchase an OTC option unless the
Fund or the Portfolio believes that daily valuations for such options are
readily obtainable. OTC options differ from exchange-traded options in that OTC
options are transacted with dealers directly and not through a clearing
corporation (which guarantees performance). Consequently, there is a risk of
non-performance by the dealer. Since no exchange is involved, OTC options are
valued on the basis of the average of the last bid prices obtained from dealers,
unless a quotation from only one dealer is available, in which case only that
dealer's price will be used. In the case of OTC options, there can be no
assurance that a liquid secondary market will exist for any particular option at
any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. A Fund or the Portfolio may also sell OTC
options and, in connection therewith, segregate assets or cover its obligations
with respect to OTC options written by the Fund or the Porfolio. The assets used
as cover for OTC options written by a Fund or the Portfolio will be considered
illiquid unless the OTC options are sold to qualified dealers who agree that the
Fund or the Portfolio may repurchase any OTC option it writes at a maximum price
to be calculated by a formula set forth in the option agreement. The cover for
an OTC option written subject to this procedure would be considered illiquid
only to the extent that the maximum repurchase price under the formula exceeds
the intrinsic value of the option.
A Fund's or the Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. Each Fund
and the Portfolio intends to purchase or write only those exchange-traded
options for which there appears to be a liquid secondary market. However, there
can be no assurance that such a market will exist at any particular time.
Closing transactions can be made for OTC options only by negotiating directly
with the contra party or by a transaction in the secondary market if any such
market exists. Although each Fund and the Portfolio will enter into OTC options
only with contra parties that are expected to be capable of entering into
closing transactions with the Fund or the Portfolio, there is no assurance that
the Fund or the Portfolio will in fact be able to close out an OTC option
position at a favorable price prior to expiration. In the extent of insolvency
of the contra party, the Fund or the Portfolio might be unable to close out an
OTC option position at any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Fund or the Portfolio
writes a call on an index, it receives a premium and agrees that, prior to the
expiration date, the purchaser of the call, upon exercise of the call, will
receive from the Fund or the Portfolio an amount of cash if the closing level of
the index upon which the call is based is greater than the exercise price of the
call. The amount of cash is equal to the difference between the closing price of
the index and the exercise price of the call times a specified multiple (the
"multiplier"), which determines the total dollar value for each point of such
difference. When a Fund or the Portfolio buys
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GT GLOBAL INCOME FUNDS
a call on an index, it pays a premium and has the same rights as to such call as
are indicated above. When a Fund or the Portfolio buys a put on an index, it
pays a premium and has the right, prior to the expiration date, to require the
seller of the put, upon the Fund's or the Portfolio's exercise of the put, to
deliver to the Fund or the Portfolio an amount of cash if the closing level of
the index upon which the put is based is less than the exercise price of the
put, which amount of cash is determined by the multiplier, as described above
for calls. When a Fund or the Portfolio writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund or the Portfolio to deliver to it an amount of cash equal to
the difference between the closing level of the index and the exercise price
times the multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund or the
Portfolio writes a call on an index it cannot provide in advance for its
potential settlement obligations by acquiring and holding the underlying
securities. A Fund or the Portfolio can offset some of the risk of writing a
call index option position by holding a diversified portfolio of securities
similar to those on which the underlying index is based. However, a Fund or the
Portfolio cannot, as a practical matter, acquire and hold a portfolio containing
exactly the same securities as underlie the index and, as a result, bears a risk
that the value of the securities held will vary from the value of the index.
Even if a Fund or the Portfolio could assemble a securities portfolio that
exactly reproduced the composition of the underlying index, it still would not
be fully covered from a risk standpoint because of the "timing risk" inherent in
writing index options. When an index option is exercised, the amount of cash
that the holder is entitled to receive is determined by the difference between
the exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Fund or the Portfolio, as the
call writer, will not know that it has been assigned until the next business day
at the earliest. The time lag between exercise and notice of assignment poses no
risk for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Fund or the Portfolio has purchased an index option and exercises it before
the closing index value for that day is available, it runs the risk that the
level of the underlying index may subsequently change. If such a change causes
the exercised option to fall out-of-the-money, the Fund or the Portfolio will be
required to pay the difference between the closing index value and the exercise
price of the option (times the applicable multiplier) to the assigned writer.
INTEREST RATE AND CURRENCY FUTURES CONTRACTS
The Government Income Fund, the Strategic Income Fund or the Portfolio may enter
into interest rate or currency futures contracts, including futures contracts on
indices of debt securities, ("Futures" or "Futures Contracts"), as a hedge
against changes in prevailing levels of interest rates or currency exchange
rates in order to establish more definitely the effective return on securities
or currencies held or intended to be acquired by the Fund or the Portfolio. The
Government Income Fund, the Strategic Income Fund's or the Portfolio's hedging
may include sales of Futures as an offset against the effect of expected
increases in interest rates or decreases in currency exchange rates, and
purchases of Futures as an offset against the effect of expected declines in
interest rates or increases in currency exchange rates.
The Government Income Fund's, the Strategic Income Fund and the Portfolio only
will enter into Futures Contracts that are traded on futures exchanges and are
standardized as to maturity date and underlying financial instrument. Futures
exchanges and trading thereon in the United States are regulated under the
Commodity Exchange Act by the Commodity Futures Trading Commission ("CFTC").
Futures are exchanged in London at the London International Financial Futures
Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce a Fund's or the Portfolio's exposure to interest rate and
currency exchange rate fluctuations, a Fund or the Portfolio may be able to
hedge exposure more effectively and at a lower cost through using Futures
Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (debt
security or currency) for a specified price at a designated date, time and
place. An index
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GT GLOBAL INCOME FUNDS
Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Government Income Fund, the
Strategic Income Fund or the Portfolio realizes a gain; if it is more, the
Government Income Fund, the Strategic Income Fund or the Portfolio realizes a
loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Government Income Fund, the Strategic Income Fund or the
Portfolio realizes a gain; if it is less, the Government Income Fund, the
Strategic Income Fund or the Portfolio realizes a loss. The transaction costs
also must be included in these calculations. There can be no assurance, however,
that a Fund or the Portfolio will be able to enter into an offsetting
transaction with respect to a particular Futures Contract at a particular time.
If a Fund or the Portfolio is not able to enter into an offsetting transaction,
the Fund or the Portfolio will continue to be required to maintain the margin
deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Government
Income Fund, the Strategic Income Fund or the Portfolio.
The Government Income Fund, the Strategic Income Fund's and the Portfolio's
Futures transactions will be entered into for hedging purposes; that is, Futures
Contracts will be sold to protect against a decline in the price of securities
or currencies that the Fund or the Portfolio owns, or Futures Contracts will be
purchased to protect the Fund or the Portfolio against an increase in the price
of securities or currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Government Income Fund, the Strategic Income Fund or the
Portfolio in order to initiate Futures trading and to maintain the Fund's or the
Portfolio's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure a
Fund's or the Portfolio's performance under the Futures Contract. The margin
required for a particular Futures Contract is set by the exchange on which the
Futures Contract is traded, and may be modified significantly from time to time
by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund or the Portfolio entered into the
Futures Contract will be made on a daily basis as the price of the underlying
security, currency or index fluctuates making the Futures Contract more or less
valuable, a process known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest and currency rates, which in turn are affected by fiscal and
monetary policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in a Fund's or the
Portfolio's portfolio being hedged. The degree of imperfection of correlation
depends upon circumstances such as: variations in speculative market demand for
Futures and for securities or currencies, including technical influences in
Futures trading; and differences between the financial instruments being hedged
and the instruments underlying the standard Futures Contracts available for
trading. A decision of whether, when, and how to hedge involves skill and
judgment, and even a well-conceived hedge may be unsuccessful to some degree
because of unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
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150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and option on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Fund or the Portfolio were unable to liquidate a Futures or option on
Futures position due to the absence of a liquid secondary market or the
imposition of price limits, it could incur substantial losses. The Fund or the
Portfolio would continue to be subject to market risk with respect to the
position. In addition, except in the case of purchased options, the Fund or the
Portfolio would continue to be required to make daily variation margin payments
and might be required to maintain the position being hedged by the Future or
option or to maintain cash or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Fund or the Portfolio writes an option on a Futures Contract, it will be
required to deposit initial and variation margin pursuant to requirements
similar to those applicable to Futures Contracts. Premiums received from the
writing of an option on a Futures Contract are included in the initial margin
deposit.
A Fund or the Portfolio may seek to close out an option position by selling an
option covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Fund or the Portfolio enters into Futures Contracts,
options on Futures Contracts and options on foreign currencies traded on a
CFTC-regulated exchange, in each case other than for BONA FIDE hedging purposes
(as defined by the CFTC), the aggregate initial margin and premiums required to
establish those positions (excluding the amount by which options are
"in-the-money") will not exceed 5% of the liquidation value of a Fund's or the
Portfolio's
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GT GLOBAL INCOME FUNDS
portfolio, after taking into account unrealized profits and unrealized losses on
any contracts the Fund or the Portfolio has entered into. In general, a call
option on a Futures Contract is "in-the-money" if the value of the underlying
Futures Contract exceeds the strike, I.E., exercise, price of the call; a put
option on a Futures Contract is "in-the-money" if the value of the underlying
Futures Contract is exceeded by the strike price of the put. This guideline may
be modified by the Company's Board of Directors or the Portfolio's Board of
Trustees, as applicable, without a shareholder vote. This limitation does not
limit the percentage of a Fund's or the Portfolio's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, generally arranged with a commercial bank
or other currency dealer, to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. The
Government Income Fund, the Strategic Income Fund and the Portfolio either may
accept or make delivery of the currency at the maturity of the Forward Contract.
A Fund or the Portfolio may also, if its contra party agrees, prior to maturity,
enter into a closing transaction involving the purchase or sale of an offsetting
contract.
A Fund or the Portfolio engages in forward currency transactions in anticipation
of, or to protect itself against, fluctuations in exchange rates. A Fund or the
Portfolio might sell a particular foreign currency forward, for example, when it
holds bonds denominated in a foreign currency but anticipates, and seeks to be
protected against, a decline in the currency against the U.S. dollar. Similarly,
a Fund or the Portfolio might sell the U.S. dollar forward when it holds bonds
denominated in U.S. dollars but anticipates, and seeks to be protected against,
a decline in the U.S. dollar relative to other currencies. Further, the Funds or
the Portfolio might purchase a currency forward to "lock in" the price of
securities denominated in that currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Government Income Fund, the Strategic Income Fund or
the Portfolio will enter into such Forward Contracts with major U.S. or foreign
banks and securities or currency dealers in accordance with guidelines approved
by the Company's Board of Directors or the Portfolio's Board of Trustees, as
applicable.
The Government Income Fund, the Strategic Income Fund or the Portfolio may enter
into Forward Contracts either with respect to specific transactions or with
respect to the overall investment of the Fund or the Portfolio. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund or the
Portfolio to purchase additional foreign currency on the spot (I.E., cash)
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Fund or the Portfolio
is obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency. Conversely, it may be necessary to sell on the
spot market some of the foreign currency the Fund or the Portfolio is obligated
to deliver. The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Forward Contracts involve the risk that anticipated currency
movements will not be predicted accurately, causing the Fund or the Portfolio to
sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund or the
Portfolio to sell a currency, the Fund or the Portfolio either may sell a
portfolio security and use the sale proceeds to make delivery of the currency or
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract pursuant to which the Fund or the
Portfolio will obtain, on the same maturity date, the same amount of the
currency that it is obligated to deliver. Similarly, the Fund or the Portfolio
may close out a Forward Contract requiring it to purchase a specified currency
by, if its contra party agrees, entering into a second contract entitling it to
sell the same amount of the same currency on the maturity date of the first
contract. The Fund or the Portfolio would realize a gain or loss as a result of
entering into such an offsetting Forward Contract under either circumstance to
the extent the exchange rate or rates between the currencies involved moved
between the execution dates of the first contract and the offsetting contract.
The cost to a Fund or the Portfolio of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because Forward Contracts usually are
entered into on a principal basis, no fees or commissions are involved. The use
of Forward Contracts does not eliminate fluctuations in the prices of the
underlying securities the Fund or the Portfolio owns or intends to acquire, but
it does establish a rate of exchange in advance. In addition, while Forward
Contracts limit the risk of loss due to a decline in the value of the hedged
currencies, they also limit any potential gain that might result should the
value of the currencies increase.
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GT GLOBAL INCOME FUNDS
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Fund or the Portfolio may use options on foreign currencies, Futures on
foreign currencies, options on Futures on foreign currencies and Forward
Contracts to hedge against movements in the values of the foreign currencies in
which the Fund's or the Portfolio's securities are denominated. Such currency
hedges can protect against price movements in a security that a Fund or the
Portfolio owns or intends to acquire that are attributable to changes in the
value of the currency in which it is denominated. Such hedges do not, however,
protect against price movements in the securities that are attributable to other
causes.
A Fund or the Portfolio might seek to hedge against changes in the value of a
particular currency when no Futures Contract, Forward Contract or option
involving that currency is available or one of such contracts is more expensive
than certain other contracts. In such cases, the Fund or the Portfolio may hedge
against price movements in that currency by entering into a contract on another
currency or basket of currencies, the values of which the Manager believes will
have a positive correlation to the value of the currency being hedged. The risk
that movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Fund or the Portfolio could be disadvantaged by dealing in the odd
lot market (generally consisting of transactions of less than $1 million) for
the underlying foreign currencies at prices that are less favorable than for
round lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, a Fund or the Portfolio might be required to accept
or make delivery of the underlying foreign currency in accordance with any U.S.
or foreign regulations regarding the maintenance of foreign banking arrangements
by U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that a Fund or the Portfolio has purchased) expose the Fund or the
Portfolio to an obligation to another party. A Fund or the Portfolio will not
enter into any such transactions unless it owns either (1) an offsetting
("covered") position in securities, currencies, or other options, Forward
Contracts or Futures Contracts, or (2) cash, receivables and short-term debt
securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. Each Fund and the Portfolio
will comply with SEC guidelines regarding cover for these instruments and, if
the guidelines so require, set aside cash 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 Fund's or the Portfolio's assets are used for cover or segregated accounts,
it could affect portfolio management or the Fund's or the Portfolio's ability to
meet redemption requests or other current obligations.
INTEREST RATE AND CURRENCY SWAPS
The Strategic Income Fund and the Portfolio usually will enter into interest
rate swaps on a net basis, that is, the two payment streams are netted out in a
cash settlement on the payment date or dates specified in the instrument, with
the Strategic Income Fund or the Portfolio receiving or paying, as the case may
be, only the net amount of the two payments. The net amount of the excess, if
any, of each of the Strategic Income Fund's and the Portfolio's obligations over
its entitlements with respect to each swap will be accrued on a daily basis and
an amount of cash or liquid securities having an aggregate net asset value at
least equal to the accrued excess will be maintained in an account by a
custodian that satisfies the requirements of the 1940 Act. The Strategic Income
Fund and the Portfolio will also establish and maintain such segregated accounts
with respect to its total obligations under any swaps that are not entered into
on a net basis and with respect to any caps or floors that are written by that
Fund or the Portfolio. The Manager, the Strategic Income Fund and
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GT GLOBAL INCOME FUNDS
the Portfolio believe that swaps, caps and floors do not constitute senior
securities under the 1940 Act and, accordingly, will not treat them as being
subject to the Fund's and the Portfolio's borrowing restrictions. The Strategic
Income Fund and the Portfolio will not enter into any swap, cap, floor, collar
or other derivative transaction unless, at the time of entering into the
transaction, the unsecured long-term debt rating of the counterparty combined
with any credit enhancements is rated at least A by Moody's Investors Service,
Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P"), or has an
equivalent rating from a nationally recognized statistical rating organization
or is determined to be of equivalent credit quality by the Manager. If a
counterparty defaults, the Strategic Income Fund or the Portfolio may have
contractual remedies pursuant to the agreements related to the transactions. The
swap market has grown substantially in recent years, with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swap market has
become relatively liquid. Caps, floors and collars are more recent innovations
for which standardized documentation has not yet been fully developed and, for
that reason, they are less liquid than swaps.
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RISK FACTORS
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ILLIQUID SECURITIES
The Government Income Fund may invest up to 10% of its total assets in
securities the disposition of which may be subject to legal or contractual
restrictions or the markets for which may be illiquid. The Strategic Income Fund
and the Portfolio each may invest up to 15% of net assets in illiquid
securities. Securities may be considered illiquid if a Fund or the Portfolio
cannot reasonably expect within seven days to receive approximately the amount
at which the Fund or the Portfolio values such securities. The sale of illiquid
securities, if they can be sold at all, generally will require more time and
result in higher brokerage charges or dealer discounts and other selling
expenses than will the sale of liquid securities, such as securities eligible
for trading on U.S. securities exchanges or in the over-the-counter markets.
Moreover, restricted securities, which may be illiquid for purposes of this
limitation often sell, if at all, at a price lower than similar securities that
are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, each Fund and the Portfolio may be obligated to pay
all or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time a Fund or the Portfolio
may be permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, a Fund or
the Portfolio might obtain a less favorable price than prevailed when it decided
to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Fund or the Portfolio, however, could affect adversely the marketability of
such portfolio securities and a Fund or the Portfolio might be unable to dispose
of such securities promptly or at favorable prices.
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GT GLOBAL INCOME FUNDS
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities eligible for resale to qualified
institutional buyers pursuant to Rule 144A under the 1933 Act, are liquid or
illiquid. The Board has delegated the function of making day-to-day
determinations of liquidity to the Manager in accordance with procedures
approved by the Board. The Manager takes into account a number of factors in
reaching liquidity decisions, including: (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
will monitor the liquidity of securities held by each Fund and the Portfolio and
report periodically on such decisions to the Company's Board of Directors.
Moreover, as noted in the Prospectus, certain securities, such as those subject
to repatriation restrictions of more than seven days, will generally be treated
as illiquid.
FOREIGN 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, either a Fund or the Portfolio could lose its
entire investment in any such country.
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which a
Fund or the Portfolio may invest may have groups that advocate radical religious
or revolutionary philosophies or support ethnic independence. Any disturbance on
the part of such individuals could carry the potential for widespread
destruction or confiscation of property owned by individuals and entities
foreign to such country and could cause the loss of a Fund's or the Portfolio's
investment in those countries. Instability may also result from, among other
things: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which a Fund or the
Portfolio invests and adversely affect the value of the Fund's or the
Portfolio's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Government Income Fund,
the Strategic Income Fund or the Portfolio. These restrictions or controls may
at times limit or preclude investment in certain securities and may increase the
cost and expenses of a Fund or the Portfolio. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. The
Government Income Fund, the Strategic Income Fund or the Portfolio could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Government
Income Fund, the Strategic Income Fund or the Portfolio will not be registered
with the SEC or regulators of any foreign country, nor will the issuers thereof
be subject to the SEC's reporting requirements. Thus, there will be less
available information concerning most foreign issuers of securities held by the
Government Income Fund, the Strategic Income Fund and the Portfolio than is
available concerning U.S. issuers. In instances where the financial statements
of an issuer are not deemed to reflect accurately the financial situation of the
issuer, 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
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GT GLOBAL INCOME FUNDS
addition, where public information is available, it may be less reliable than
such information regarding U.S. issuers. Issuers of securities in foreign
jurisdictions are generally not subject to the same degree of regulation as are
U.S. issuers with respect to such matters as restrictions on market
manipulation, insider trading rules, shareholder proxy requirements and timely
disclosure of information.
CURRENCY FLUCTUATIONS. Because the Funds and the Portfolio, under normal
circumstances, will invest substantial portions of their total assets in the
securities of foreign issuers which are denominated in foreign currencies, the
strength or weakness of the U.S. dollar against such foreign currencies will
account for part of each Fund's and the Portfolio's investment performance. A
decline in the value of any particular currency against the U.S. dollar will
cause a decline in the U.S. dollar value of each Fund's and the Portfolio's
holdings of securities and cash denominated in such currency and, therefore,
will cause an overall decline in their respective net asset values and any net
investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Funds. Moreover, if the value
of the foreign currencies in which a Fund or the Portfolio receives its income
declines relative to the U.S. dollar between the receipt of the income and the
making of Fund distributions, the Fund or the Portfolio may be required to
liquidate securities in order to make distributions if the Fund or the Portfolio
has insufficient cash in U.S. dollars to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates, and pace of business activity in the other countries, and the
United States, and other economic and financial conditions affecting the world
economy.
Although the Funds and the Portfolio value their assets daily in terms of U.S.
dollars, they do not intend to convert holdings of foreign currencies into U.S.
dollars on a daily basis. The Funds and the 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 are buying and selling various currencies. Thus, a dealer may offer to sell
a foreign currency to a Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the U.S., and
foreign securities transactions usually are subject to fixed commissions, which
generally are higher than negotiated commissions on U.S. transactions. In
addition, foreign securities transactions may be subject to difficulties
associated with the settlement of such transactions. Delays in settlement could
result in temporary periods when assets of a Fund or the Portfolio are
uninvested and no return is earned thereon. The inability of a Fund or the
Portfolio to make intended security purchases due to settlement problems could
cause it to miss attractive opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to a Fund or
the Portfolio due to subsequent declines in value of the portfolio security or,
if the Fund or the Portfolio has entered into a contract to sell the security,
could result in possible liability to the purchaser. The Manager will consider
such difficulties when determining the allocation of each Fund's or the
Portfolio's assets, although the Manager does not believe that such difficulties
will have a material adverse effect on the Funds' or the Portfolio's portfolio
trading activities.
The Funds and the Portfolio may use foreign custodians, which may involve risks
in addition to those related to the use of U.S. custodians. Such risks include
uncertainties relating to: (i) determining and monitoring the financial
strength, reputation and standing of the foreign custodian; (ii) maintaining
appropriate safeguards to protect the Funds' and the Portfolio's investments and
(iii) possible difficulties in obtaining and enforcing judgments against such
custodians.
WITHHOLDING TAXES. Each Fund's and the Portfolio's net investment income
from foreign issuers may be subject to withholding taxes by the foreign issuer's
country, thereby reducing the Fund's and the Portfolio's net investment income
or delaying the receipt of income where those taxes may be recaptured. See
"Taxes."
CONCENTRATION. To the extent a Fund 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
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GT GLOBAL INCOME FUNDS
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 Fund.
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
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 Funds 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 Fund
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
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GT GLOBAL INCOME FUNDS
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. The Strategic Income Fund
and the Portfolio may invest in debt securities in emerging markets. Investing
in securities in emerging countries may entail greater risks than investing in
debt securities in developed countries. These risks include (i) less social,
political and economic stability; (ii) the small current size of the markets for
such securities and the currently low or nonexistent volume of trading, which
result in a lack of liquidity and in greater price volatility; (iii) certain
national policies which may restrict the Strategic Income Fund's and the
Portfolio's investment opportunities, including restrictions on investment in
issuers or industries deemed sensitive to national interests; (iv) foreign
taxation; and (v) the absence of developed structures governing private or
foreign investment or allowing for judicial redress for injury to private
property.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
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 economies and securities
markets of certain emerging market countries.
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GT GLOBAL INCOME FUNDS
INVESTMENT LIMITATIONS
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Each Fund and the Portfolio has adopted the following investment limitations as
fundamental policies which may not be changed without approval by the holders of
the lesser of (i) 67% of that Fund's shares or the total beneficial interests of
the Portfolio represented at a meeting at which more than 50% of the outstanding
shares of the Fund or the total beneficial interests of the Portfolio are
represented, or (ii) more than 50% of the outstanding shares of the Fund or the
total beneficial interests of the Portfolio. Whenever the High Income Fund is
requested to vote on a change in the investment limitations of the Portfolio,
the Fund will hold a meeting of its shareholders and will cast its votes as
instructed by its shareholders.
GOVERNMENT INCOME FUND
The Government Income Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts, and may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Prospectus and this Statement of Additional
Information and subject to (14) below;
(4) Acquire securities subject to restrictions on disposition or
securities for which there is no readily available market, or enter into
repurchase agreements or purchase time deposits maturing in more than seven
days, or purchase OTC options or hold assets set aside to cover OTC options
written by a Fund, if, immediately after and as a result, the value of such
securities would exceed, in the aggregate, 10% of the Fund's total assets;
(5) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act;
(6) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(7) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(8) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts subject to (14) below;
(9) Borrow money, except from banks for temporary or emergency purposes
not in excess of 30% of the value of the Fund's total assets. The Fund will
not purchase securities while such borrowings are outstanding. This
restriction shall not prevent the Fund from entering into reverse repurchase
agreements and engaging in "roll" transactions, provided that reverse
repurchase agreements, "roll" transactions and any other transactions
constituting borrowing by the Fund may not exceed one-third of the Fund's
total assets. In the event that the asset coverage for the Fund's borrowings
falls below 300%, the Fund will reduce, within three days (excluding Sundays
and holidays), the amount of its borrowings in order to provide for the 300%
asset coverage;
(10) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing;
(11) Invest in interests in oil, gas, or other mineral exploration or
development programs;
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GT GLOBAL INCOME FUNDS
(12) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation;
(13) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Fund's investment adviser, or
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer;
or
(14) Enter into a futures contract, if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract) would be committed to margin on such futures contracts.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff positions that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following investment policies of the Government Income Fund are not
fundamental policies and may be changed by vote of a majority of the Company's
Board of Directors without shareholder approval. The Fund may not: (1) borrow
money to purchase securities; and (2) invest in securities of an issuer if the
investment would cause the Fund to own more than 10% of any class of securities
of any one issuer.
STRATEGIC INCOME FUND
The Strategic Income Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives, policies and limitations as
the Fund) except that this limitation shall not apply to securities issued
or guaranteed as to principal and interest by the U.S. Government or any of
its agencies or instrumentalities;
(2) Invest in companies for the purpose of exercising control or
management (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives, policies and limitations as
the Fund);
(3) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts, and may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Prospectus and this Statement of Additional
Information and subject to (13) below;
(4) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act;
(5) Make loans, except that the Fund may invest in loans and
participations, purchase debt securities and enter into repurchase
agreements and make loans of portfolio securities;
(6) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(7) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts subject to (13) below;
(8) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). This restriction shall not prevent the Fund from
entering into reverse repurchase agreements and engaging in "roll"
transactions, provided that reverse repurchase agreements, "roll"
transactions and any other transactions constituting borrowing by the Fund
may not exceed one-third of the Fund's total assets. In the event that the
asset coverage for the Fund's borrowings falls below 300%, the Fund will
reduce, within three days (excluding Sundays and holidays), the amount of
its borrowings in order to provide for 300% asset coverage. Transactions
involving options, futures contracts, options on futures contracts and
forward currency contracts, and collateral arrangements relating thereto
will not be deemed to be borrowings;
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GT GLOBAL INCOME FUNDS
(9) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing;
(10) Invest in interests in oil, gas, or other mineral exploration or
development programs;
(11) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation (provided, however, that the Fund may invest all of
its investable assets in an open-end management investment company with
substantially the same investment objectives, policies, and limitations as
the Fund);
(12) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Fund's investment adviser, or
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer;
or
(13) Enter into a futures contract, if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract) would be committed to margin on such futures contracts.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff positions that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following investment policies of the Strategic Income Fund are not
fundamental policies and may be changed by vote of a majority of the Company's
Board of Directors without shareholder approval. The Fund may not:
(1) Invest more than 15% of its total assets in illiquid securities;
(2) Borrow money to purchase securities and will not invest in
securities of an issuer if the investment would cause the Fund to own more
than 10% of any class of securities of any one issuer (provided, however,
that the Fund may invest all of its investable assets in an open-end
management investment company with substantially the same investment
objectives, policies, and limitations as the Fund.); and
(3) Invest more than 10% of its total assets in shares of other
investment companies and invest more than 5% of its total assets in any one
investment company or acquire more than 3% of the outstanding voting
securities of any one investment company (provided, however, that the Fund
may invest all of its investable assets in an open-end management investment
company with substantially the same investment objectives, policies, and
limitations as the Fund).
HIGH INCOME FUND AND THE PORTFOLIO
The High Income Fund and the Portfolio each may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund) except that this
limitation shall not apply to securities issued or guaranteed as to
principal and interest by the U.S. Government or any of its agencies or
instrumentalities;
(2) Purchase or sell real estate, including real estate limited
partnerships, provided that the Fund and the Portfolio may invest in
securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell commodities or commodity contracts, except that the
Fund and the Portfolio may purchase and sell financial and currency futures
contracts and options thereon, and may purchase and sell currency forward
contracts, options on foreign currencies and may otherwise engage in
transactions in foreign currencies;
(4) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund and the
Portfolio may be deemed an underwriter under federal or state securities
laws;
(5) Make loans, except that the Fund and the Portfolio may invest in
loans and participations, purchase debt securities and enter into repurchase
agreements and make loans of portfolio securities;
(6) Purchase securities on margin, provided that the Fund and the
Portfolio may obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities; except that it may make
margin deposits in
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GT GLOBAL INCOME FUNDS
connection with the use of options, futures contracts, options thereon or
forward currency contracts. The Fund and the Portfolio may make deposits of
margin in connection with futures and forward contracts and options thereon;
(7) Borrow money in excess of 33 1/3% of the Fund's or the Portfolio's
total assets (including the amount borrowed), less all liabilities and
indebtedness (other than borrowing). This restriction shall not prevent the
Fund or the Portfolio from entering into reverse repurchase agreements and
engaging in "roll" transactions, provided that reverse repurchase
agreements, "roll" transactions and any other transactions constituting
borrowing by the Fund or the Portfolio may not exceed one-third of the
Fund's or the Portfolio's respective total assets. In the event that the
asset coverage for the Fund's or the Portfolio's borrowings falls below
300%, the Fund or the Portfolio will reduce, within three days (excluding
Sundays and holidays), the amount of its borrowings in order to provide for
300% asset coverage. Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(8) Mortgage, pledge, or in any other manner transfer as security for
any indebtedness any of its assets, except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of the Fund's or the
Portfolio's assets;
(9) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs, however, the Fund or the Portfolio may
invest in securities of companies that engage in these activities; or
(10) With respect to 50% of its total assets, invest more than 5% of its
assets in the securities of any one issuer or purchase more than 10% of the
outstanding voting securities of any one issuer (provided, however, that the
Fund may invest all of its investable assets in an open-end management
investment company with substantially the same investment objectives as the
Fund).
For purposes of the Fund's and the Portfolio's concentration policy contained in
limitation (1) above, they intend to comply with the SEC staff positions that
securities issued or guaranteed as to principal and interest by any single
foreign government or any supranational organizations in the aggregate are
considered to be securities of issuers in the same industry.
The following investment policies of the High Income Fund and the Portfolio are
not fundamental policies and may be changed by vote of a majority of the
Company's Board of Directors or the Portfolio's Board of Trustees without
shareholder approval. The Fund and the Portfolio each may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund or the Portfolio to own more than 10% of any class of securities of any
one issuer (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund);
(2) Invest in companies for the purpose of exercising control or
management (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund);
(3) Purchase or retain the securities of any issuer, if, to the Fund's
or the Portfolio's knowledge, one or more of the officers or Directors of
the Company, the Fund's or the Portfolio's investment adviser, or
distributor, each own beneficially more than 1/2 of 1% of the securities of
such issuer and together own beneficially more than 5% of the securities of
such issuer;
(4) Enter into a futures contract, an option on a futures contract or an
option on foreign currency traded on a CFTC-regulated exchange, in each case
other than for BONA FIDE hedging purposes (as defined by the CFTC), if the
aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's or the Portfolio's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts the Fund or the Portfolio has entered into;
(5) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation (provided, however, that the Fund may invest all of
its investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund); or
(6) Invest more than 10% of its total assets in shares of other
investment companies and invest more than 5% of its total assets in any one
investment company or acquire more than 3% of the outstanding voting
securities of any one investment company (provided, however, that the Fund
may invest all of its investable assets in an open-end management investment
company with substantially the same investment objectives as the Fund).
Statement of Additional Information Page 23
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GT GLOBAL INCOME FUNDS
Investors should refer to the Prospectus for further information with respect to
each Fund's investment objectives, which may not be changed without the approval
of shareholders and the Portfolio's investment objectives, which may be changed
without the approval of investors in the Portfolio, and other investment
policies and techniques, which may be changed without shareholder approval.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, the Manager
is responsible for the execution of the Government Income and Strategic Income
Funds' and the Portfolio's portfolio transactions and the selection of broker/
dealers that execute such transactions on behalf of these Funds and the
Portfolio. In executing portfolio transactions, the Manager seeks the best net
results for the Government Income and Strategic Income Funds and the Portfolio,
taking into account such factors as the price (including the applicable
brokerage commission or dealer spread), size of the order, difficulty of
execution and operational facilities of the firm involved. Although 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 the Funds and the Portfolio may engage in soft dollar
arrangements for research services, as described below, neither the Funds nor
the Portfolio has any obligation to deal with any broker/dealer or group of
broker/ dealers in the execution of portfolio transactions.
Debt securities generally are traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price of
the security usually includes a profit to the dealer. U.S. and foreign
government securities and money market instruments generally are traded in the
OTC markets. In underwritten offerings, securities usually are purchased at a
fixed price which includes an amount of compensation to the underwriter. On
occasion, securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Broker/dealers may receive commissions on
futures, currency and options transactions.
Consistent with the interests of the Funds and the Portfolio, the Manager may
select brokers to execute the Funds' and the Portfolio's portfolio transactions
on the basis of the research and brokerage services they provide to the Manager
for its use in managing the Funds and the Portfolio and its other advisory
accounts. Such services may include furnishing analyses, reports and information
concerning issuers, industries, securities, geographic regions, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such as
clearance and settlement). Research and brokerage services received from such
brokers are in addition to, and not in lieu of, the services required to be
performed by the Manager under the Management Contract (defined below). A
commission paid to such brokers may be higher than that which another qualified
broker would have charged for effecting the same transaction, provided that 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 the Funds and the Portfolio and its other clients and that the total
commissions paid by the Funds and the Portfolio will be reasonable in relation
to the benefits received by the Funds and the Portfolio over the long term.
Research services may also be received from dealers who execute Fund
transactions in 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 the Funds or the Portfolio toward payment of the Funds'
or the Portfolio's expenses, such as transfer agent and custodian fees.
Investment decisions for each Fund and the Portfolio and for other investment
accounts managed by 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 one or both Funds and the
Portfolio. In such cases, simultaneous transactions may occur. Purchases or
sales are then allocated as to price or amount in a manner deemed fair and
equitable to all accounts involved. While in some cases this practice could have
a detrimental effect upon the price or value of the security as far as the Funds
and the Portfolio are concerned, in other cases the Manager believes that
coordination and the ability to participate in volume transactions will be
beneficial to the Funds and the Portfolio.
Under a policy adopted by the Company's Board of Directors and the Portfolio's
Board of Trustees, and subject to the policy of obtaining the best net results,
the Manager may consider a broker/dealer's sale of the shares of the Funds and
the
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GT GLOBAL INCOME FUNDS
other funds for which the Manager serves as investment manager in selecting
brokers and dealers for the execution of portfolio transactions. This policy
does not imply a commitment to execute portfolio transactions through all
broker/ dealers that sell shares of the Funds and such other funds.
Each Fund and the Portfolio contemplates purchasing most foreign equity
securities in over-the-counter markets or stock exchanges located in the
countries in which the respective principal offices of the issuers of the
various securities are located, if that is the best available market. The fixed
commissions paid in connection with most such foreign stock transactions
generally are higher than negotiated commissions on United States transactions.
There generally is less government supervision and regulation of foreign stock
exchanges and brokers than in the United States. Foreign security settlements
may in some instances be subject to delays and related administrative
uncertainties.
Foreign equity securities may be held by a Fund and the Portfolio in the form of
American Depository Receipts ("ADRs"), American Depository Shares ("ADSs"),
Continental Depository Receipts ("CDRs") or European Depository Receipts
("EDRs") or securities convertible into foreign equity securities. ADRs, ADSs,
CDRs and EDRs may be listed on stock exchanges, or traded in the 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 the
Funds and the Portfolio may invest generally are traded in the OTC markets.
The Funds and the Portfolio contemplate that, consistent with the policy of
obtaining the best net results, brokerage transactions may be conducted through
certain companies that are members of the Liechtenstein Global Trust. The
Company's Board of Directors has adopted procedures in conformity with Rule
17e-1 under the 1940 Act to ensure that all brokerage commissions paid to such
affiliates are reasonable and fair in the context of the market in which they
are operating. Any such transactions will be effected and related compensation
paid only in accordance with applicable SEC regulations. For the fiscal years
ended October 31, 1996, 1995 and 1994, the Portfolio paid aggregate brokerage
commissions of $86,600, $0 and $24,000, respectively. For the fiscal years ended
October 31, 1996, 1995 and 1994, the Government Income Fund paid aggregate
brokerage commissions of $24,663, $0 and $92,397, respectively. For the fiscal
years ended October 31, 1996, 1995 and 1994, the Strategic Income Fund paid
aggregate brokerage commissions of $85,404, $0 and $134,876, respectively.
PORTFOLIO TRADING AND TURNOVER
Each Fund and the Portfolio engages in portfolio trading when the Manager
concludes that the sale of a security owned by a Fund and the Portfolio and/or
the purchase of another security of better value can enhance principal and/or
increase income. A security may be sold to avoid any prospective decline in
market value, or a security may be purchased in anticipation of a market rise.
Consistent with each Fund's and the Portfolio's investment objectives, a
security also may be sold and a comparable security purchased coincidentally in
order to take advantage of what is believed to be a disparity in the normal
yield and price relationship between the two securities. Although the Funds and
the Portfolio generally do not intend to trade for short-term profits, the
securities in each Fund's and the Portfolio's portfolio will be sold whenever
the Manager believes it is appropriate to do so, without regard to the length of
time a particular security may have been held. Portfolio turnover is calculated
by dividing the lesser of sales or purchases of portfolio securities by each
Fund's or the Portfolio's average month-end portfolio value, excluding
short-term investments. Higher portfolio turnover involves correspondingly
greater brokerage commissions and other transaction costs that a Fund or the
Portfolio will bear directly, and could result in the realization of net capital
gains that would be taxable when distributed to shareholders. The portfolio
turnover rates for the Government Income Fund, Strategic Income Fund and the
Portfolio the last two fiscal years were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------- -----------------
<S> <C> <C>
Government Income Fund............................................................... 268% 385%
Strategic Income Fund................................................................ 177% 238%
High Income Portfolio................................................................ 290% 213%
</TABLE>
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL INCOME FUNDS
DIRECTORS, TRUSTEES AND
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The term "Directors" as used below refers to the Company's Directors and the
Portfolio's Trustees collectively. The Company's Directors and executive
officers and the Portfolio's Trustees and executive officers are listed below.
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY/PORTFOLIO AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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) since 1995; President, GT Global since 1995;
50 California Street President and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice President
San Francisco, CA 94111 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 26
<PAGE>
GT GLOBAL INCOME FUNDS
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY/PORTFOLIO AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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 Principal Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
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 has a Nominating and Audit Committee, composed of Miss Quigley and
Messrs. Anderson, Bayley and Patterson, which is responsible for nominating
persons to serve as Directors, reviewing audits of the Company and its funds and
recommending firms to serve as independent auditors of the Company. Each of the
Directors and officers of the Company is also a Director and officer of G.T.
Investment Portfolios, Inc., 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 and Growth
Portfolio, which also are registered investment companies managed by the
Manager. Each of the individuals listed above serves as a Director or officer of
the Company as well as a Trustee or officer of the Portfolio. Each Director and
Officer serves in total as a Director and or Trustee and Officer, respectively,
of 11 registered investment companies with 41 series managed or administered by
the Manager. Each Director or Trustee who is not a director, officer or employee
of the Manager or any affiliated company is paid aggregate fees of $5,000 per
annum, plus $300 per Fund for each meeting of the Board attended, and reimburses
travel and other expenses incurred in connection with attendance at such
meetings. Other Directors and Officers receive no compensation or expense
reimbursement from the Company. For the fiscal year ended October 31, 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 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 accrued 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
the Funds or of all the Company's Funds in the aggregate.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL INCOME FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
The Manager serves as the Government Income Fund's and the Strategic Income
Fund's investment manager and administrator under an Investment Management and
Administration Contract between the Company and the Manager ("Company Management
Contract") and as the Portfolio's investment manager and administrator under an
Investment Management and Administration Contract between the Portfolio and the
Manager ("Portfolio Management Contract") (collectively, "Management
Contracts"). The Manager serves as the High Income Fund's administrator under an
Administration Contract ("Administration Contract") between the Company and the
Manager. 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 the Government Income Fund, the Strategic
Income Fund and the Portfolio and as administrator, the Manager administers each
Fund's and the Portfolio'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, the Funds, and the Portfolio and provides suitable office space,
necessary small office equipment and utilities. For these services, the
Government Income Fund and the Strategic Income Fund each pay the Manager
investment management and administration fees, based on the Funds' average daily
net assets computed daily and paid monthly, at the annualized rate of .725% on
the first $500 million, .70% on the next 1 billion, .675% on the next $1
billion, and .65% on amounts thereafter. The High Income Fund pays
administration fees, computed daily and paid monthly, to the Manager at the
annualized rate of 0.25% of the Fund's average daily net assets. In addition,
the High Income Fund bears a pro rata portion of the investment management and
administration fee paid by the Portfolio to the Manager. The Portfolio pays such
fees, also computed daily and paid monthly at the annualized rate of .475% on
the first $500 million, .45% on the next $1 billion, .425% on the next $1
billion, and .40% on amounts thereafter of its average daily net assets, plus 2%
of the Portfolio's total investment income as stated in the Portfolio's
Statement of Operations, calculated in accordance with generally accepted
accounting principles, adjusted daily for currency revaluations, on a marked to
market basis, of the Portfolio's assets; provided, however, that during any
fiscal year this amount shall not exceed 2% of the Portfolio's total investment
income calculated in accordance with generally accepted accounting principles.
The Management Contracts may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors or the Portfolio's Board of Trustees, as
applicable, or by the vote of a majority of the Fund's or the Portfolio's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors or Trustees who are not parties to the Management Contract or the
Administration Contract, as applicable, or "interested persons" of any such
party (as defined in the 1940 Act), cast in person at a meeting called for the
specific purpose of voting on such approval. The Management Contracts provide
that with respect to the Government Income Fund, the Strategic Income Fund and
the Portfolio, and the Administration Contract provides that with respect to the
High Income Fund, either the Company, the Portfolio or the Manager may terminate
the Contract without penalty upon sixty days' written notice to the other party.
The Management Contracts and the Administration Contract terminate automatically
in the event of their assignment (as defined in the 1940 Act).
In each of the last three fiscal years the Government Income Fund paid
investment management and administration fees to the Manager in the following
amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1996....................................................................................................... $ 3,672,503
1995....................................................................................................... 4,946,971
1994....................................................................................................... 6,390,750
</TABLE>
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL INCOME FUNDS
In each of the last three fiscal years the Strategic Income Fund paid investment
management and administration fees to the Manager in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1996....................................................................................................... $ 3,807,689
1995....................................................................................................... 4,293,053
1994....................................................................................................... 5,392,542
</TABLE>
In each of the last three fiscal years the Portfolio paid investment management
and administration fees to the Manager in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1996....................................................................................................... $ 3,014,924
1995....................................................................................................... 2,411,786
1994....................................................................................................... 2,266,420
</TABLE>
In each of the last three fiscal years the High Income Fund paid administration
fees to the Manager in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1996....................................................................................................... $ 1,015,220
1995....................................................................................................... 860,884
1994....................................................................................................... 886,795
</TABLE>
DISTRIBUTION SERVICES
Each Fund's Class A and Class B shares are offered continuously through each
Fund's principal underwriter and distributor, GT Global, on a "best efforts"
basis pursuant to separate Distribution Contracts between the Company and GT
Global.
As described in the Prospectus, the Company has adopted a separate Distribution
Plan for each class of each Fund in accordance with Rule 12b-1 under the 1940
Act (each a"Class A Plan" and "Class B Plan," respectively, and collectively,
"Plans"). The rate of payments by each Fund under the Plans, as described in the
Prospectus, may not be increased without the approval of the majority of the
outstanding voting securities of the affected class. All expenses for which GT
Global is reimbursed under a Class A Plan will have been incurred within one
year of such reimbursement. The following table discloses payments made by each
Fund to GT Global under the Class A Plan and the Class B Plan for the fiscal
year ended October 31, 1996.
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------- ----------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
Government Income Fund............................................................... $1,074,110 $2,006,881
Strategic Income Fund................................................................ $ 625,247 $3,468,104
High Income Fund..................................................................... $ 560,451 $2,405,007
</TABLE>
In approving the Plans, the Directors determined that the adoption of the Class
B Plan or continuation of the Class A Plan, as applicable, was in the best
interests of the shareholders of the Funds. Agreements related to the Plans also
must be approved by such vote of the Directors, including a majority of the
Directors who are not "interested persons" of the Company (as defined in the
1940 Act) and who have no direct or indirect financial interests in the
operation of the Plans, or in any agreement related thereto.
Each Plan requires that, at least quarterly, the Directors will review the
amounts expended thereunder and the purposes for which such expenditures were
made. Each Plan requires that so long as it is in effect the selection and
nomination of Directors who are not "interested persons" of the Company will be
committed to the discretion of the Directors who are not "interested persons" of
the Company, as defined in the 1940 Act.
As discussed in the Prospectus, GT Global collects sales charges on sales of
Class A shares of the Funds, retains certain amounts of such charges and
reallows other amounts of such charges to broker/dealers who sell shares.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL INCOME FUNDS
The following tables review the extent of such activity during the last three
fiscal years:
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
COLLECTED RETAINED REALLOWED
------------- ----------- -------------
<S> <C> <C> <C>
Government Income Fund...................................................... $ 88,272 $ 15,917 $ 72,355
Strategic Income Fund.......................................................
High Income Fund............................................................
</TABLE>
YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
COLLECTED RETAINED REALLOWED
------------- ----------- -------------
<S> <C> <C> <C>
Government Income Fund...................................................... $ 305,067 $ 58,490 $ 246,577
Strategic Income Fund....................................................... 399,242 68,458 330,784
High Income Fund............................................................ 537,880 67,403 470,477
</TABLE>
YEAR ENDED OCTOBER 31, 1994
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
COLLECTED RETAINED REALLOWED
------------- ----------- -------------
<S> <C> <C> <C>
Government Income Fund...................................................... $ 2,518,304 $ 169,742 $ 2,348,562
Strategic Income Fund....................................................... 3,565,247 732,755 2,832,492
High Income Fund............................................................ 1,888,649 330,237 1,558,412
</TABLE>
GT Global receives any contingent deferred sales charges payable with respect to
redemptions of Class B shares and certain Class A shares. The following table
discloses the amount of CDSCs collected by GT Global with regard to the GT
Global Income Funds for the periods shown.
GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
CDSCS
YEAR ENDED OCTOBER 31, COLLECTED
- ----------------------------------------------------------------------------------- -------------
<S> <C>
1996........................................................................... $ 1,467,051
1995........................................................................... 1,596,085
1994........................................................................... 809,221
</TABLE>
STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
CDSCS
YEAR ENDED OCTOBER 31, COLLECTED
- ----------------------------------------------------------------------------------- -------------
<S> <C>
1996........................................................................... $ 1,925,586
1995........................................................................... 1,337,974
1994........................................................................... 1,084,779
</TABLE>
HIGH INCOME FUND
<TABLE>
<CAPTION>
CDSCS
YEAR ENDED OCTOBER 31, COLLECTED
- ----------------------------------------------------------------------------------- -------------
<S> <C>
1996........................................................................... $ 1,739,271
1995........................................................................... 2,443,970
1994........................................................................... 990,675
</TABLE>
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, a new account fee of $4.00 per account, a per transaction fee of $1.75
for all transactions other than exchanges and a per exchange fee of $2.25. The
Transfer Agent also is reimbursed by each Fund, for its out-of-pocket expenses
for such items as postage, forms, telephone charges, stationery and office
supplies. The Manager also serves as each Fund's pricing and accounting agent.
As of October 31, 1996 and October 31, 1995, the Fund paid transfer agency and
accounting services fees to the Manager of Government Income Fund, Strategic
Income Fund and High Income Fund $1,026,383 and $1,134,651; $1,159,230 and
$1,253,480; and $746,349 and $679,763, respectively.
EXPENSES OF THE FUNDS AND THE PORTFOLIO
Each Fund and the Portfolio pays all expenses not assumed by the Manager, GT
Global and other agents. These expenses include, in addition to the advisory,
distribution, transfer agency, pricing and accounting agent and brokerage fees
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL INCOME FUNDS
discussed above, legal and audit expenses, custodian fees, directors' fees,
organizational fees, fidelity bond and other insurance premiums, taxes,
extraordinary expenses and the expenses of reports and prospectuses sent to
existing investors. The allocation of general Company expenses and expenses
shared by the Funds and other funds organized as series of the Company are
allocated on a basis deemed fair and equitable, which may be based on the
relative net assets of the Funds or the nature of the services performed and
relative applicability to each Fund. Expenditures, including costs incurred in
connection with the purchase or sale of portfolio securities, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses. The ratio of each Fund's and the Portfolio's expenses to its
relative net assets can be expected to be higher than the expense ratios of
funds investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
each Fund and the Portfolio generally are higher than the comparable expenses of
such other funds.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, each Fund's net asset value per share for each
class of shares is determined at the close of regular trading on the New York
Stock Exchange ("NYSE") (currently, 4:00 P.M. Eastern time, unless weather,
equipment failure or other factors contribute to an earlier closing business
time) on each business day the NYSE is open for business. Currently, the NYSE is
closed on weekends and on certain days relating to the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
Each Fund's and the Portfolio's portfolio securities and other assets are valued
as follows:
Equity securities, including ADRs, ADSs and EDRs, which are traded on stock
exchanges are valued at the last sale price on the exchange or in the principal
over-the-counter market in which such securities are traded, as of the close of
business on the day the securities are being valued or, lacking any sales, at
the last available bid price. In cases where securities are traded on more than
one exchange, the securities are valued on the exchange determined by the
Manager to be the primary market.
Long-term debt obligations are valued at the mean of representative quoted bid
or asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
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,
provided such valuations represent fair value.
Options on indices, securities and currencies purchased by a Fund or the
Portfolio are valued at their last bid price in the case of listed options or,
in the case of OTC options, at the average of the last bid prices obtained from
dealers, unless a quotation from only one dealer is available, in which case
only that dealer's price will be used. When market quotations for futures and
options on futures held by a Fund or the Portfolio are readily available, those
positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available (including restricted securities which are subject to limitations as
to their sale) are valued at fair value as determined in good faith by or under
the direction of the Company's Board of Directors. The valuation procedures
applied in any specific instance are likely to vary from case to case. However,
consideration is generally given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors also are generally considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of a Fund's or the Portfolio's total assets.
The Fund's or the Portfolio's liabilities, including accruals for expenses, are
deducted from its total assets. Once the total value of a Fund's or the
Portfolio's net assets is so determined, that value is then divided by the total
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL INCOME FUNDS
number of shares outstanding (excluding treasury shares), and the result,
rounded to the nearer cent, is the net asset value per share.
Any assets or liabilities initially denominated in terms of foreign currencies
are translated into U.S. dollars at the official exchange rate or at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors, in good faith, will
establish a conversion rate for such currency.
European, Far Eastern or Latin American securities trading may not take place on
all days on which the NYSE is open. Further, trading takes place in Japanese
markets on certain Saturdays and in various foreign markets on days on which the
NYSE is not open. Consequently, the calculation of the Funds' respective net
asset values therefore may not take place contemporaneously with the
determination of the prices of securities held by the Funds. Events affecting
the values of portfolio securities that occur between the time their prices are
determined and the close of regular trading on the NYSE will not be reflected in
the Funds' net asset values unless the Manager, under the supervision of the
Company's Board of Directors, determines that the particular event would
materially affect net asset value. As a result, a Fund's net asset value may be
significantly affected by such trading on days when a shareholder cannot
purchase or redeem shares of the Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES AND
REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Class A or Class B shares purchased should accompany the purchase
order, or funds should be wired to the Transfer Agent as described in the
Prospectus. Payment, other than by wire transfer, must be made by check or money
order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, on account of a check returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by a Fund by reason of such cancellation, and if such
purchaser is a shareholder, that Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse that Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Funds reserve the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on a Fund
until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Funds reserve the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law. Such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectuses.
LETTER OF INTENT -- CLASS A SHARES
The Letter of Intent ("LOI") is not a binding obligation to purchase the
indicated amount. During such time as Class A shares are held in escrow under an
LOI to assure payment of applicable sales charges if the indicated amount is not
met, all dividends and capital gain distributions on escrowed shares will be
reinvested in additional Class A shares or paid in cash, as specified by the
shareholder. If the intended investment is not completed within the specified
13-month period, the purchaser must remit to GT Global the difference between
the sales charge actually paid and the sales charge which would have been
applicable if the total Class A purchases had been made at a single time. If
this amount is not paid to GT Global within 20 business days after written
request, the appropriate number of escrowed shares will be redeemed and the
proceeds paid to GT Global.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL INCOME FUNDS
A registered investment adviser, trust company or trust department seeking to
execute an LOI as a single purchaser with respect to accounts over which it
exercises investment discretion is required to provide the Transfer Agent with
information establishing that it has discretionary authority with respect to the
money invested (e.g., by providing a copy of the pertinent investment advisory
agreement). Class A shares purchased in this manner must be restrictively
registered with the Transfer Agent so that only the investment adviser, trust
company or trust department, and not the beneficial owner, will be able to place
purchase, redemption and exchange orders.
AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in the Funds' Automatic Investment Plan ("AIP"),
investors or their brokers should specify whether the investment will be in
Class A shares or Class B shares and send the following documents to the
Transfer Agent: (1) an AIP Application; (2) a Bank Authorization Form; and (3) a
voided personal check from the pertinent bank account. The necessary forms are
provided at the back of the prospectus. Provided that an investor's bank accepts
the Bank Authorization Form, investment amounts will be drawn on the designated
dates (monthly on the 25th day or beginning quarterly on the 25th day of the
month the investor first selects) in order to purchase full and fractional
shares of a Fund at the public offering price determined on that day. In the
event that the 25th day falls on a Saturday, Sunday or holiday, shares will be
purchased on the next business day. If an investor's check is returned because
of insufficient funds, a stop payment order or the account is closed, the AIP
may be discontinued, and any share purchase made upon deposit of such check may
be cancelled. Furthermore, the shareholder will be liable for any loss incurred
by a Fund by reason of such cancellation. Investors should allow one month for
the establishment of an AIP. An AIP may be terminated by the Transfer Agent or
the Funds upon 30 days' written notice or by the participant, at any time,
without penalty, upon written notice to the pertinent Fund or the Transfer
Agent.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Class A or Class B shares of a Fund may be purchased as the underlying
investment for an IRA meeting the requirements of section 408(a) of the Code.
IRA applications are available from brokers or GT Global.
EXCHANGES BETWEEN FUNDS
Shares of each Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Class A shares may be
exchanged only for Class A shares of other GT Global Mutual Funds. Class B
shares may be exchanged only for Class B shares of other GT Global Mutual Funds.
The exchange privilege is not an option or right to purchase shares but is
permitted under the current policies of the respective GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the funds
upon 60 days' prior notice to the shareholders of such fund and is available
only in states where the exchange may be made legally. Before purchasing shares
through the exercise of the exchange privilege, a shareholder should obtain and
read a copy of the prospectus of the fund to be purchased and should consider
the investment objective(s) of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone, telex or telegram
redemption services must submit a "Corporate Resolution" or "Certificate of
Partnership" indicating the names, titles and the required number of signatures
of persons authorized to act on its behalf. The certificate must be signed by a
duly authorized officer(s) and, in the case of a corporation, the corporate seal
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire directly to the shareholder's predesignated account at a domestic bank
or savings institution, if the proceeds are at least $1,000. Costs in connection
with the administration of this service, including wire charges, currently are
borne by the appropriate Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Funds and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days written notice.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders of a Fund owning Class A or Class B shares with a value of $10,000
or more, may establish a Systematic Withdrawal Plan ("SWP"). Under a SWP, a
shareholder will receive monthly or quarterly payments, in amounts of not less
than $100 per payment, through the automatic redemption of the necessary number
of shares on the designated dates (monthly on the 25th day or beginning
quarterly on the 25th day of the month the investor first selects). In the event
that the 25th day falls on a Saturday, Sunday or holiday, the redemption will
take place on the prior business day. Certificates, if any, for the shares being
redeemed must be held by the Transfer Agent. Checks will be made payable to the
designated recipient and mailed within seven days. If the recipient is other
than the registered shareholder, the signature of each shareholder must be
guaranteed on the SWP application (see "How to Redeem Shares" in the
Prospectuses). A corporation (or partnership) also must submit a "Corporation
Resolution" or "Certificate of Partnership" indicating the names,
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL INCOME FUNDS
titles, and signatures of the individuals authorized to act on its behalf, and
the SWP application must be signed by a duly authorized officer(s) and the
corporate seal affixed.
With respect to a SWP, the maximum annual SWP withdrawal is 12% of the initial
account value. Withdrawals in excess of 12% of the initial account value
annually may result in assessment of a contingent deferred sales charge. See
"How to Invest" in the Prospectus.
Shareholders should be aware that such systematic withdrawals may deplete or use
up entirely the initial investment and result in realized long-term or
short-term capital gains or losses. The SWP may be terminated at any time by the
Transfer Agent or a Fund upon 30 days' written notice or by a shareholder upon
written notice to a Fund or its Transfer Agent. Applications and further details
regarding establishment of a SWP are provided at the back of the Funds'
Prospectus.
SUSPENSION OF REDEMPTION PRIVILEGES
The Funds may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
exists, as defined by the SEC, which would prohibit the Funds from disposing of
their portfolio securities or in fairly determining the value of their assets,
or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for a Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of a Fund, so called
"redemption in kind." Payments of redemption in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that each Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the net
assets of the Fund at the beginning of such period. This election is irrevocable
so long as Rule 18f-1 remains in effect, unless the SEC by order upon
application permits the withdrawal of such election.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Code, each Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income, net short-term capital gain and net gains
from certain foreign currency transactions) ("Distribution Requirement") and
must meet several additional requirements. With respect to each Fund, these
requirements include the following: (1) the Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities loans and gains from the sale or other disposition of securities
or foreign currencies, or other income (including gains from options, Futures or
Forward Contracts) derived with respect to its business of investing in
securities or those currencies ("Income Requirement"); (2) the Fund must derive
less than 30% of its gross income each taxable year from the sale or other
disposition of securities, or any of the following, that were held for less than
three months -- options or Futures (other than those on foreign currencies), or
foreign currencies (or options, Futures or Forward Contracts thereon) that are
not directly related to the Fund's principal business of investing in securities
(or options and Futures with respect to securities) ("Short-Short Limitation");
(3) at the close of each quarter of the Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
government securities, securities of other RICs and other securities, with these
other securities limited, in respect of any one issuer, to an amount that does
not exceed 5% of the value of the Fund's total assets and that does not
represent more than 10% of the issuer's outstanding voting securities, and (4)
at the close of each quarter of the Fund's taxable year, not more than 25% of
the value of its total assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer. The
High
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL INCOME FUNDS
Income Fund, as an investor in the Portfolio, is deemed to own a proportionate
share of the Portfolio's assets, and to earn a proportionate share of the
Portfolio's income, for purposes of determining whether that Fund satisfies all
the requirements described above to qualify as a RIC.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
See "Taxation of Certain Investment Activities" below for a discussion of the
tax consequences to the High Income Fund of hedging transactions engaged in, and
investments in passive foreign investment companies ("PFICs") and other foreign
securities by, the Portfolio.
TAXATION OF THE PORTFOLIO -- GENERAL
The Portfolio is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership." As a result, the Portfolio is not subject
to federal income tax; instead, the High Income Fund, as an investor in the
Portfolio, is required to take into account in determining its federal income
tax liability its share of the Portfolio's income, gains, losses, deductions and
credits, without regard to whether it has received any cash distributions from
the Portfolio. The Portfolio also is not subject to New York income or franchise
tax.
Because, as noted above, the High Income Fund is deemed to own a proportionate
share of the Portfolio's assets, and to earn a proportionate share of the
Portfolio's income, for purposes of determining whether that Fund satisfies the
requirements to qualify as a RIC, the Portfolio intends to continue to conduct
its operations so that the High Income Fund will be able to continue to satisfy
all those requirements.
Distributions to the High Income Fund from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in that Fund's
recognition of any gain or loss for federal income tax purposes, except that (1)
gain will be recognized to the extent any cash that is distributed exceeds that
Fund's basis for its interest in the Portfolio before the distribution, (2)
income or gain will be recognized if the distribution is in liquidation of that
Fund's entire interest in the Portfolio and includes a disproportionate share of
any unrealized receivables held by the Portfolio, and (3) loss will be
recognized if a liquidation distribution consists solely of cash and/or
unrealized receivables. The High Income Fund's basis for its interest in the
Portfolio generally will equal the amount of cash and the basis of any property
that Fund invests in the Portfolio, increased by that Fund's share of the
Portfolio's net income and gains and decreased by (1) the amount of cash and the
basis of any property the Portfolio distributes to that Fund and (2) that Fund's
share of the Portfolio's losses.
TAXATION OF CERTAIN INVESTMENT ACTIVITIES
For purposes of the following discussion, "Investor Fund" means the Government
Income Fund, the Strategic Income Fund or the Portfolio.
FOREIGN TAXES. Interest and dividends received by an Investor Fund may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions ("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 the High Income Fund, its proportionate share of the Portfolio's assets)
at the close of its taxable year consists of securities of foreign corporations,
the Fund will be eligible to, and may, file an election with the Internal
Revenue Service that will enable its shareholders, in effect, to receive the
benefit of the foreign tax credit with respect to any foreign taxes paid by it
(taking into account, in the case of the High Income Fund, its proportionate
share of any foreign taxes paid by the 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 proportionate 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 the High Income Fund, its proportionate share of
the 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 the High
Income Fund, its proportionate share of the Portfolio's income) from sources
within foreign countries and U.S. possessions if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES. Each Investor Fund may invest in the
stock of PFICs. A PFIC is a foreign corporation that, in general, meets either
of the following tests: (1) at least 75% of its gross income is passive or (2)
an
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL INCOME FUNDS
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, a Fund will be subject to
federal income tax on a part (or, in the case of the High Income Fund, its
proportionate share of a part) of any "excess distribution" received by it (or,
in the case of the High Income Fund, by the Portfolio) on the stock of a PFIC or
of any gain on the Fund's (or, in the case of the High Income Fund, the
Portfolio's) disposition of that stock (collectively "PFIC income"), plus
interest thereon, even if the Fund distributes the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income will be included in
the Fund's investment company taxable income and, accordingly, will not be
taxable to the Fund to the extent that income is distributed to its
shareholders.
If an Investor Fund invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Investor Fund (or, in the case of the Portfolio, the
High Income Fund) would be required to include in income each taxable year its
pro rata share (taking into account, the case of the High Income Fund, its
proportionate share of the Portfolio's pro rata share) of the QEF's ordinary
earnings and net capital gain (the excess of net long-term capital gain over net
short-term capital loss) -- which most likely would have to be distributed by
the Investor Fund (or, in the case of the Portfolio, the High Income 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.
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 Investors Funds' use
of hedging transactions, such as selling (writing) and purchasing options and
Futures Contracts and entering into Forward Contracts, involves complex rules
that will determine, for federal income tax purposes, the character and timing
of recognition of the gains and losses an Investor Fund realizes in connection
therewith. Gains from the disposition of foreign currencies (except certain
gains that may be excluded by future regulations), and gains from options,
Futures and Forward Contracts derived by an Investor Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement for that Investor Fund (or, in
the case of the Portfolio, the High Income Fund). However, income from the
disposition by an Investor Fund of options and Futures (other than those on
foreign currencies) will be subject to the Short-Short Limitation for that
Investor Fund (or, in the case of the Portfolio, the High Income Fund) if they
are held for less than three months. Income from the disposition by an Investor
Fund of foreign currencies, and options, Futures and Forward Contracts on
foreign currencies, that are not directly related to its principal business of
investing in securities (or options and Futures with respect thereto) also will
be subject to the Short-Short Limitation for that Investor Fund, (or, in the
case of the Portfolio, the High Income Fund) if they are held for less than
three months.
If an Investor Fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether that Investor Fund (or,
in the case of the Portfolio, the High Income Fund) satisfies the Short-Short
Limitation. Thus, only the net gain (if any) from the designated hedge will be
included in gross income for purposes of that limitation. Each Investor Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all those transactions. To the extent this treatment is not
available, an Investor Fund may be forced to defer the closing out of certain
options, Futures, Forward Contracts and/or foreign currency positions beyond the
time when it otherwise would be advantageous to do so, in order for that
Investor Fund (or, in the case of the Portfolio, the High Income Fund) to
continue to qualify as a RIC.
Futures and Forward Contracts that are subject to Section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by an Investor Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, Futures and Forward
Contracts 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
Investor Fund attempts to monitor section 988 transactions to minimize any
adverse tax impact.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL INCOME FUNDS
The Strategic Income Fund and the Portfolio each may acquire zero coupon or
other securities issued with original issue discount ("OID"). As a holder of
those securities, that Fund and the Portfolio (and, through it, the High Income
Fund) each must include in its income the portion of the OID that accrues on the
securities during the taxable year, even if no corresponding payment on them is
received during the year. Similarly, the Strategic Income Fund and the Portfolio
each must include in its gross income securities it receives as "interest" on
payment-in-kind securities. Because each Fund annually must distribute
substantially all of its investment company taxable income, including any OID
and other non-cash income, to satisfy the Distribution Requirement and avoid
imposition of the Excise Tax, either of them may be required in a particular
year to distribute as a dividend an amount that is greater than the total amount
of cash it actually receives (or, in the case of the High Income Fund, its
shares of the total amount of cash the Portfolio actually receives). Those
distributions will be made from the Fund's (or, in the case of the High Income
Fund, its, or its share of the Portfolio's) cash assets or, if necessary, from
the proceeds of sales of portfolio securities. A Fund may (directly or through
the Portfolio) realize capital gains or losses from those sales, which would
increase or decrease its investment company taxable income and/or net capital
gain. In addition, any such gains may be realized on the disposition of
securities held for less than three months. Because of the Short-Short
Limitation, any such gains would reduce the ability of the Strategic Income Fund
or the Portfolio, as the case may be, to sell other securities, or certain
options, Futures, Forward Contracts or foreign currency positions, held for less
than three months that it might wish to sell in the ordinary course of its
portfolio management.
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
the Portfolio) from U.S. corporations. However, dividends received by a
corporate shareholder and deducted by it pursuant to the dividends-received
deduction are subject indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by a Fund to a 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 Portfolio.
Investors are urged to consult their own tax advisers for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from a Fund.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL INCOME FUNDS
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
and 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), 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 each Fund's and the
Portfolio's assets. State Street is authorized to establish and has established
separate accounts in foreign currencies and to cause securities of the Funds and
the Portfolio to be held in separate accounts outside the United States in the
custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' and the Portfolio's independent accountants are Coopers & Lybrand
L.L.P., One Post Office Square, Boston Massachusetts 02109. Coopers & Lybrand
L.L.P. conducts audits of each Fund's and the Portfolio's financial statements,
assists in the preparation of the Funds' and the Portfolio's federal and state
income tax returns and consults with the Company, the Funds and the Portfolio as
to matters of accounting, regulatory filings, and federal and state income
taxation.
The audited financial statements of the Funds and the Portfolio included in this
Statement of Additional Information have been examined by Coopers & Lybrand
L.L.P., as stated in their opinion appearing herein and are included in reliance
upon such opinion given upon the authority of that firm as experts in accounting
and auditing.
USE OF NAME
The Manager has granted the Funds and the Portfolio the right to use the "GT"
name and "GT Global" and has reserved the right to withdraw its consent to the
use of such names by the Company, the Funds and/or the Portfolio at any time, or
to grant the use of such names to any other company.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
STANDARDIZED RETURNS
Each Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), are calculated
separately for Class A and Class B shares of the 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,
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL INCOME FUNDS
deduction of the applicable contingent deferred sales charge imposed on a
redemption of Class B shares held for the period; (3) reinvestment of dividends
and other distributions at net asset value on the reinvestment date determined
by the Company's Board of Directors; and (4) a complete redemption at the end of
any period illustrated.
The Standardized Returns for the Class A and Class B shares of the Strategic
Income Fund, Government Income Fund and High Income Fund, stated as average
annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
STRATEGIC STRATEGIC GOVERNMENT GOVERNMENT HIGH
INCOME INCOME INCOME INCOME INCOME
FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A)
- ------------------------------------------------- ------------ ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Fiscal year ended October 31, 1996............... 17.15% 17.15% 2.03% 1.57% 32.44%
October 31, 1991 through October 31, 1996........ 10.48% n/a 5.64% n/a n/a
October 22, 1992 (commencement of operations)
through October 31, 1996........................ n/a 10.27 % n/a 5.57 % 16.20 %
March 29, 1988 (commencement of operations)
through October 31, 1996........................ 8.96 % n/a 6.73 % n/a n/a
<CAPTION>
HIGH
INCOME
FUND
PERIOD (CLASS B)
- ------------------------------------------------- ------------
<S> <C>
Fiscal year ended October 31, 1996............... 33.16%
October 31, 1991 through October 31, 1996........ n/a
October 22, 1992 (commencement of operations)
through October 31, 1996........................ 16.52 %
March 29, 1988 (commencement of operations)
through October 31, 1996........................ n/a
</TABLE>
NON-STANDARDIZED RETURNS
In addition to Standardized Returns, each Fund also may also 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 and Class B 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 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.
Average annual Non-Standardized 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) no deduction
of sales charges; (2) reinvestment of dividends and other distributions at net
asset value on the reinvestment date determined by the Board; and (3) a complete
redemption at the end of any period illustrated.
The average annual Non-Standardized Returns for the Class A and Class B shares
of the Strategic Income Fund, Government Income Fund and High Income Fund,
stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
STRATEGIC STRATEGIC GOVERNMENT GOVERNMENT HIGH
INCOME INCOME INCOME INCOME INCOME
FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A)
- ------------------------------------------------- ------------ ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Fiscal year ended October 31, 1996............... 23.00% 22.15% 7.11% 6.54% 39.05%
October 31, 1991 through October 31, 1996........ 11.56% n/a 6.68% n/a n/a
October 22, 1992 (commencement of operations)
through October 31, 1996........................ n/a 10.64 % n/a 5.94 % 17.61 %
March 29, 1988 (commencement of operations)
through October 31, 1996........................ 9.58 % n/a 7.34 % n/a n/a
<CAPTION>
HIGH
INCOME
FUND
PERIOD (CLASS B)
- ------------------------------------------------- ------------
<S> <C>
Fiscal year ended October 31, 1996............... 38.16%
October 31, 1991 through October 31, 1996........ n/a
October 22, 1992 (commencement of operations)
through October 31, 1996........................ 16.83 %
March 29, 1988 (commencement of operations)
through October 31, 1996........................ n/a
</TABLE>
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 and, as set
forth below, may or may not take sales charges into account.
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Class B shares of the Strategic Income Fund, Government
Income Fund and High Income Fund, stated as aggregate total returns for the
periods shown, were:
<TABLE>
<CAPTION>
STRATEGIC STRATEGIC GOVERNMENT GOVERNMENT HIGH HIGH
INCOME INCOME INCOME INCOME INCOME INCOME
FUND FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A) (CLASS B)
- -------------------------------------------------- --------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
October 22, 1992 (commencement of operations)
through October 31, 1996......................... n/a 50.21% n/a 26.14% 92.10% 87.02%
March 29, 1988 (commencement of operations)
through October 31, 1996......................... 119.43% n/a 83.72% n/a n/a n/a
</TABLE>
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL INCOME FUNDS
The aggregate Non-Standardized Returns (taking sales charges into account) for
the Class A and Class B shares of the Strategic Income Fund, Government Income
Fund and High Income Fund, stated as aggregate total returns for the periods
shown, were:
<TABLE>
<CAPTION>
STRATEGIC STRATEGIC GOVERNMENT GOVERNMENT HIGH HIGH
INCOME INCOME INCOME INCOME INCOME INCOME
FUND FUND FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B) (CLASS A) (CLASS B)
- -------------------------------------------------- --------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
October 22, 1992 (commencement of operations)
through October 31, 1996......................... n/a 48.21% n/a 24.37% 82.97% 85.02%
March 29, 1988 (commencement of operations)
through October 31, 1996......................... 109.01% n/a 74.99% n/a n/a n/a
</TABLE>
YIELD
Each Fund may also include its current yield ("Yield") in advertisements, sales
literature and shareholder reports. Yield, which is calculated separately for
Class A and Class B shares of each Fund, is computed by dividing the difference
between dividends and interest earned during a one-month period ("a") and
expenses accrued for the period (net of reimbursements) ("b") by the product of
the average daily number of shares outstanding during the period that were
entitled to receive dividends ("c") and the maximum offering price per share on
the last day of the period ("d") according to the following formula as required
by the Securities and Exchange Commission:
<TABLE>
<S> <C> <C> <C> <C> <C>
a-b
YIELD = 2 [( -- + 1 ) (6)-1]
cd
</TABLE>
The Yields of the Class A shares of the Strategic Income Fund, Government Income
Fund and the High Income Fund for the one-month period ended October 31, 1996
were 6.58%, 6.23% and 7.29%, respectively. The current yields of the Class B
shares of Strategic Income Fund, Government Income Fund and High Income Fund for
the one-month period ended October 31, 1996 were 6.23%, 5.87% and 7.00%,
respectively.
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the Securities Act of 1933, as amended, on account
of the inclusion of such information herein.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of any of these Funds, nor is it a
prediction of such performance. The performance of the Funds will differ from
the historical performance of relevant indices. The performance of indices does
not take expenses into account, while each Fund incurs expenses in its
operations, which will reduce performance. Each Fund is actively managed, I.E.,
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 relevant indices.
Each Fund and GT Global, from time to time, may compare the Funds with, but not
limited to, the following:
(1) Various Salomon Brothers World Bond Indices, which measure the total
return performance of high quality non-U.S. dollar denominated securities in
major sectors of the worldwide bond markets including the Salomon Brothers
World Government Bond Index, which is a widely used index of ten year
government bonds with remaining maturities greater than one year.
(2) The Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's or BBB by S&P, or, in
the case of nonrated bonds, BBB by Fitch Investors Service, Inc. ("Fitch")
(excluding Collateralized Mortgage Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL INCOME FUNDS
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings and comparisons published or prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Company Services ("CDA/Wiesenberger"), Morningstar, Inc.
("Morningstar") and/or other companies that rank or compare mutual funds by
overall performance, investment objectives, assets, expense levels, periods
of existence and/or other factors. In this regard, each Fund may be compared
to the Fund's "peer group" as defined by Lipper, CDA/Wiesenberger,
Morningstar and/or other firms, as applicable or to specific funds or groups
of funds within or without such peer group. Morningstar is a mutual fund
rating service that also rates mutual funds on the basis of risk-adjusted
performance. Morningstar ratings are calculated from a fund's three, five
and ten year average annual returns with appropriate fee adjustments and a
risk factor that reflects fund performance relative to the three-month U.S.
Treasury bill monthly returns. Ten percent of the funds in an investment
category receive five stars and 22.5% receive four stars. The ratings are
subject to change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and Gross National Product ("GNP") weighted
index, beginning in 1975. The returns are broken down by local market and
currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized index composed of the capitalization-weighted average of the
price of 500 of the largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-backed
fixed income securities and the Salomon Brothers Brady Bond Index which
measures the total return performance of Brady Bonds issued since March,
1990, and are issued in U.S. dollar denominated instruments.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies in Europe, Australia and the Far East.
(13) International Finance Corporation ("IFC") Emerging Markets Data Base
which provides detailed statistics on bond and stock markets in developing
countries
(14) J.P. Morgan & Co. Bond Indices, including, among others, the J.P.
Morgan Traded Government Bond Index which is an index composed of liquid
non-U.S. fixed income securities based on market weightings and currency
since 1986.
(15) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(16) The World Bank Publication of Trends in Developing Countries
("TIDE") provides brief reports on most of the World Bank's borrowing
members. The World Development Report is published annually and looks at
global and regional economic trends and their implications for the
developing economies.
(17) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(18) Datastream and Worldscope, each is an on-line database retrieval
service for information including but not limited to international financial
and economic data.
(19) International Financial Statistics, which is produced by the
International Monetary Fund.
(20) Various publications and reports produced by the World Bank and its
affiliates.
(21) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL INCOME FUNDS
(22) Various publications including but not limited to ratings agencies
such as Moody's, S&P and Fitch.
(23) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(24) Various publications from the Organization for Economic Cooperation
and Development ("OECD").
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan
Stanley, Smith Barney, S.G. Warburg, Jardine Flemming, The Bank for
International Settlements, Asian Development Bank, Bloomberg, L.P. and Ibbottson
Associates may be used as well as information reported by the Federal Reserve
and the respective Central Banks of various nations. In addition, GT Global may
use performance rankings, ratings and commentary reported periodically in
national financial publications, included but not limited to, Money Magazine,
Smart Money, Global Finance, EuroMoney, Financial World, Forbes, Fortune,
Business Week, Latin Finance, the Wall Street Journal, Emerging Markets Weekly,
Kiplinger's Guide To Personal Finance, Barron's, The Financial Times, USA Today,
The New York Times, Far Eastern Economic Review, Mutual Funds Magazine, The
Economist and Investors Business Digest. Each Fund may compare its performance
to that of other compilations or indices of comparable quality to those listed
above and other indices which may be developed and made available.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.
GT Global believes the GT Global Income Funds can be an appropriate investment
for long-term investment goals including but not limited to funding retirement,
paying for education or purchasing a house. The GT Global Income Funds do not
represent a complete investment program and the investors should consider the
Funds as appropriate for a portion of their overall investment portfolio with
regard to their long-term investment goals.
GT Global believes that a growing number of consumer products, including but not
limited to home appliances, automobiles and clothing, purchased by Americans are
manufactured abroad. GT Global believes that investing globally in the companies
that produce products for U.S. consumers can help U.S. investors seek protection
of the value of their assets against the potentially increasing costs of foreign
manufactured goods. Of course, there can be no assurance that there will be any
correlation between global investing and the costs of such foreign goods unless
there is a corresponding change in value of the U.S. dollar to foreign
currencies. From time to time, GT Global may refer to or advertise the names of
such companies although there can be no assurance that any GT Global Mutual Fund
may own the securities of these companies.
Each Fund may compare its performance to that of other compilations or indices
of comparable quality to those listed above which may be developed and made
available in the future. Each Fund may be compared in advertising to
Certificates of Deposit (CDs), the Bank Rate Monitor National Index, an average
of the quoted rates for 100 leading banks and thrifts in ten U.S. cities chosen
to represent the ten largest Consumer Metropolitan statistical areas, or other
investments issued by banks. Each Fund differs from bank investments in several
respects. Each Fund may offer greater liquidity or higher potential returns than
CDs; but unlike CDs, the Fund will have a fluctuating share price and return and
is not FDIC insured.
Each Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. ("Lipper"), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, each Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides historical
returns of the capital markets in the United States, including common stocks,
small capitalization stocks, long-term corporate bonds, intermediate-term
government bonds, long-term government bonds, Treasury bills, the U.S. rate of
inflation (based on the CPI), and combinations of various capital markets. The
performance of these capital markets is based on the returns of different
indices.
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL INCOME FUNDS
GT Global Funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the Funds.
Ibbotson calculates total returns in the same method as the Funds. Each Fund may
also compare performance to that of other compilations or indices that may be
developed and made available in the future.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
Each Fund may discuss its Quotron number, CUSIP number, and its current
portfolio management team.
From time to time, each Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, each Fund may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, each Fund may quote financial
or business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of GT Global Funds to one another in appropriate categories over
specific periods of time may also be quoted in advertising.
Each Fund may quote various measures of volatility and benchmark correlation,
such as beta, standard deviation and R(2), in advertising. In addition, each
Fund may compare these measures to those of other funds. Measures of volatility
seek to compare each Fund's historical share price fluctuations or total returns
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
Each Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a Fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after-tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
Each Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Mutual Funds through various retirement accounts and
plans that offer deferral of income taxes on investment earnings and may also
enable an investor to make pre-tax contributions. Because of their advantages,
these retirement accounts and plans may produce returns superior to comparable
non-retirement investments. The Funds may also discuss these accounts and plans,
which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): 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. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL INCOME FUNDS
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 401(k) plans, but with fewer administrative requirements and
therefore potentially lower annual administration expenses.
CODE SECTION 403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other not-for-profit corporations can make pre-tax salary reduction
contributions to these accounts.
PROFIT-SHARING (INCLUDING 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 methods and advertising discuss the
risks inherent in investing. Risk represents the possibility that you may lose
some or all of your investment over a period of time. A basic tenet of investing
is the greater the potential reward, the greater the risk.
The major types of investment risk are market risk, industry risk, credit risk,
interest rate risk and inflation risk. Market risk entails a change in value of
a security due to market uncertainty. Industry risk can be described as the
market risk associated with companies engaged in a similar business.
The next two risks, credit and interest rate risk, more often are associated
with fixed income investing. Credit risk refers to the creditworthiness of an
issuer of debt securities and its ability to pay interest and repay the
principal value of the bond. Interest rate risk has two components. When
interest rates rise or fall the value of the security generally will move
correspondingly in the opposite direction. Further, the longer the maturity the
greater the impact on the bond's value.
Finally, there is inflation risk which does not affect a security's value but
its purchasing power, i.e. the risk of changing price levels in the economy that
affects security prices or the price of goods and services.
From time to time, the Funds and GT Global will quote data regarding industries,
individual countries, regions, world stock exchanges, and economic and
demographic statistics from sources GT Global deems reliable, including 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 Industry
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.
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL INCOME FUNDS
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
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 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.
In addition, the GT Global Strategic Income Fund and the GT Global High Income
Fund, from time to time, may quote yields and total returns of representative
debt instruments from emerging market countries in its advertising and sales
literature.
ECONOMIC DEVELOPMENT IN EMERGING MARKETS
The Manager has identified six phases to track the progress of developing
economies.
In addition, the Manager focuses on the transitions between each phase:
BETWEEN PHASES 1 & 2, STABILIZATION: Developing nations recognize the need
for economic reform and launch initiatives to stabilize their economies. Typical
measures might include initiating monetary reforms to contain inflation,
controlling government spending, and addressing external trade imbalances.
BETWEEN PHASES 2 & 3, RENOVATION: Economic development gathers momentum as
the governments of developing nations take further steps to increase
productivity and external competitiveness. Typical reforms include easing market
regulations, privatizing state-owned industries, lowering trade barriers and
reforming the national tax structure.
BETWEEN PHASES 3 & 4, NEW CONSTRUCTION: As economic reforms take hold,
infrastructure improvements are needed to facilitate and support long-term
growth. The construction and upgrading of highways and airports, communications
and utility systems generally require financing in the form of public debt.
Similarly, as the private sector develops, bolstered by new privatizations,
corporate debt securities typically are issued to finance business expansion.
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL INCOME FUNDS
EMERGING MARKET TRADING VOLUME
The annual trading volume of debt securities from developing economies according
to Salomon Brothers, Inc. has grown from $90 billion in 1990 to $150 billion in
1991, to $400 billion in 1992 and was estimated to be $1,200 billion at the end
of 1993 and $1.5 trillion at the end of 1994, respectively.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
Moody's rates the debt securities issued by various entities from "Aaa" to "C".
Investment grade ratings are the first four categories:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude, or there
may be other elements present which make the long-term risks appear somewhat
greater.
A -- Upper-medium-grade-obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium-grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and, in fact,
have speculative characteristics as well.
Ba -- Have speculative elements and their future cannot be considered as
well assured. Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B -- Generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small.
Caa -- Poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca -- Speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
C -- Lowest rated class of bonds. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities that are not
rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL INCOME FUNDS
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic ratings
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the company ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal and differ from AAA issues only in a small degree.
A -- Have a strong capacity to pay interest and repay principal although
they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" are
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of this
obligation. "BB" indicates the lowest degree of speculation and "C" the
highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
BB -- Has less near-term vulnerability to default than other speculative
issues; however, it faces major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The "BB" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "BBB-" rating.
B -- Has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
CCC -- Has a currently indefinable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The "CCC" rating category
is also used for debt subordinated to senior debt that is assigned an actual
or implied "B" or "B-" rating.
CC -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC" rating.
C -- Typically applied to debt subordinated to senior debt which is
assigned an actual or implied "CCC-" debt rating. The "C" rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" rating is used when interest payments
are not made on the date due even if the applicable grace period has not
expired, unless S&P believes that such payments will be made during such
grace period. The "D" rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1" and "Prime-2" to indicate commercial
paper having the highest capacity for timely repayment. Issuers (or supporting
institutions) rated Prime-1 have a superior ability to repay senior short-term
debt obligations. Prime-1 repayment capacity generally will be evidenced by many
of the following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
Statement of Additional Information Page 47
<PAGE>
GT GLOBAL INCOME FUNDS
structures with moderate reliance on debt and ample asset protections; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2 have a strong
ability to repay senior short-term debt obligations. This normally will be
evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging from
A-1 for the highest quality obligations to "D" for the lowest. A-1 -- This
highest rating indicates that the degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics will be denoted with a plus sign (+) designation. A-2 --
Capacity for timely payments on issues with this designation is satisfactory;
however, the relative degree of safety is not as high as for issues designated
"A-1." A-3 -- Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations. B -- Issues
rated "B" are regarded as having only speculative capacity for timely payment. C
- -- This rating is assigned to short-term debt obligations with a doubtful
capacity for payment. D -- Debt rated "D" is in payment default. The "D" rating
category is used when interest payments or principal payments are not made on
the date due, even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Funds 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 INCOME 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 Government Income Fund, GT Global High Income Fund - Consolidated, and GT
Global Strategic Income Fund, including the portfolios of investments, as of
October 31, 1996, the related statements of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods indicated
herein. These financial statements and the 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 positions of GT
Global Government Income Fund, GT Global High Income Fund - Consolidated, and GT
Global Strategic Income Fund as of October 31, 1996, the results of their
operations for the year then ended, the changes in their net assets for each of
the two years in the period then ended, and the financial highlights for each of
periods indicated herein, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 13, 1996
F1
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (89.0%)
Australia (4.8%)
Commonwealth of Australia, 9.5% due 8/15/03 .......... AUD 21,800,000 $ 19,335,562 4.8
Canada (11.8%)
Canadian Government:
7% due 12/1/06 ..................................... CAD 40,000,000 31,138,957 7.6
8.75% due 12/1/05 .................................. CAD 19,600,000 17,046,021 4.2
Colombia (1.1%)
Republic of Colombia, 7.25% due 2/23/04 .............. USD 4,875,000 4,635,638 1.1
Denmark (2.9%)
Kingdom of Denmark, 7% due 12/15/04 .................. DKK 67,000,000 11,834,313 2.9
Finland (2.0%)
Finnish Government, 9.5% due 3/15/04 ................. FIM 31,000,000 8,182,127 2.0
Germany (17.6%)
Deutschland Republic, 6% due 1/5/06 .................. DEM 108,650,000 71,726,974 17.6
Ireland (1.9%)
Irish Gilts, 8% due 8/18/06 .......................... IEP 4,500,000 7,859,990 1.9
Italy (9.0%)
Italian Buoni Poliennali del Tesoro (BTPS):
9.5% due 2/1/99 .................................... ITL 22,600,000,000 15,650,408 3.8
10.5% due 11/1/00 .................................. ITL 17,000,000,000 12,393,065 3.1
9.5% due 2/1/01 .................................... ITL 12,110,000,000 8,593,403 2.1
Mexico (1.1%)
United Mexican States, 7.6875% due 8/6/01 - 144A+
{.} ................................................. USD 4,490,000 4,491,347 1.1
New Zealand (2.6%)
New Zealand Government, 8% due 11/15/06 .............. NZD 14,200,000 10,554,326 2.6
Poland (1.1%)
Republic of Poland, Past Due Interest, 4% due 10/27/14
- Registered++ ...................................... USD 5,605,000 4,631,131 1.1
South Africa (1.1%)
Republic of South Africa, 9.625% due 12/15/99 ........ USD 4,240,000 4,515,600 1.1
Spain (2.0%)
Kingdom of Spain, 10.1% due 2/28/01 .................. ESP 950,000,000 8,292,480 2.0
Sweden (4.8%)
Swedish Government, 13% due 6/15/01 .................. SEK 101,000,000 19,323,805 4.8
United Kingdom (10.5%)
United Kingdom Treasury:
7.5% due 12/7/06 ................................... GBP 16,000,000 25,821,527 6.3
7% due 11/6/01 ..................................... GBP 10,500,000 16,923,202 4.2
United States (14.7%)
United States Treasury Note:
7.875% due 11/15/04 ................................ USD 27,225,000 29,916,660 7.3
6.25% due 10/31/01 ................................. USD 20,000,000 20,150,000 5.0
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
United States Treasury Bond, 6.875% due 8/15/25 ...... USD 9,500,000 $ 9,726,738 2.4
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $351,306,081) ....... 362,743,274 89.0
------------ -----
<CAPTION>
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (4.4%)
New Zealand (2.2%)
New Zealand Treasury Bill, 9.23% due 1/15/97 ......... NZD 13,160,000 9,133,580 2.2
Philippines (2.2%)
Philippine Treasury Bill, 9.94% due 11/27/96 ......... PHP 233,300,000 8,832,945 2.2
------------
Total Treasury Bills (cost $17,878,115) .................. 17,966,525
------------
Commercial Paper - Discounted (3.1%)
Indonesia (1.2%)
PT Bank Tabungan Negara, effective yield 16.02%, due
9/12/97 ............................................. IDR 12,000,000,000 4,552,243 1.1
PT Bank Degang Negara, effective yield 16.02%, due
9/12/97 ............................................. IDR 750,000,000 284,515 0.1
Thailand (1.9%)
Bank of Ayudhya, 10.25% due 9/24/97 .................. THB 100,000,000 3,914,304 1.0
Siam City Bank Co., Ltd., 10.58% due 11/25/96 ........ THB 100,000,000 3,898,078 0.9
------------
Total Commercial Paper - Discounted (cost $12,670,668) ... 12,649,140
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $30,548,783) .......... 30,615,665 7.5
------------ -----
<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 $2,365,000 U.S. Treasury
Bonds, 7.125% due 2/15/23 (market value of collateral
is $2,497,903, including accrued interest). (cost
$2,446,377) ........................................... 2,446,377 0.6
------------ -----
TOTAL INVESTMENTS (cost $384,301,241) * .................. 395,805,316 97.1
Other Assets and Liabilities ............................. 11,803,202 2.9
------------ -----
NET ASSETS ............................................... $407,608,518 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{.} 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.
+ The coupon rate shown on floating rate note represents the rate at
period end.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
* For Federal income tax purposes, cost is $384,541,135 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 13,757,185
Unrealized depreciation: (2,493,004)
-------------
Net unrealized appreciation: $ 11,264,181
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1996
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- -------- -------- --------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 3,628,300 1.26651 11/12/96 $ 12,069
Canadian Dollars........................ 4,631,930 1.3427 11/29/96 14,368
Canadian Dollars........................ 3,436,593 1.34525 11/29/96 17,154
Canadian Dollars........................ 1,165,453 1.366 11/29/96 23,433
Canadian Dollars........................ 3,346,943 1.35055 11/29/96 29,776
Canadian Dollars........................ 3,735,427 1.3503 11/29/96 32,546
Danish Kroner........................... 8,920,056 5.7816 01/17/97 (9,227)
Deutsche Marks.......................... 14,902,129 1.51102 01/30/97 64,470
Deutsche Marks.......................... 21,428,571 1.45885 11/04/96 (801,268)
Deutsche Marks.......................... 4,661,689 1.5052 11/04/96 (25,396)
Deutsche Marks.......................... 198,229 1.5073 11/04/96 (802)
Deutsche Marks.......................... 7,433,593 1.5066 11/04/96 (33,552)
Irish Punts............................. 4,794,643 0.6252 01/02/97 76,118
Irish Punts............................. 13,246,732 0.62509 01/02/97 208,108
Italian Liras........................... 8,379,070 1,531.31 01/21/97 41,111
Italian Liras........................... 4,560,976 1,545.30 01/21/97 63,467
Japanese Yen............................ 12,352,371 109.85 01/13/97 (301,248)
Japanese Yen............................ 12,605,919 111.845 02/05/97 (36,577)
Japanese Yen............................ 13,804,625 105.3 11/05/96 (1,105,157)
Japanese Yen............................ 11,472,720 107.55 11/29/96 (614,681)
Japanese Yen............................ 6,001,115 109.3 11/29/96 (220,294)
-------------- --------------
Total Contracts to Buy (Payable amount
$167,272,666)........................ 164,707,084 (2,565,582)
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 40.41%.
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 4,115,507 1.29149 11/12/96 (93,019)
Australian Dollars...................... 1,485,385 1.27251 11/12/96 (11,916)
Australian Dollars...................... 582,271 1.26871 11/12/96 (2,944)
Canadian Dollars........................ 22,337,854 1.368 11/29/96 (481,129)
Canadian Dollars........................ 4,736,522 1.3644 11/29/96 (89,791)
Canadian Dollars........................ 7,172,020 1.3522 11/29/96 (72,479)
Canadian Dollars........................ 1,270,045 1.3574 11/29/96 (17,651)
Canadian Dollars........................ 687,319 1.35016 11/29/96 (5,918)
Canadian Dollars........................ 164,359 1.34715 11/29/96 (1,051)
Danish Kroner........................... 6,565,784 5.8727 01/17/97 (95,166)
Danish Kroner........................... 14,863,819 5.81074 01/17/97 (59,243)
Deutsche Marks.......................... 7,092,137 1.50452 01/30/97 (174)
Deutsche Marks.......................... 7,809,992 1.4983 01/30/97 32,229
Deutsche Marks.......................... 3,733,316 1.50859 11/04/96 11,903
Deutsche Marks.......................... 1,982,292 1.4746 11/04/96 52,158
Deutsche Marks.......................... 6,862,033 1.48714 11/04/96 121,170
Deutsche Marks.......................... 21,144,443 1.49762 11/04/96 222,793
Finnish Markkaa......................... 8,536,304 4.53 01/02/97 (35,200)
Irish Punts............................. 8,382,003 0.61708 01/02/97 (24,529)
Irish Punts............................. 764,407 0.52481 01/02/97 (11,665)
Irish Punts............................. 8,894,965 0.61081 01/02/97 65,027
Italian Liras........................... 19,326,725 1,546.70 01/21/97 (286,187)
Japanese Yen............................ 12,352,371 112.755 01/13/97 (24,758)
Japanese Yen............................ 1,846,479 107.883 11/05/96 100,074
Japanese Yen............................ 3,165,392 108.307 11/05/96 158,493
Japanese Yen............................ 8,792,755 105.3 11/05/96 703,921
Japanese Yen............................ 3,388,865 109.304 11/29/96 124,273
Japanese Yen............................ 4,377,284 109.354 11/29/96 158,444
Japanese Yen............................ 9,707,686 107.88 11/29/96 488,829
New Zealand Dollars..................... 19,930,083 1.42847 01/31/97 (118,668)
Swedish Kronor.......................... 13,732,602 6.6109 01/21/97 (118,722)
Swiss Francs............................ 6,300,745 1.24608 01/03/97 39,137
Swiss Francs............................ 4,346,716 1.24171 01/03/97 42,393
Swiss Francs............................ 6,157,184 1.24205 01/03/97 58,347
-------------- --------------
Total Contracts to Sell (Receivable
amount $253,436,645)................. 252,607,664 828,981
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 61.97%.
Total Open Forward Foreign Currency
Contracts, Net....................... $(1,736,601)
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (62.4%)
Argentina (10.9%)
Republic of Argentina:
Discount Bond, 6.4375% due 3/31/23+ ................. USD 26,305,000 $ 19,087,566 4.3
BOCON Pre 4, 5.4453% due 9/1/02[.] + ................ USD 15,293,000 15,346,526 3.5
Par Bond, 5.25% due 3/31/23++ ....................... USD 20,381,000 12,152,171 2.7
Floating Rate Bond, 6.625% due 3/31/05+ ............. USD 2,203,040 1,816,131 0.4
Brazil (9.6%)
Federal Republic of Brazil:
C Bond, 4.5% due 4/15/14 (Effective rate at period
end is 6.92813%, including "payment-in-kind"
bonds.)[.] ++ ...................................... USD 55,360,363 38,404,647 8.6
MYDFA Floating Rate Note, 6.6875% due 9/15/07 -
144A{.} + .......................................... USD 5,191,000 4,350,707 1.0
Bulgaria (2.9%)
Bulgaria, Discount Bond Series A, 6.6875% due 7/28/24 -
EURO+ ................................................ USD 25,780,000 13,067,238 2.9
Costa Rica (1.7%)
Banco Central de Costa Rica:
Interest Bond Series A, 6.34375% due 5/21/05
(Effective maturity date 8/23/03)+ ................. USD 6,036,880 5,825,589 1.3
Principal Bond Series A, 6.25% due 5/21/10 .......... USD 1,900,000 1,539,000 0.4
Ecuador (4.9%)
Ecuador:
Past Due Interest Bond, 3% due 2/27/15 - Euro
(Effective rate at period end is 4.96%, including
"payment-in-kind" bonds.)[.] + ..................... USD 28,818,107 16,138,140 3.6
Past Due Interest Bond, 3% due 2/27/15 - Registered
(Effective rate at period end is 4.96%, including
"payment-in-kind" bonds.)[.] + ..................... USD 6,079,992 3,404,796 0.8
Discount Bond, 6.5% due 2/28/25 - EURO+ ............. USD 3,210,000 2,104,556 0.5
Mexico (8.3%)
United Mexican States:
Global Bond, 11.5% due 5/15/26 ...................... USD 12,700,000 12,684,125 2.9
11.375% due 9/15/16 - 144A{.} ....................... USD 5,640,000 5,625,900 1.3
7.6875% due 8/6/01 - 144A+ {.} {j} .................. USD 4,619,000 4,620,386 1.0
Discount Bond Series C, 6.35156% due 12/31/19+
+/+ ................................................ USD 4,956,000 4,082,505 0.9
Banco Nacional de Comercio Exterior, S.N.C. (BNCE)
Trust Division, 11.25% due 5/30/06 - 144A{.} ......... USD 9,440,000 9,746,800 2.2
Nigeria (4.8%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20++ ........................................... USD 34,500,000 21,390,000 4.8
Panama (3.1%)
Panama, Interest Reduction Bond, 3.5% due 7/17/14 -
144A++ {.} ........................................... USD 21,105,000 13,955,681 3.1
Philippines (2.7%)
Republic of Philippines, 8.75% due 10/7/16 -
144A{.} .............................................. USD 7,000,000 6,855,625 1.5
Central Bank of the Philippines, Debt Conversion Bond
Series B, 6.4375% due 12/1/09+ ....................... USD 5,663,000 5,422,323 1.2
United States (2.7%)
United States Treasury Note, 7% due 7/15/06{j} ........ USD 11,660,000 12,194,037 2.7
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Uruguay (1.5%)
Banco Central del Uruguay:
New Money Bond, 6.875% due 2/18/06+ ................. USD 3,750,000 $ 3,628,125 0.8
Par Bond Series A, 6.75% due 2/19/21+/+ ............. USD 2,290,000 1,889,250 0.4
Par Bond Series B, 6.75% due 2/19/21+/+ ............. USD 1,500,000 1,237,500 0.3
Venezuela (9.3%)
Republic of Venezuela:
Debt Conversion Bond, 6.625% due 12/18/07+ .......... USD 20,750,000 17,066,875 3.8
Front Loaded Interest Reduction Bond Series A, 6.625%
due 3/31/07+ ....................................... USD 13,000,000 10,814,375 2.4
Par Bond Series A, 6.75% due 3/31/20+/+ ............. USD 13,500,000 9,610,313 2.2
Front Loaded Interest Reduction Bond Series B, 6.5%
due 3/31/07+ ....................................... USD 5,000,000 4,159,375 0.9
------------
Total Government & Government Agency Obligations (cost
$259,273,931) ............................................ 278,220,262
------------
Sovereign Debt (17.3%)
Morocco (4.5%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.4375%
due 1/1/09+ .......................................... USD 25,000,000 19,843,750 4.5
Peru (1.5%)
Peru Loan Agreement ** -/- ............................ USD 4,600,000 5,384,875 1.2
Peru Loan Agreement (Citibank Issued) ** -/- .......... USD 1,000,000 1,170,625 0.3
Russia (11.3%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement:
Assignment ** -/- ................................... USD 46,757,000 34,337,172 7.7
Participation ** -/- ................................ DEM 12,466,000 6,321,960 1.4
Assignment ** -/- ................................... DEM 9,819,000 4,979,571 1.1
Participation ** -/- ................................ USD 6,600,000 4,846,875 1.1
------------
Total Sovereign Debt (cost $54,521,525) ................... 76,884,828
------------
Corporate Bonds (10.8%)
Argentina (0.5%)
Industrias Metallurgicas Pescarmona S.A. (IMPSA),
11.75% due 3/27/98 - 144A{.} ......................... USD 1,950,000 1,989,000 0.5
Brazil (0.3%)
Net Sat Servicos LTDA, 12.75% due 8/5/04 - 144A{.} .... USD 1,134,000 1,190,700 0.3
Indonesia (5.1%)
Asia Pulp & Paper International Finance Co., Ltd.,
11.75% due 10/1/05 ................................... USD 6,077,000 6,335,273 1.4
Dharmala Sakti Sejahtera Promissory Note, effective
yield 20.00%, due 6/9/97 ............................. IDR 9,000,000,000 3,449,610 0.8
PT Polysindo EKA Perkasa:
effective yield 20.05%, due 7/27/97 ................. IDR 6,000,000,000 2,246,285 0.5
13% due 6/15/01 - DTC ............................... USD 613,000 680,430 0.2
13% due 6/15/01 - EURO .............................. USD 395,000 438,450 0.1
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (Continued)
PT Tjiwi Kimia, 13.25% due 8/1/01 ..................... USD 2,500,000 $ 2,812,500 0.6
Rapp International Finance, 13.25% due 12/15/05 -
Euro ................................................. USD 2,430,000 2,642,625 0.6
FSW International Finance Co., 12.5% due 11/1/06 -
144A{.} .............................................. USD 2,007,000 2,025,816 0.5
PT Indah Kiat International Finance Series B, 11.875%
due 6/15/02 .......................................... USD 1,510,000 1,615,700 0.4
Luxembourg (0.5%)
Millicom International Cellular, effective yield
13.07%, due 6/1/06 - 144A{.} ......................... USD 3,800,000 2,170,750 0.5
Malaysia (0.1%)
Aokam Perdana Bhd., Convertible Bond, 3.5% due
6/13/04 .............................................. USD 650,000 453,375 0.1
Mexico (2.8%)
Grupo Industrial Durango, S.A., 12.625% due 8/1/03 .... USD 4,758,000 4,960,215 1.1
Grupo Irsa, S.A. de C.V., 8.375% due 7/15/98 .......... USD 3,300,000 3,295,875 0.7
Cemex, S.A. de C.V. "B", 12.75% due 7/15/06 -
144A{.} .............................................. USD 2,420,000 2,622,675 0.6
Grupo Elektra, S.A. de C.V., 12.75% due 5/15/01 -
144A{.} .............................................. USD 1,500,000 1,573,125 0.4
People's Republic of China (0.7%)
Zhuhai Highway Co., Ltd., 11.5% due 7/1/08 -
144A{.} .............................................. USD 2,900,000 3,124,750 0.7
Philippines (0.8%)
Filinvest Capital, Convertible Bond, 3.75% due 2/1/02 -
Reg. S++ ............................................. USD 1,892,000 1,863,620 0.4
CE Casecnan Water & Energy, 11.45% due 11/15/05 - Reg.
S .................................................... USD 1,030,000 1,138,150 0.3
Subic Power Corp., 9.5% due 12/28/08 - 144A{.} ........ USD 448,276 463,966 0.1
------------
Total Corporate Bonds (cost $46,398,969) .................. 47,092,890
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $360,194,425) ........ 402,197,980 90.5
------------ -----
<CAPTION>
UNDERLYING VALUE % OF NET
OPTIONS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Republic of Argentina: .................................. USD -- -- 0.3
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Floating Rate Bond 3/31/05, Call Option, strike 77.875,
expires 11/29/96 ..................................... -- 19,800,000 890,050 --
Floating Rate Bond 3/31/05, Call Option, strike 80.625,
expires 12/9/96 ...................................... -- 19,800,000 512,365 --
Republic of Brazil C Bond 4/15/14, Call Option, strike
71.8125, expires 12/26/96 .............................. USD 99,670,154 1,108,531 0.3
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Republic of Venezuela: .................................. USD -- -- --
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Debt Conversion Bond 12/18/07, Call Option, strike
84.15, expires 1/2/97 ................................ -- 9,857,000 94,637 --
Debt Conversion Bond 12/18/07, Call Option, strike
84.44, expires 1/2/97 ................................ -- 9,857,000 85,894 --
------------ -----
TOTAL OPTIONS (cost $3,779,230) ........................... 2,691,477 0.6
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Commercial Paper - Discounted (3.8%)
Thailand (0.2%)
TPI Polene Public Co., Ltd., current yield 10.36% due
1/6/97 ............................................... THB 25,000,000 $ 962,735 0.2
United States (3.6%)
Merrill Lynch & Co., current yield 5.38% due
11/5/96 .............................................. USD 16,000,000 15,990,436 3.6
------------
Total Commercial Paper - Discounted (cost $16,958,338) .... 16,953,171
------------
Government & Government Agency Obligations (2.0%)
Mexico (2.0%)
Mexican Cetes, current yield 29.66% due 1/23/97 ....... MXN 4,567,238 5,351,413 1.2
Mexican Cetes, current yield 29.61% due 1/16/97 ....... MXN 1,340,951 1,578,527 0.4
Mexican Cetes, current yield 26.88% due 1/30/97 ....... MXN 1,225,706 1,436,292 0.3
Mexican Cetes, current yield 29.66% due 2/20/97 ....... MXN 325,125 372,690 0.1
Mexican Cetes, current yield 29.66% due 2/6/97 ........ MXN 135,468 156,927 --
------------
Total Government & Government Agency Obligations (cost
$8,891,671) .............................................. 8,895,849
------------
Commercial Paper - Indexed (1.4%)
Philippines (1.4%)
National Westminster Bank PLC, Currency-Linked CD,
12.3798% due 2/28/97 (cost $6,500,000) ............... USD 6,500,000 6,418,711 1.4
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $32,350,009) ........... 32,267,731 7.2
------------ -----
<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 $3,010,000 U.S. Treasury Bonds,
7.125% due 2/15/23 (market value of collateral is
$3,179,150, including accrued interest).
(cost $3,112,480) ..................................... 3,112,480 0.7
------------ -----
TOTAL INVESTMENTS (cost $399,436,144) * ................... 440,269,668 99.0
Other Assets and Liabilities .............................. 4,348,817 1.0
------------ -----
NET ASSETS ................................................ $444,618,485 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
** Underlying loan agreement currently in default.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
+ The coupon rate shown on floating rate note represents the rate at
period end.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) bonds.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
{j} Security is segregated as collateral for when-issued securities
held by the Fund. See Note 1 of Notes to Financial Statements.
* For Federal income tax purposes, cost is $401,018,014 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 42,322,854
Unrealized depreciation: (3,071,200)
-------------
Net unrealized appreciation: $ 39,251,654
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1996
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- -------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 6,587,811 1.47060 11/13/96 $ 191,735
-------------- --------------
Total Contracts to Sell (Receivable
amount $6,779,546)................... 6,587,811 191,735
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 1.48%.
Total Open Forward Foreign Currency
Contracts............................ $ 191,735
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (82.1%)
Argentina (6.4%)
Republic of Argentina:
Discount Bond, 6.4375% due 3/31/23+ ................ USD 16,365,000 $ 11,874,853 2.3
BOCON Pre 4, 5.4453% due 9/1/02[.] + ............... USD 9,290,000 9,322,515 1.8
Par Bond, 5.25% due 3/31/23++ ...................... USD 11,350,000 6,767,438 1.3
Floating Rate Bond, 6.625% due 3/31/05+ ............ USD 6,224,960 5,131,701 1.0
Australia (2.2%)
Commonwealth of Australia, 9.5% due 8/15/03 .......... AUD 13,000,000 11,530,381 2.2
Brazil (4.2%)
Federal Republic of Brazil:
C Bond, 4.5% due 4/15/14 (Effective rate at period
end is 6.928125%, including "payment-in-kind"
bonds.)[.] ++ ..................................... USD 27,866,864 19,332,637 3.7
MYDFA Floating Rate Note, 6.6875% due 9/15/07 -
144A+ {.} ......................................... USD 3,326,000 2,787,604 0.5
Bulgaria (1.6%)
Bulgaria, Discount Bond Series A, 6.6875% due 7/28/24
- EURO+ ............................................. USD 15,872,000 8,045,120 1.6
Canada (2.7%)
Canadian Government:
8.75% due 12/1/05 .................................. CAD 10,500,000 9,131,797 1.8
8% due 11/1/98 ..................................... CAD 6,000,000 4,785,187 0.9
Costa Rica (0.8%)
Banco Central de Costa Rica:
Interest Bond Series A, 6.34375% due 5/21/05
(Effective maturity date 8/23/03)+ ................ USD 2,711,480 2,616,578 0.5
Principal Bond Series A, 6.25% due 5/21/10 ......... USD 1,900,000 1,539,000 0.3
Denmark (2.8%)
Kingdom of Denmark, 7% due 12/15/04 .................. DKK 81,000,000 14,307,236 2.8
Ecuador (2.6%)
Ecuador:
Past Due Interest Bond, 3% due 2/27/15 - Euro
(Effective rate at period end is 4.96%, including
"payment-in-kind" bonds.)[.] + .................... USD 16,652,835 9,325,588 1.8
Discount Bond, 6.5% due 2/28/25 - Euro+ ............ USD 6,520,000 4,274,675 0.8
Past Due Interest Bond, 3% due 2/27/15 - 144A
(Effective rate at period end is 4.96%, including
"payment-in-kind" bonds.)[.] + {.} ................ USD 1,058 592 --
France (1.7%)
France O.A.T., 7.25% due 4/25/06 ..................... FRF 40,000,000 8,576,852 1.7
Germany (9.9%)
Deutschland Republic:
6% due 1/5/06 ...................................... DEM 45,000,000 29,707,608 5.7
8.25% due 9/20/01 .................................. DEM 14,500,000 10,885,060 2.1
Treuhandanstalt, 7.125% due 1/29/03 .................. DEM 15,000,000 10,746,994 2.1
Italy (3.9%)
Italian Buoni Poliennali del Tesoro (BTPS):
10.5% due 11/1/00 .................................. ITL 11,200,000,000 8,164,843 1.6
9.5% due 2/1/99 .................................... ITL 8,000,000,000 5,539,967 1.1
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Republic of Italy Series Y, .5625% due 7/26/99+ ...... JPY 700,000,000 $ 6,216,478 1.2
Mexico (7.0%)
United Mexican States:
Discount Bond Series C, 6.35156% due 12/31/19+
+/+ ............................................... USD 18,634,000 15,349,758 3.0
Global Bond, 11.5% due 5/15/26 ..................... USD 8,272,000 8,261,660 1.6
11.375% due 9/15/16 - 144A{.} ...................... USD 3,000,000 2,992,500 0.6
7.6875% due 8/6/01 - 144A+ {.} ..................... USD 2,953,000 2,953,886 0.6
Banco Nacional de Comercio Exterior, S.N.C. (BNCE)
Trust Division, 11.25% due 5/30/06 - 144A{.} ........ USD 6,152,000 6,351,940 1.2
New Zealand (1.1%)
New Zealand Government, 8% due 2/15/01 ............... NZD 8,000,000 5,822,342 1.1
Nigeria (2.0%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20++ .......................................... USD 16,500,000 10,230,000 2.0
Panama (2.0%)
Panama, Interest Reduction Bond, 3.5% due 7/17/14 -
144A++ {.} .......................................... USD 15,805,000 10,451,056 2.0
Philippines (0.2%)
Republic of Philippines, 8.75% due 10/7/16 -
144A{.} ............................................. USD 1,000,000 979,375 0.2
Spain (3.5%)
Kingdom of Spain, 10.1% due 2/28/01 .................. ESP 2,100,000,000 18,330,746 3.5
Supranational (1.6%)
International Bank of Reconstruction & Development,
4.75% due 12/20/04 .................................. JPY 800,000,000 8,227,205 1.6
Sweden (2.3%)
Swedish Government, 13% due 6/15/01 .................. SEK 63,000,000 12,053,463 2.3
Turkey (0.8%)
Sultan Ltd., 8.49874% due 6/11/99+ ................... USD 4,400,000 4,327,928 0.8
United Kingdom (6.6%)
United Kingdom Treasury:
7% due 11/6/01 ..................................... GBP 14,100,000 22,725,571 4.4
7.5% due 12/7/06 ................................... GBP 7,000,000 11,296,982 2.2
United States (10.7%)
United States Treasury Note, 6.875% due 3/31/00{j} ... USD 43,000,000 44,211,056 8.5
United States Treasury Bond, 6.875% due 8/15/25 ...... USD 11,000,000 11,262,539 2.2
Uruguay (0.2%)
Banco Central del Uruguay, Par Bond Series A, 6.75%
due 2/19/21+/ + ..................................... USD 1,370,000 1,130,250 0.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Venezuela (5.3%)
Republic of Venezuela:
Debt Conversion Bond, 6.625% due 12/18/07+ ......... USD 13,750,000 $ 11,309,375 2.2
Front Loaded Interest Reduction Bond Series B, 6.5%
due 3/31/07+ ...................................... USD 9,000,000 7,486,875 1.4
Par Bond Series A, 6.75% due 3/31/20+/+ ............ USD 7,500,000 5,339,063 1.0
Front Loaded Interest Reduction Bond Series A,
6.625% due 3/31/07+ ............................... USD 4,500,000 3,743,438 0.7
------------
Total Government & Government Agency Obligations (cost
$406,608,996) ........................................... 425,447,712
------------
Sovereign Debt (8.1%)
Morocco (1.8%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.4375%
due 1/1/09+ ......................................... USD 11,460,000 9,096,375 1.8
Russia (6.3%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement:
Assignment ** -/- .................................. USD 31,585,000 23,195,234 4.5
Participation ** -/- ............................... DEM 8,786,000 4,455,699 0.9
Participation ** -/- ............................... USD 3,440,000 2,526,250 0.5
Assignment ** -/- .................................. DEM 4,566,000 2,315,584 0.4
------------
Total Sovereign Debt (cost $27,803,682) .................. 41,589,142
------------
Corporate Bonds (3.4%)
Brazil (0.2%)
Net Sat Servicos LTDA, 12.75% due 8/5/04 - 144A{.} ... USD 738,000 774,900 0.2
Indonesia (0.9%)
PT Polysindo EKA Perkasa, 13% due 6/15/01:
EURO ............................................... USD 1,955,000 2,170,050 0.4
DTC ................................................ USD 395,000 438,450 0.1
FSW International Finance Co., 12.5% due 11/1/06 -
144A{.} ............................................. USD 1,090,000 1,100,219 0.2
Rapp International Finance, 13.25% due 12/15/05 -
Euro ................................................ USD 664,000 722,100 0.1
PT Indah Kiat International Finance Series B, 11.875%
due 6/15/02 ......................................... USD 664,000 710,480 0.1
Luxembourg (0.3%)
Millicom International Cellular, effective yield
13.07% due 6/1/06 - 144A{.} ......................... USD 2,300,000 1,313,875 0.3
Mexico (0.7%)
Grupo Industrial Durango, S.A., 12.625% due 8/1/03 ... USD 2,653,000 2,765,753 0.5
Grupo Elektra, S.A. de C.V., 12.75% due 5/15/01 -
144A{.} ............................................. USD 1,000,000 1,048,750 0.2
Philippines (0.3%)
Filinvest Capital, Convertible Bond, 3.75% due 2/1/02
- 144A{.} ........................................... USD 1,260,000 1,241,100 0.2
CE Casecnan Water & Energy, 11.45% due 11/15/05 - Reg.
S ................................................... USD 670,000 740,350 0.1
United States (1.0%)
Chase Manhattan Corp., 6.25% due 1/15/06 ............. USD 2,835,000 2,700,839 0.5
</TABLE>
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (Continued)
General Motors Acceptance Corp., 6.625% due
10/15/05 ............................................ USD 2,700,000 $ 2,641,580 0.5
------------
Total Corporate Bonds (cost $17,787,296) ................. 18,368,446
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $452,199,974) ....... 485,405,300 93.6
------------ -----
<CAPTION>
UNDERLYING % OF NET
OPTIONS CURRENCY AMOUNT ASSETS
- ---------------------------------------------------------- -------- -------------- -------------
<S> <C> <C> <C> <C>
Republic of Brazil C Bond 4/15/14, Call Option, strike
71.8125, expires 12/26/96 ............................. USD 59,364,791 660,255 0.2
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Republic of Venezuela: ................................. USD -- -- --
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Debt Conversion Bond 12/18/07, Call Option, strike
84.15, expires 1/2/97 ............................... -- 5,500,000 52,806 --
Debt Conversion Bond 12/18/07, Call Option, strike
84.44, expires 1/2/97 ............................... -- 5,500,000 47,927 --
------------ -----
TOTAL OPTIONS (cost $1,727,048) .......................... 760,988 0.2
------------ -----
<CAPTION>
PRINCIPAL % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT ASSETS
- ---------------------------------------------------------- -------- -------------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (0.9%)
Mexico (0.9%)
Mexican Cetes, current yield 29.66% due 1/23/97 ...... MXN 2,552,332 2,990,557 0.6
Mexican Cetes, current yield 29.61% due 1/16/97 ...... MXN 749,370 882,136 0.2
Mexican Cetes, current yield 26.88% due 1/30/97 ...... MXN 684,968 802,651 0.1
Mexican Cetes, current yield 29.66% due 2/20/97 ...... MXN 181,691 208,272 --
Mexican Cetes, current yield 29.66% due 2/6/97 ....... MXN 75,705 87,697 --
------------
Total Government & Government Agency Obligations (cost
$4,968,978) ............................................. 4,971,313
------------
Commercial Paper - Indexed (0.5%)
Philippines (0.5%)
National Westminster Bank PLC, Currency-Linked CD,
12.3798% due 2/28/97 (cost $2,500,000) .............. USD 2,500,000 2,468,735 0.5
------------
Commercial Paper - Discounted (0.2%)
Thailand (0.2%)
TPI Polene Public Co., Ltd., current yield 10.36% due
1/6/97
(cost $967,902) ..................................... THB 25,000,000 962,735 0.2
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $8,436,880) ........... 8,402,783 1.6
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
GT GLOBAL STRATEGIC INCOME 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 $16,135,000 U.S. Treasury
Bonds, 7.125% due 2/15/23 (market value of collateral
is $17,041,721, including accrued interest). (cost
$16,705,575) ......................................... $ 16,705,575 3.2
------------ -----
TOTAL INVESTMENTS (cost $479,069,477) * .................. 511,274,646 98.6
Other Assets and Liabilities ............................. 7,508,600 1.4
------------ -----
NET ASSETS ............................................... $518,783,246 100.0
------------ -----
------------ -----
</TABLE>
- --------------
+ The coupon rate shown on floating rate note represents the rate at
period end.
** Underlying loan agreement currently in default.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
-/- Non-income producing security.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) bonds.
{j} Security is segregated as collateral for when-issued securities
held by the Fund. See Note 1 of Notes to Financial Statements.
* For Federal income tax purposes, cost is $480,138,813 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 34,211,689
Unrealized depreciation: (3,075,856)
-------------
Net unrealized appreciation: $ 31,135,833
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F14
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1996
<TABLE>
<CAPTION>
MARKET VALUE UNREALIZED
(U.S. CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- ------------ ----------- -------- --------------
<S> <C> <C> <C> <C>
Canadian Dollars........................ 418,368 1.35055 11/29/96 $ 3,722
Deutsche Marks.......................... 330,382 1.48683 11/05/96 (5,905)
Deutsche Marks.......................... 175,102 1.52412 11/05/96 1,231
Deutsche Marks.......................... 35,067,522 1.47631 11/27/96 (832,700)
------------ --------------
Total Contracts to Buy (Payable amount
$36,825,026)......................... 35,991,374 (833,652)
------------ --------------
THE VALUE OF CONTRACTS TO BUY AS PERCENTAGE OF NET ASSETS IS 6.94%.
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
Canadian Dollars........................ 14,000,381 1.35715 11/29/96 (192,033)
Canadian Dollars........................ 537,902 1.35220 11/29/96 (5,436)
Deutsche Marks.......................... 8,259,548 1.47358 11/05/96 223,195
Deutsche Marks.......................... 5,011,894 1.46463 11/05/96 166,888
Deutsche Marks.......................... 22,849,488 1.50483 11/12/96 70,044
Deutsche Marks.......................... 12,928,667 1.50920 11/27/96 18,590
Deutsche Marks.......................... 10,748,606 1.52824 11/27/96 (118,653)
Deutsche Marks.......................... 3,969,908 1.50676 11/27/96 12,146
Deutsche Marks.......................... 717,812 1.52558 11/27/96 (6,686)
Deutsche Marks.......................... 635,185 1.52100 11/27/96 (4,021)
Deutsche Marks.......................... 330,826 1.47100 11/27/96 9,079
Italian Liras........................... 14,175,119 1546.70000 01/21/97 (209,903)
Swedish Kronor.......................... 9,887,474 6.61090 01/21/97 (85,480)
------------ --------------
Total Contracts to Sell (Receivable
amount $103,930,540)................. 104,052,810 (122,270)
------------ --------------
THE VALUE OF CONTRACTS TO SELL AS PERCENTAGE OF NET ASSETS IS 20.06%.
Total Open Forward Foreign Currency
Contracts, Net....................... $(955,922)
--------------
--------------
</TABLE>
- --------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F15
<PAGE>
GT GLOBAL INCOME FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------
GOVERNMENT HIGH INCOME- STRATEGIC
INCOME CONSOLIDATED INCOME
------------- ------------ -------------
<S> <C> <C> <C>
Assets:
Investments in securities, at value
(cost $384,301,241, $399,436,144, and
$479,069,477, respectively) (Note
1)................................... $ 395,805,316 $440,269,668 $ 511,274,646
U.S. currency......................... 688 747 764
Foreign currencies (cost $163,
$375,538, and $6,038,
respectively)........................ 165 363,584 5,983
Receivable for securities sold........ 25,721,936 19,276,936 7,533,831
Interest receivable................... 12,649,427 8,384,949 13,463,776
Receivable for Fund shares sold....... 288,358 5,276,241 2,864,788
Receivable for open forward foreign
currency contracts, net (Note 1)..... -- 191,735 --
Receivable for forward foreign
currency contracts -- closed (Note
1)................................... 674,249 -- --
Miscellaneous receivable.............. -- -- 90,538
Cash held as collateral for securities
loaned (Note 1)...................... 92,153,670 -- 47,372,677
Unamortized organizational costs...... -- 35,371 --
------------- ------------ -------------
Total assets........................ 527,293,809 473,799,231 582,607,003
------------- ------------ -------------
Liabilities:
Payable for securities purchased...... 16,533,723 21,061,541 12,311,147
Payable for Fund shares repurchased... 8,524,914 7,137,124 1,807,865
Payable for open forward foreign
currency contracts, net (Note 1)..... 1,736,601 -- 955,922
Payable for forward foreign currency
contracts -- closed.................. -- -- 404,268
Payable for investment management and
administration fees (Note 2)......... 256,521 381,409 324,636
Payable for service and distribution
expenses (Note 2).................... 216,795 283,839 344,647
Payable for printing and postage
expenses............................. 95,659 116,749 84,559
Payable for transfer agent fees (Note
2)................................... 63,830 62,864 85,559
Payable for professional fees......... 51,757 58,593 57,257
Payable for registration and filing
fees................................. 22,078 8,320 28,364
Payable for custodian fees (Note 1)... 9,679 23,927 29,251
Payable for fund accounting fees (Note
2)................................... 8,364 9,624 10,417
Payable for Directors' and Trustees'
fees and expenses (Note 2)........... 4,832 10,497 2,999
Other accrued expenses................ 6,868 26,159 4,189
Collateral for securities loaned (Note
1)................................... 92,153,670 -- 47,372,677
------------- ------------ -------------
Total liabilities................... 119,685,291 29,180,646 63,823,757
Minority interest (Notes 1 & 2)..... -- 100 --
------------- ------------ -------------
Net assets.............................. $ 407,608,518 $444,618,485 $ 518,783,246
------------- ------------ -------------
------------- ------------ -------------
Class A:
Net asset value and redemption price per
share ($240,944,963 DIVIDED BY
27,559,672, $178,317,938 DIVIDED BY
12,011,654, and $185,125,741 DIVIDED BY
15,748,198 shares outstanding,
respectively).......................... $ 8.74 $ 14.85 $ 11.76
------------- ------------ -------------
------------- ------------ -------------
Maximum offering price per share
(100/95.25 of $8.74, 100/95.25 of
$14.85, and 100/95.25 of $11.76,
respectively) *........................ $ 9.18 $ 15.59 $ 12.35
------------- ------------ -------------
------------- ------------ -------------
Class B:+
Net asset value and offering price per
share ($166,577,127 DIVIDED BY
19,059,341, $251,002,484 DIVIDED BY
16,920,131, and $333,178,201 DIVIDED BY
28,314,377 shares outstanding,
respectively).......................... $ 8.74 $ 14.83 $ 11.77
------------- ------------ -------------
------------- ------------ -------------
Advisor Class:
Net asset value, offering price per
share, and redemption price per share
($86,428 DIVIDED BY 9,897, $15,298,063
DIVIDED BY 1,031,529, and $479,304
DIVIDED BY 40,725 shares outstanding,
respectively).......................... $ 8.73 $ 14.83 $ 11.77
------------- ------------ -------------
------------- ------------ -------------
Net assets consist of:
Paid in capital (Note 4).............. $ 552,445,325 $398,450,836 $ 598,321,655
Undistributed net investment income... 364,918 -- --
Accumulated net realized gain (loss)
on investments and foreign currency
transactions......................... (155,061,909) 5,153,808 (110,861,534)
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (1,643,891) 180,317 (882,044)
Net unrealized appreciation of
investments.......................... 11,504,075 40,833,524 32,205,169
------------- ------------ -------------
Total -- representing net assets
applicable to capital shares
outstanding............................ $ 407,608,518 $444,618,485 $ 518,783,246
------------- ------------ -------------
------------- ------------ -------------
<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.
F16
<PAGE>
GT GLOBAL INCOME FUNDS
STATEMENTS OF OPERATIONS
Year ended October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
----------------------------------------
GOVERNMENT HIGH INCOME- STRATEGIC
INCOME CONSOLIDATED INCOME
------------ ------------ ------------
<S> <C> <C> <C>
Investment income: (Note 1)
Interest income....................... $ 39,935,517 $ 45,539,611 $ 49,794,868
------------ ------------ ------------
Total investment income............. 39,935,517 45,539,611 49,794,868
------------ ------------ ------------
Expenses:
Investment management and
administration fees (Note 2)......... 3,672,503 4,030,144 3,807,689
Transfer agent fees (Note 2).......... 899,178 644,652 1,027,713
Service and distribution expenses:
(Note 2)
Class A............................. 1,074,110 560,451 625,247
Class B............................. 2,006,881 2,405,007 3,468,104
Custodian fees (Note 1)............... 305,430 181,559 290,730
Fund accounting fees (Note 2)......... 127,205 101,697 131,517
Printing and postage expenses......... 88,931 101,142 94,439
Audit fees............................ 71,998 74,353 73,189
Legal fees............................ 26,352 39,821 25,230
Registration and filing fees.......... 52,704 51,240 47,004
Amortization of Organization Costs.... -- 34,894 --
Directors' and Trustees' fees and
expenses (Note 2).................... 17,712 24,607 11,712
Insurance Expenses.................... -- 2,987 --
Other expenses........................ 39,783 6,221 13,540
------------ ------------ ------------
Total expenses before reductions and
interest expense................... 8,382,787 8,258,775 9,616,114
Interest expense (Note 1)......... -- 163,819 --
Expense reductions (Note 1)....... (250,204) -- (108,002)
------------ ------------ ------------
Total net expenses.................. 8,132,583 8,422,594 9,508,112
------------ ------------ ------------
Net investment income................... 31,802,934 37,117,017 40,286,756
------------ ------------ ------------
Net realized and unrealized gain (loss)
on investments and foreign currencies:
(Note 1)
Net realized gain on investments...... 8,737,745 62,643,262 43,672,673
Net realized loss on foreign currency
transactions......................... (10,634,640) (125,790) (6,996,692)
------------ ------------ ------------
Net realized gain (loss) during the
year............................... (1,896,895) 62,517,472 36,675,981
Net change in unrealized appreciation
on translation of assets and
liabilities in foreign currencies.... 2,319,205 174,082 1,913,734
Net change in unrealized appreciation
(depreciation) of investments........ (1,121,083) 31,730,913 27,794,834
------------ ------------ ------------
Net unrealized appreciation during
the year........................... 1,198,122 31,904,995 29,708,568
------------ ------------ ------------
Net realized and unrealized gain (loss)
on investments and foreign
currencies............................. (698,773) 94,422,467 66,384,549
------------ ------------ ------------
Net increase in net assets resulting
from operations........................ $ 31,104,161 $131,539,484 $106,671,305
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F17
<PAGE>
GT GLOBAL INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
----------------------------------------------------------
GOVERNMENT INCOME HIGH INCOME-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................. $ 31,802,934 $ 46,493,014 $ 37,117,017 $ 39,491,435
Net realized gain (loss) on
investments and foreign currency
transactions......................... (1,896,895) (4,465,423) 62,517,472 (62,112,954)
Net change in unrealized appreciation
on translation of assets and
liabilities in foreign currencies.... 2,319,205 3,260,081 174,082 (302)
Net change in unrealized appreciation
(depreciation) of investments........ (1,121,083) 12,089,374 31,730,913 24,969,833
------------- ------------- ------------- -------------
Net increase in net assets resulting
from operations.................... 31,104,161 57,377,046 131,539,484 2,348,012
------------- ------------- ------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............ (15,504,590) (29,604,447) (13,418,057) (12,528,224)
From net realized gain on
investments.......................... (8,183,323) -- (1,230,117) (474,126)
In excess of net investment income.... -- -- -- --
Return of capital..................... -- -- -- (737,846)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............ (9,165,193) (15,123,091) (18,753,394) (17,274,071)
From net realized gain on
investments.......................... (5,303,358) -- (1,719,241) (622,059)
In excess of net investment income.... -- -- -- --
Return of capital..................... -- -- -- (1,015,555)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............ (7,915) (3,476) (505,715) (54,186)
From net realized gain on
investments.......................... (2,893) -- (46,362) --
In excess of net investment income.... -- -- -- --
Return of capital..................... -- -- -- (3,075)
------------- ------------- ------------- -------------
Total distributions................. (38,167,272) (44,731,014) (35,672,886) (32,709,142)
------------- ------------- ------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 386,482,407 359,717,885 583,133,415 418,666,106
Decrease from capital shares
repurchased.......................... (592,826,606) (515,847,692) (592,743,855) (430,339,278)
------------- ------------- ------------- -------------
Net decrease from capital share
transactions....................... (206,344,199) (156,129,807) (9,610,440) (11,673,172)
------------- ------------- ------------- -------------
Total increase (decrease) in net
assets................................. (213,407,310) (143,483,775) 86,256,158 (42,034,302)
Net assets:
Beginning of year..................... 621,015,828 764,499,603 358,362,327 400,396,629
------------- ------------- ------------- -------------
End of year........................... $ 407,608,518* $ 621,015,828** $ 444,618,485* $ 358,362,327**
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
<CAPTION>
STRATEGIC INCOME
----------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
------------- -------------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income................. $ 40,286,756 $ 54,919,073
Net realized gain (loss) on
investments and foreign currency
transactions......................... 36,675,981 (82,675,607)
Net change in unrealized appreciation
on translation of assets and
liabilities in foreign currencies.... 1,913,734 (3,747,114)
Net change in unrealized appreciation
(depreciation) of investments........ 27,794,834 35,939,954
------------- -------------
Net increase in net assets resulting
from operations.................... 106,671,305 4,436,306
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............ (12,520,881) (16,844,112)
From net realized gain on
investments.......................... -- --
In excess of net investment income.... (1,097,884) --
Return of capital..................... -- (852,171)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............ (22,200,673) (27,777,018)
From net realized gain on
investments.......................... -- --
In excess of net investment income.... (1,946,649) --
Return of capital..................... -- (1,405,284)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............ (46,547) (14,952)
From net realized gain on
investments.......................... -- --
In excess of net investment income.... (4,081) --
Return of capital..................... -- (756)
------------- -------------
Total distributions................. (37,816,715) (46,894,293)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 335,665,174 194,343,201
Decrease from capital shares
repurchased.......................... (432,196,117) (339,216,716)
------------- -------------
Net decrease from capital share
transactions....................... (96,530,943) (144,873,515)
------------- -------------
Total increase (decrease) in net
assets................................. (27,676,353) (187,331,502)
Net assets:
Beginning of year..................... 546,459,599 733,791,101
------------- -------------
End of year........................... $ 518,783,246* $ 546,459,599**
------------- -------------
------------- -------------
<FN>
- ----------------
* Includes undistributed net investment income of $364,918, $0, and $0,
respectively.
** Includes undistributed net investment income (loss) of $1,761,999,
$78,582,766, and $(68,169), respectively.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F18
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1996 (D) 1995 (D) 1994 (D) 1993 (D) 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.81 $ 8.63 $ 11.07 $ 9.83 $ 10.29
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income................. 0.57 0.62 0.65 0.74 0.92
Net realized and unrealized gain
(loss) on investments................ 0.03 0.15 (1.52) 1.34 (0.31)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.60 0.77 (0.87) 2.08 0.61
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.57) (0.59) (0.65) (0.74) (0.83)
From net realized gain on
investments.......................... (0.10) -- (0.27) -- (0.13)
In excess of net realized gain on
investments.......................... -- -- (0.55) -- --
Return of capital..................... -- -- (0.10) -- --
From sources other than net investment
income............................... -- -- -- (0.10) (0.11)
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.67) (0.59) (1.57) (0.84) (1.07)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 8.74 $ 8.81 $ 8.63 $ 11.07 $ 9.83
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 7.11% 9.22% (8.87)% 21.9% 6.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 240,945 $ 385,404 $ 502,094 $ 708,301 $ 623,387
Ratio of net investment income to
average net assets..................... 6.52% 6.98% 6.87% 7.1% 9.0%
Ratio of expenses to average net assets:
(Note 1)
With expense reductions............... 1.34% 1.35% 1.33% 1.4% 1.6%
Without expense reductions............ 1.39% 1.38% --%* --%* --%*
Portfolio turnover rate++++............. 268% 385% 625% 495% 351%
</TABLE>
- ----------------
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
+ All capital shares issued and oustanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
F19
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
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>
CLASS B++
-----------------------------------------------------------
OCTOBER 22,
1992
YEAR ENDED OCTOBER 31, TO
--------------------------------------------- OCTOBER 31,
1996 (D) 1995 (D) 1994 (D) 1993 (D) 1992
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 8.80 $ 8.64 $ 11.07 $ 9.83 $ 9.87
--------- --------- --------- --------- -----------
Income from investment
operations:
Net investment income....... 0.51 0.55 0.59 0.67 0.02
Net realized and unrealized
gain (loss) on
investments................ 0.04 0.14 (1.52) 1.34 (0.06)
--------- --------- --------- --------- -----------
Net increase (decrease)
from investment
operations............... 0.55 0.69 (0.93) 2.01 (0.04)
--------- --------- --------- --------- -----------
Distributions to shareholders:
From net investment
income..................... (0.51) (0.53) (0.59) (0.67) --
From net realized gain on
investments................ (0.10) -- (0.27) -- --
In excess of net realized
gain on investments........ -- -- (0.54) -- --
Return of capital........... -- -- (0.10) -- --
From sources other than net
investment income.......... -- -- -- (0.10) --
--------- --------- --------- --------- -----------
Total distributions....... (0.61) (0.53) (1.50) (0.77) --
--------- --------- --------- --------- -----------
Net asset value, end of
period....................... $ 8.74 $ 8.80 $ 8.64 $ 11.07 $ 9.83
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
Total investment return (c)... 6.54% 8.22% (9.39)% 21.1% (0.4)% (a)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $166,577 $235,481 $262,405 $182,972 $2,624
Ratio of net investment income
to average net assets........ 5.87% 6.33% 6.22% 6.5% 8.0% (b)
Ratio of expenses to average
net assets: (Note 1)
With expense reductions..... 1.99% 2.00% 1.98% 2.0% 1.9% (b)
Without expense
reductions................. 2.04% 2.03% --%* --%* --% *
Portfolio turnover rate++++... 268% 385% 625% 495% 351%
<CAPTION>
ADVISOR CLASS+++
--------------------------
YEAR JUNE 1, 1995
ENDED TO
OCTOBER 31, OCTOBER 31,
1996 (D) 1995 (D)
----------- ------------
<S> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 8.80 $ 8.98
----------- ------------
Income from investment
operations:
Net investment income....... 0.60 0.26
Net realized and unrealized
gain (loss) on
investments................ 0.03 (0.19)
----------- ------------
Net increase (decrease)
from investment
operations............... 0.63 0.07
----------- ------------
Distributions to shareholders:
From net investment
income..................... (0.60) (0.25)
From net realized gain on
investments................ (0.10) --
In excess of net realized
gain on investments........ -- --
Return of capital........... -- --
From sources other than net
investment income.......... -- --
----------- ------------
Total distributions....... (0.70) (0.25)
----------- ------------
Net asset value, end of
period....................... $ 8.73 $ 8.80
----------- ------------
----------- ------------
Total investment return (c)... 7.49% 0.83% (a)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $ 86 $ 131
Ratio of net investment income
to average net assets........ 6.87% 7.33% (b)
Ratio of expenses to average
net assets: (Note 1)
With expense reductions..... 0.99% 1.00% (b)
Without expense
reductions................. 1.04% 1.03% (b)
Portfolio turnover rate++++... 268% 385%
</TABLE>
- ----------------
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
+ All capital shares issued and oustanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
F20
<PAGE>
GT GLOBAL HIGH INCOME FUND - CONSOLIDATED
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
OCTOBER 22,
1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS) TO
--------------------------------------------- OCTOBER 31,
1996 (E) 1995 1994 (E) 1993 (E) 1992
--------- --------- --------- --------- -----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 11.70 $ 12.56 $ 14.92 $ 11.43 $ 11.43
--------- --------- --------- --------- -----------------
Income from investment
operations:
Net investment income....... 1.27 1.35 0.94 0.78 --
Net realized and unrealized
gain (loss) on
investments................ 3.09 (1.09) (1.87) 3.92 --
--------- --------- --------- --------- -----------------
Net increase (decrease)
from investment
operations............... 4.36 0.26 (0.93) 4.70 --
--------- --------- --------- --------- -----------------
Distributions to shareholders:
From net investment
income..................... (1.11) (1.03) (0.94) (0.78) --
From net realized gain on
investments................ (0.10) (0.03) (0.27) -- --
In excess of net realized
gain on investments........ -- -- (0.22) -- --
Return of capital........... -- (0.06) -- -- --
From sources other than net
investment income.......... -- -- -- (0.43) --
--------- --------- --------- --------- -----------------
Total distributions....... (1.21) (1.12) (1.43) (1.21) --
--------- --------- --------- --------- -----------------
Net asset value, end of
period....................... $ 14.85 $ 11.70 $ 12.56 $ 14.92 $ 11.43
--------- --------- --------- --------- -----------------
--------- --------- --------- --------- -----------------
Total investment return (d)... 39.05% 2.81% (6.45)% 43.6% --% (a)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $178,318 $142,002 $167,974 $143,171 $ 207
Ratio of net investment income
to average net assets........ 9.52% 11.85% 7.00% 6.40% N/A(c)
Ratio of operating expenses to
average net assets........... 1.69% 1.75% 1.57% 2.20% N/A(c)
Ratio of interest expense to
average net assets........... 0.04% N/A 0.22% N/A N/A
Portfolio turnover rate++..... 290% --% --% --% --%
</TABLE>
- ----------------
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
(a) Not annualized
(b) Annualized
(c) Ratios are not meaningful due to short period of operation.
(d) Total investment return does not include sales charges.
(e) These selected per share operating data were calculated based upon
weighted average shares outstanding during the year.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F21
<PAGE>
GT GLOBAL HIGH INCOME FUND - CONSOLIDATED
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
OCTOBER 22, ADVISOR CLASS+
1992 --------------------------
(COMMENCEMENT YEAR JUNE 1, 1995
YEAR ENDED OCTOBER 31, OF OPERATIONS) TO ENDED TO
--------------------------------------------- OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 (E) 1995 1994 (E) 1993 (E) 1992 1996 (E) 1995
--------- --------- --------- --------- ----------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 11.69 $ 12.56 $ 14.90 $ 11.43 $ 11.43 $ 11.71 $ 11.44
--------- --------- --------- --------- ----------------- ----------- ------------
Income from investment
operations:
Net investment income....... 1.17 1.27 0.86 0.70 -- 1.34 0.57
Net realized and unrealized
gain (loss) on
investments................ 3.09 (1.09) (1.85) 3.90 -- 3.05 0.17
--------- --------- --------- --------- ----------------- ----------- ------------
Net increase (decrease)
from investment
operations............... 4.26 0.18 (0.99) 4.60 -- 4.39 0.74
--------- --------- --------- --------- ----------------- ----------- ------------
Distributions to shareholders:
From net investment
income..................... (1.03) (0.96) (0.86) (0.70) -- (1.16) (0.44)
From net realized gain on
investments................ (0.09) (0.03) (0.27) -- -- (0.11) --
In excess of net realized
gain on investments........ -- -- (0.22) -- -- -- --
Return of capital........... -- (0.06) -- -- -- -- (0.03)
From sources other than net
investment income.......... -- -- -- (0.43) -- -- --
--------- --------- --------- --------- ----------------- ----------- ------------
Total distributions....... (1.12) (1.05) (1.35) (1.13) -- (1.27) (0.47)
--------- --------- --------- --------- ----------------- ----------- ------------
Net asset value, end of
period....................... $ 14.83 $ 11.69 $ 12.56 $ 14.90 $ 11.43 $ 14.83 $ 11.71
--------- --------- --------- --------- ----------------- ----------- ------------
--------- --------- --------- --------- ----------------- ----------- ------------
Total investment return (d)... 38.16% 2.07% (6.99)% 42.6% --% (a) 39.38% 6.54% (a)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $251,002 $214,897 $232,423 $127,035 $ 53 $15,298 $ 1,463
Ratio of net investment income
to average net assets........ 8.87% 11.20% 6.35% 5.8% N/A(c) 9.87% 12.20% (b)
Ratio of operating expenses to
average net assets........... 2.34% 2.40% 2.22% 2.8% N/A(c) 1.34% 1.40% (b)
Ratio of interest expense to
average net assets........... 0.04% N/A 0.22% N/A N/A 0.04% N/A
Portfolio turnover rate++..... 290% --% --% --% --% 290% --% (b)
</TABLE>
- ----------------
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
(a) Not annualized
(b) Annualized
(c) Ratios are not meaningful due to short period of operation.
(d) Total investment return does not include sales charges.
(e) These selected per share operating data were calculated based upon
weighted average shares outstanding during the year.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F22
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
1996 (E) 1995 (E) 1994 1993 (E) 1992
--------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 10.32 $ 10.88 $ 13.61 $ 11.25 $ 10.91
--------- --------- --------- --------- --------
Income from investment
operations:
Net investment income....... 0.89 0.97 0.79 0.96 0.86
Net realized and unrealized
gain (loss) on
investments................ 1.44 (0.69) (2.14) 2.85 0.31
--------- --------- --------- --------- --------
Net increase (decrease)
from investment
operations............... 2.33 0.28 (1.35) 3.81 1.17
--------- --------- --------- --------- --------
Distributions to shareholders:
From net investment
income..................... (0.82) (0.80) (0.79) (0.96) (0.83)
From net realized gain on
investments................ -- -- (0.38) (0.37) --
In excess of net investment
income..................... (0.07) -- -- -- --
Return of capital........... -- (0.04) (0.21) -- --
From sources other than net
investment income.......... -- -- -- (0.12) --
--------- --------- --------- --------- --------
Total distributions....... (0.89) (0.84) (1.38) (1.45) (0.83)
--------- --------- --------- --------- --------
Net asset value, end of
period....................... $ 11.76 $ 10.32 $ 10.88 $ 13.61 $ 11.25
--------- --------- --------- --------- --------
--------- --------- --------- --------- --------
Total investment return (c)... 23.00% 3.06% (10.44)% 37.0% 11.1%
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $185,126 $188,165 $275,241 $287,870 $83,849
Ratio of net investment income
to average net assets........ 8.09% 9.64% 6.74% 7.2% 7.6%
Ratio of expenses to average
net assets:
With expense reductions
(Note 1)................... 1.38% 1.42% 1.40% 1.7% 1.8%
Without expense
reductions................. 1.40% 1.45% --%* --%* --%*
Ratio of interest expenses to
average net assets........... N/A N/A 0.10% N/A N/A
Portfolio turnover rate++++... 177% 238% 583% 310% 418%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992, were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Ratios are not meaningful due to the short period of operation of
Class B shares.
(e) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
F23
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
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>
CLASS B++
---------------------------------------------------------------- ADVISOR CLASS+++
OCTOBER 22, --------------------------
1992 YEAR JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO ENDED TO
--------------------------------------------- OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 (E) 1995 (E) 1994 1993 (E) 1992 1996 (E) 1995 (E)
--------- --------- --------- --------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 10.33 $ 10.88 $ 13.60 $ 11.24 $ 11.36 $ 10.33 $10.32
--------- --------- --------- --------- ---------------- ----------- ------------
Income from investment
operations:
Net investment income....... 0.82 0.91 0.73 0.89 0.01 0.93 0.41
Net realized and unrealized
gain (loss) on
investments................ 1.44 (0.69) (2.14) 2.85 (0.13) 1.44 (0.04)
--------- --------- --------- --------- ---------------- ----------- ------------
Net increase (decrease)
from investment
operations............... 2.26 0.22 (1.41) 3.74 (0.12) 2.37 0.37
--------- --------- --------- --------- ---------------- ----------- ------------
Distributions to shareholders:
From net investment
income..................... (0.75) (0.73) (0.72) (0.89) -- (0.86) (0.34)
From net realized gain on
investments................ -- -- (0.38) (0.37) -- -- --
In excess of net investment
income..................... (0.07) -- -- -- -- (0.07) --
Return of capital........... -- (0.04) (0.21) -- -- -- (0.02)
From sources other than net
investment income.......... -- -- -- (0.12) -- -- --
--------- --------- --------- --------- ---------------- ----------- ------------
Total distributions....... (0.82) (0.77) (1.31) (1.38) -- (0.93) (0.36)
--------- --------- --------- --------- ---------------- ----------- ------------
Net asset value, end of
period....................... $ 11.77 $ 10.33 $ 10.88 $ 13.60 $ 11.24 $ 11.77 $10.33
--------- --------- --------- --------- ---------------- ----------- ------------
--------- --------- --------- --------- ---------------- ----------- ------------
Total investment return (c)... 22.15% 2.48% (11.02)% 36.2% (1.1)% (b) 23.39% 3.72% (b)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $333,178 $357,852 $458,550 $310,431 $ 533 $ 479 $ 443
Ratio of net investment income
to average net assets........ 7.44% 8.99% 6.09% 6.5% N/A(d) 8.44% 9.99% (a)
Ratio of expenses to average
net assets:
With expense reductions
(Note 1)................... 2.03% 2.07% 2.05% 2.4% N/A(d) 1.03% 1.07% (a)
Without expense
reductions................. 2.05% 2.10% --%* --%* --% * 1.05% 1.10% (a)
Ratio of interest expenses to
average net assets........... N/A N/A 0.10% N/A N/A N/A N/A
Portfolio turnover rate++++... 177% 238% 583% 310% 418% 177% 238%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992, were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Ratios are not meaningful due to the short period of operation of
Class B shares.
(e) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
F24
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES TO
FINANCIAL STATEMENTS
October 31, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Government Income Fund, GT Global High Income Fund, and GT Global
Strategic Income Fund ("Funds") are separate series of G.T. Investment Funds,
Inc. ("Company"). Collectively, these Funds are known as the "GT Global Income
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 twelve series of shares
in operation, each series corresponding to a distinct portfolio of investments.
The GT Global High Income Fund invests substantially all of its investable
assets in the Global High Income Portfolio ("Portfolio"). The Portfolio is
organized as a New York Trust and is registered under the 1940 Act as a
non-diversified, open-end management investment company.
The Portfolio has investment objectives, policies, and limitations substantially
identical to those of its corresponding Fund. Therefore, the financial
statements of the Fund and its respective Portfolio have been presented on a
consolidated basis, and represent all activities of both the Fund and Portfolio.
Through October 31, 1996, all of the shares of beneficial interest of the
Portfolio were owned by either its Fund or Chancellor LGT Asset Management, Inc.
(the "Manager"), which has a nominal ($100) investment in the 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 Portfolio 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 and the Portfolio 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
Portfolio (the phrase "Funds or Portfolio" hereinafter refers to the GT Global
Government Income Fund, the GT Global Strategic Income Fund, and the Global High
Income Portfolio) after translation to U.S. dollars based on the exchange rates
on that day. The cost of each security is determined using historical exchange
rates. Income and withholding taxes are translated at prevailing exchange rates
when earned or incurred.
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.
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
F25
<PAGE>
GT GLOBAL INCOME FUNDS
Portfolio's books and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains or losses arise from
changes in the value of assets and liabilities other than investments in
securities at period end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by 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 on
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
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
F26
<PAGE>
GT GLOBAL INCOME FUNDS
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:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31,
-------------------------------- 1996
AGGREGATE VALUE CASH --------------
GT GLOBAL ON LOAN COLLATERAL FEES RECEIVED
- ---------------------------------------- --------------- -------------- --------------
<S> <C> <C> <C>
Government Income Fund.................. $ 85,475,086 $ 92,153,670 $250,204
Strategic Income Fund................... 44,548,682 47,372,677 108,002
</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. The GT Global Government Income Fund has a
capital loss carryforward of $156,095,393 of which $140,349,807 expires in 2002,
and $15,745,586 expires in 2003. The GT Global Strategic Income Fund has a
capital loss carryforward of $110,439,537 of which $33,635,683 expires in 2002,
and $76,803,854 expires in 2003.
(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 High Income Fund and the Portfolio in
connection with their organization, their initial registration with the
Securities and Exchange Commission and with various states and the initial
public offering of its shares aggregated $149,100 and $25,000, 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.
(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.
(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
Portfolio of Investments.
(O) LINE OF CREDIT
For the year ended October 31, 1996, the Global High Income Portfolio
periodically borrowed amounts from a bank at a base or Eurodollar rate. The
arrangement with the bank allows the Portfolio to borrow a maximum amount of
$25,000,000. On February 28 & 29, 1996, the Portfolio borrowed $24,000,000, all
of which was repaid on April 18, 1996.
For the year ended October 31, 1996, the weighted average outstanding daily
balance of bank loans (based on the number of
F27
<PAGE>
GT GLOBAL INCOME FUNDS
days the loans were outstanding) was $17,800,000 with a weighted average
interest rate of 6.63%. Interest expense for the year ended October 31, 1996 was
$163,819.
(P) SECURITIES PURCHASED ON A WHEN-ISSUED OR FORWARD COMMITMENT BASIS
A Fund or Portfolio may trade securities on a when-issued or forward commitment
basis, with payment and delivery scheduled for a future date. These transactions
are subject to market fluctuations and are subject to the risk that the value at
delivery may be more or less than the trade date purchase price. Although the
Fund or Portfolio will generally purchase these securities with the intention of
acquiring such securities, they may sell such securities before the settlement
date. These securities are identified on the accompanying Portfolio of
Investments. The Fund or Portfolio has set aside sufficient cash or liquid high
grade debt securities as collateral for these purchase commitments.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Funds' and Portfolio's 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. The GT Global Government Income
Fund and GT Global Strategic Income Fund each pays the Manager investment
management and administration fees at the annualized rate of 0.725% on the first
$500 million of the average daily net assets of the Fund; 0.70% on the next $1
billion; 0.675% on the next $1 billion; and 0.65% on amounts thereafter. The GT
Global High Income Fund pays administration fees to the Manager at the
annualized rate of 0.25% of its average daily net assets. 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.
The Global High Income Portfolio pays investment management and administration
fees to the Manager at the annualized rate of 0.475% on the first $500 million
of average daily net assets of the Portfolio; 0.45% on the next $1 billion;
0.425% on the next $1 billion; and 0.40% on amounts thereafter, plus 2% of the
Portfolio's total investment income calculated in accordance with generally
accepted accounting principles, adjusted daily for currency revaluations, on a
mark to market basis, of the Portfolio's assets; provided, however, that during
any fiscal year this amount shall not exceed 2% of the Portfolio's total
investment income calculated in accordance with generally accepted accounting
principles. These fees are computed daily and paid monthly.
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 period ended October 31, 1996, GT Global retained the
following sales charges: $55,131 for the GT Global Government Income Fund,
$69,243 for the Global High Income Fund, and $23,580 for the GT Global Strategic
Income 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: $17,709 for the GT Global Government Income Fund,
$0 for the GT Global High Income Fund and $10,099 for the GT Global Strategic
Income 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: $1,449,342 for the GT Global Government Income Fund, $1,739,271
for the Global High Income Fund, and $1,915,487 for the GT Global Strategic
Income 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 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for 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%
F28
<PAGE>
GT GLOBAL INCOME FUNDS
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 GT Global
Government Income Fund and GT Global Strategic Income Fund's expenses (exclusive
of brokerage commissions, taxes, interest, and extraordinary expense) to the
maximum annual rate of 1.85%, 2.50%, and 1.50% of the average daily net assets
of each Fund's Class A, Class B, and Advisor Class shares, respectively.
Similarly, they voluntarily have undertaken to limit GT Global High Income
Fund's expenses to the maximum annual rate of 2.20%, 2.85%, and 1.85% of the
average daily net assets of the Fund's Class A, Class B, and Advisor Class
shares, respectively. If necessary, these limitations will be effected by
waivers by the Manager of 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 each Fund's other
operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of LGT 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 and Portfolio. 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. The
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 the 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>
GT Global Government Income Fund................................................ $352,752,344 $921,279,705
Global High Income Portfolio.................................................... 96,288,547 983,932,679
GT Global Strategic Income Fund................................................. 71,587,672 816,104,575
</TABLE>
<TABLE>
<CAPTION>
SALES
------------------------------
U.S. GOVERNMENT OTHER ISSUES
--------------- ------------
<S> <C> <C>
GT Global Government Income Fund................................................ $441,687,203 $1,075,693,915
Global High Income Portfolio.................................................... 84,315,986 1,020,907,620
GT Global Strategic Income Fund................................................. 109,353,125 896,578,545
</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; 300,000,000 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:
F29
<PAGE>
GT GLOBAL INCOME FUNDS
CAPITAL SHARE TRANSACTIONS
GT GLOBAL GOVERNMENT INCOME 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............................. 19,126,586 $ 164,293,090 17,764,859 $ 154,603,577
Shares issued in connection with
reinvestment of distributions......... 1,643,833 14,228,931 2,042,839 17,630,697
--------------- ------------------ --------------- ------------------
20,770,419 178,522,021 19,807,698 172,234,274
Share repurchased....................... (36,969,597) (318,856,283) (34,203,619) (297,666,599)
--------------- ------------------ --------------- ------------------
Net decrease............................ (16,199,178) $ (140,334,262) (14,395,921) $ (125,432,325)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------------- -----------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 23,047,364 $ 198,774,141 20,700,346 $ 178,801,868
Shares issued in connection with
reinvestment of distributions......... 956,866 8,282,950 1,005,589 8,536,817
--------------- ------------------ --------------- ------------------
24,004,230 207,057,091 21,705,935 187,338,685
Share repurchased....................... (31,688,935) (273,022,079) (25,343,381) (218,171,165)
--------------- ------------------ --------------- ------------------
Net decrease............................ (7,684,705) $ (65,964,988) (3,637,446) $ (30,832,480)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
JUNE 1, 1995
YEARS ENDED (COMMENCEMENT OF SALE OF SHARES) TO
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------------- -----------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 105,543 $ 891,754 15,659 $ 141,450
Shares issued in connection with
reinvestment of distributions......... 1,345 11,541 397 3,476
--------------- ------------------ --------------- ------------------
106,888 903,295 16,056 144,926
Shares repurchased...................... (111,905) (948,244) (1,142) (9,928)
--------------- ------------------ --------------- ------------------
Net increase (decrease)................. (5,017) $ (44,949) 14,914 $ 134,998
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
</TABLE>
F30
<PAGE>
GT GLOBAL INCOME FUNDS
GT GLOBAL HIGH INCOME 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............................. 25,694,335 $ 346,426,450 25,003,318 $ 280,486,242
Shares issued in connection with
reinvestment of distributions......... 607,445 8,023,249 682,971 7,764,542
--------------- ------------------ --------------- ------------------
26,301,780 354,449,699 25,686,289 288,250,784
Share repurchased....................... (26,422,858) (355,715,247) (26,927,729) (301,862,112)
--------------- ------------------ --------------- ------------------
Net decrease............................ (121,078) $ (1,265,548) (1,241,440) $ (13,611,328)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------------- -----------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 14,568,804 $ 194,636,619 10,582,935 $ 119,426,735
Shares issued in connection with
reinvestment of distributions......... 765,798 10,086,445 826,797 9,372,626
--------------- ------------------ --------------- ------------------
15,334,602 204,723,064 11,409,732 128,799,361
Share repurchased....................... (16,793,522) (225,719,415) (11,542,431) (128,317,008)
--------------- ------------------ --------------- ------------------
Net increase (decrease)................. (1,458,920) $ (20,996,351) (132,699) $ 482,353
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
JUNE 1, 1995
YEAR ENDED (COMMENCEMENT OF SALE OF
OCTOBER 31, 1996 SHARES) TO OCTOBER 31, 1995
----------------------------------- -----------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,706,101 $ 23,413,749 133,919 $ 1,558,699
Shares issued in connection with
reinvestment of distributions......... 40,101 546,903 4,923 57,262
--------------- ------------------ --------------- ------------------
1,746,202 23,960,652 138,842 1,615,961
Share repurchased....................... (839,670) (11,309,193) (13,845) (160,158)
--------------- ------------------ --------------- ------------------
Net increase............................ 906,532 $ 12,651,459 124,997 $ 1,455,803
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
</TABLE>
F31
<PAGE>
GT GLOBAL INCOME FUNDS
GT GLOBAL STRATEGIC INCOME 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............................. 15,025,486 $ 168,473,834 10,413,395 $ 105,118,727
Shares issued in connection with
reinvestment of distributions......... 829,046 9,085,802 1,180,205 11,913,775
--------------- ------------------ --------------- ------------------
15,854,532 177,559,636 11,593,600 117,032,502
Shares repurchased...................... (18,331,797) (204,237,090) (18,672,585) (187,700,412)
--------------- ------------------ --------------- ------------------
Net decrease............................ (2,477,265) $ (26,677,454) (7,078,985) $ (70,667,910)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------------- -----------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 12,778,909 $ 141,835,937 5,950,544 $ 60,333,373
Shares issued in connection with
reinvestment of distributions......... 1,206,362 13,216,165 1,633,228 16,496,489
--------------- ------------------ --------------- ------------------
13,985,271 155,052,102 7,583,772 76,829,862
Shares repurchased...................... (20,318,197) (224,904,917) (15,079,063) (151,484,130)
--------------- ------------------ --------------- ------------------
Net decrease............................ (6,332,926) $ (69,852,815) (7,495,291) $ (74,654,268)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
JUNE 1, 1995
YEAR ENDED (COMMENCEMENT OF SALE OF SHARES) TO
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------------- -----------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 278,551 $ 3,010,280 44,461 $ 465,129
Shares issued in connection with
reinvestment of distributions......... 3,931 43,156 1,535 15,708
--------------- ------------------ --------------- ------------------
282,482 3,053,436 45,996 480,837
Shares repurchased...................... (284,638) (3,054,110) (3,115) (32,174)
--------------- ------------------ --------------- ------------------
Net increase (decrease)................. (2,156) $ (674) 42,881 $ 448,663
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
</TABLE>
5. WRITTEN OPTIONS:
The Global High Income Portfolio's written options contract activity for the
year ended October 31, 1996 was as follows:
COVERED CALL AND PUT OPTIONS WRITTEN
<TABLE>
<CAPTION>
UNDERLYING
NOMINAL
AMOUNT PREMIUMS
----------- ---------
<S> <C> <C>
Options outstanding at October 31, 1995.................................................................... 0 $ 0
Options written............................................................................................ 7,000,000 101,500
Options cancelled in closing purchase transactions......................................................... 0 0
Options expired prior to exercise.......................................................................... (7,000,000) (101,500)
Options exercised.......................................................................................... 0 0
----------- ---------
Options outstanding at October 31, 1996.................................................................... 0 $ 0
----------- ---------
----------- ---------
</TABLE>
- --------------
FEDERAL TAX INFORMATION:
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>
Government Income......................................................................................... --
High Income............................................................................................... $1,206,836
Strategic Income.......................................................................................... --
</TABLE>
F32
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL INCOME FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, PLEASE CONTACT YOUR FINANCIAL 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 for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim
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 large cap equity securities of U.S. companies believed to be
undervalued
GT JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Invests in global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in a portfolio of emerging market debt securities
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY G.T.
INVESTMENT FUNDS, INC., GT GLOBAL GOVERNMENT INCOME FUND, GT GLOBAL
STRATEGIC INCOME FUND, GT GLOBAL HIGH INCOME FUND, GLOBAL HIGH INCOME
PORTFOLIO, CHANCELLOR LGT ASSET MANAGEMENT, INC. OR GT GLOBAL, INC. THIS
STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
INCSA703MC
<PAGE>
GT GLOBAL GROWTH &
INCOME FUND
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
March 1, 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Class A and Class B
shares of GT Global Growth & Income Fund ("Fund"). The Fund is a non-diversified
series of G.T. Investment Funds, Inc. (the "Company"), a registered open-end
management investment company. This Statement of Additional Information, which
is not a prospectus, supplements and should be read in conjunction with the
Fund's current Class A and Class B Prospectus dated March 1, 1997, a copy of
which is available without charge by writing to the above address or by calling
the Fund at the toll-free telephone number listed above.
Chancellor LGT Asset Management, Inc. (the "Manager") serves as the Fund's
investment manager and administrator. The distributor of the Fund's shares is GT
Global, Inc. ("GT Global"). The Fund's transfer agent is GT Global Investor
Services, Inc. ("GT Services" or the "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 5
Risk Factors............................................................................................................. 13
Investment Limitations................................................................................................... 17
Execution of Portfolio Transactions...................................................................................... 19
Directors and Executive Officers......................................................................................... 21
Management............................................................................................................... 23
Valuation of Fund Shares................................................................................................. 24
Information Relating to Sales and Redemptions............................................................................ 26
Taxes.................................................................................................................... 28
Additional Information................................................................................................... 31
Investment Results....................................................................................................... 32
Description of Debt Ratings.............................................................................................. 38
Financial Statements..................................................................................................... 40
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
INVESTMENT OBJECTIVE AND
POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term capital appreciation together
with current income. The Fund seeks its objective by investing in a global
portfolio of both equity securities and debt obligations allocated among diverse
international markets.
SELECTION OF EQUITY INVESTMENTS
For investment purposes, an issuer is typically considered as located in a
particular country if it (a) is incorporated under the laws of or has its
principal office in that country, or (b) it normally derives 50% or more of its
total revenue from business in that country. However, these are not absolute
requirements, and certain companies incorporated in a particular country and
considered by the Manager to be located in that country may have substantial
off-shore operations or subsidiaries and/or export sales exceeding in size the
assets or sales in that country.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Fund may invest in the securities of investment companies within the limits
of the Investment Company Act of 1940, as amended ("1940 Act"). These
limitations currently provide that, in general, the Fund may purchase shares of
a closed-end investment company unless (a) such a purchase would cause the Fund
to own in the aggregate more than 3 percent of the total outstanding voting
stock of the investment company or (b) such a purchase would cause the Fund to
have more than 5 percent of its total assets invested in the investment company
or more than 10 percent of its total assets invested in an aggregate of all such
investment companies. Investment in such investment companies may also involve
the payment of substantial premiums above the value of such companies' portfolio
securities. The Fund does not intend to invest in such investment companies
unless, in the judgment of 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
The Fund may hold equity securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs"), or other securities convertible into securities of
eligible issuers. These securities may not necessarily be denominated in the
same currency as the securities for which they may be exchanged. ADRs and ADSs
typically are issued by an American bank or trust company and evidence ownership
of underlying securities issued by a foreign corporation. EDRs, which are
sometimes referred to as Continental Depository Receipts ("CDRs"), are issued in
Europe typically by foreign banks and trust companies and evidence ownership of
either foreign or domestic securities. Generally, ADRs and ADSs in registered
form are designed for use in United States securities markets and EDRs in bearer
form are designed for use in European securities markets. For purposes of the
Fund's investment policies, the Fund's investments in ADRs, ADSs and EDRs will
be deemed to be investments in the equity securities representing securities of
foreign issuers into which they may be converted.
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
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as deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans continuously be secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The Fund may pay reasonable
administrative and custodial fees in connection with loans of its securities.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund will have a right to call each loan and obtain the securities on five
business days' notice. The Fund will not have the right to vote equity
securities while they are lent, but it may call in a loan in anticipation of any
important vote. Loans will be made only 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 the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund typically will acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not an
investment policy or restriction of the Fund. For the purposes of calculation
with respect to the $1 billion figure, the assets of a bank will be deemed to
include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which the Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed upon price, date, and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Fund if the other party
to the repurchase agreement becomes bankrupt, the Fund intends to enter into
repurchase agreements only with banks and dealers believed by the Manager to
present minimum credit risks in accordance with guidelines established by the
Company's Board of Directors. The Manager will review and monitor the
creditworthiness of such institutions under the Board's general supervision.
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 10% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, i.e.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of the Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, within three days
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GT GLOBAL GROWTH & INCOME FUND
(excluding Sundays and holidays) of such event the Fund may be required to sell
portfolio securities to restore the 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. The Fund also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to meet redemptions. Any borrowing by the Fund may cause greater
fluctuation in the value of its shares than would be the case if the Fund did
not borrow.
The Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. The Fund, however, currently is prohibited, pursuant to
a non-fundamental investment policy, from borrowing money in order to purchase
securities. Nevertheless, this policy may be changed in the future by a vote of
a majority of the Company's Board of Directors. In the event that the Fund
employs leverage in the future, it would be subject to certain additional risks.
Use of leverage creates an opportunity for greater growth of capital but would
exaggerate any increases or decreases in the Fund's net asset value. When the
income and gains on securities purchased with the proceeds of borrowings exceed
the costs of such borrowings, the Fund's earnings or net asset value will
increase faster than otherwise would be the case; conversely, if such income and
gains fail to exceed such costs, the Fund's earnings or net asset value would
decline faster than would otherwise be the case.
The Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. The Fund also may engage in "roll"
borrowing transactions which involve the Fund's sale of Government National
Mortgage Association certificates or other securities together with a commitment
(for which the Fund may receive a fee) to purchase similar, but not identical,
securities at a future date. The Fund will maintain, in a segregated account
with a custodian, cash 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
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility. The Fund may
only make short sales "against the box." In this type of short sale, at the time
of the sale the Fund owns the security it has sold short or has the immediate
and unconditional right to acquire the identical security at no additional cost.
In a short sale, the seller does not immediately deliver the securities sold and
does not receive the proceeds from the sale. To make delivery to the purchaser,
the executing broker borrows the securities being sold short on behalf of the
seller. The seller is said to have a short position in the securities sold until
it delivers the securities sold, at which time it receives the proceeds of the
sale. To secure its obligation to deliver securities sold short, the Fund will
deposit in a separate account with its custodian an equal amount of the
securities sold short or securities convertible into or exchangeable for such
securities at no cost. The Fund could close out a short position by purchasing
and delivering an equal amount of the securities sold short, rather than by
delivering securities already held by the Fund, because the Fund might want to
continue to receive interest and dividend payments on securities in its
portfolio that are convertible into the securities sold short.
The Fund might make a short sale "against the box" in order to hedge against
market risks when the Manager believes that the price of a security may decline,
causing a decline in the value of a security owned by the Fund or a security
convertible into or exchangeable for such security, or when the Manager wants to
sell the security the Fund owns at a current attractive price, but also wishes
to defer recognition of gain or loss for federal income tax purposes and for
purposes of satisfying certain tests applicable to regulated investment
companies under the Internal Revenue Code of 1986, as amended ("Code"). In such
case, any future losses in the Fund's long position should be reduced by a gain
in the short position. Conversely, any gain in the long position should be
reduced by a loss in the short position. The extent to which such gains or
losses in the long position are reduced will depend upon the amount of the
securities sold short relative to the amount of the securities the Fund owns,
either directly or indirectly, and, in the case where the Fund owns convertible
securities, changes in the investment values or conversion permiums of such
securities. There will be certain additional transaction costs associated with
short sales "against the box," but the Fund will endeavor to offset these costs
with income from the investment of the cash proceeds of short sales.
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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 Fund entered into a
short hedge because the Manager projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might by wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, a Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options generally will be written on securities and currencies that, in the
opinion of 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 Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
Style) or on (European Style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objective. When writing a call option, the Fund, in return for
the
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GT GLOBAL GROWTH & INCOME FUND
premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Fund has no control
over when it may be required to sell the underlying securities or currencies,
since most options may be exercised at any time prior to the option's
expiration. If a call option that the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, 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 the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity normally are higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
The Fund generally would write put options in circumstances where the Manager
wishes to purchase the underlying security or currency for the Fund's portfolio
at a price lower than the current market price of the security or currency. In
such event, the Fund would write a put option at an exercise price that, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund also would receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at greater than its market value.
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GT GLOBAL GROWTH & INCOME FUND
PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, the Fund has the right to sell the underlying security
or currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund in order to protect against an anticipated
decline in the value of the security or currency. Such hedge protection is
provided only during the life of the put option when the Fund, as the holder of
the put option, is able to sell the underlying security or currency at the put
exercise price regardless of any decline in the underlying security's market
price or currency's exchange value. For example, a put option may be purchased
in order to protect unrealized appreciation of a security or currency when 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.
The Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique also may be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options also may be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in using
Forward Contracts by purchasing put or call options on currencies. A put option
gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or an
(European style) the expiration date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be
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GT GLOBAL GROWTH & INCOME FUND
offset, in whole or in part, by an increase in the value of the put. If the
value of the currency instead should rise against the dollar, any gain to the
Fund would be reduced by the premium it had paid for the put option. A currency
call option might be purchased, for example, in anticipation of, or to protect
against, a rise in the value against the dollar of a currency in which the Fund
anticipates purchasing securities.
Options may be either listed on an exchange or traded 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. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. The Fund may also sell OTC options and,
in connection therewith, segregate assets or cover its obligations with respect
to OTC options written by the Fund. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund writes a call
on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When
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GT GLOBAL GROWTH & INCOME FUND
an index option is exercised, the amount of cash that the holder is entitled to
receive is determined by the difference between the exercise price and the
closing index level on the date when the option is exercised. As with other
kinds of options, the Fund as the call writer will not know that it has been
assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collectively, "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock price levels in order to establish more
definitely the effective return on securities or currencies held or intended to
be acquired by the Fund. The Fund's hedging may include sales of Futures as an
offset against the effect of expected increases in interest rates and decreases
in currency exchange rates or stock prices, and purchases of Futures as an
offset against the effect of expected declines in interest rates, and increases
in currency exchange rates or stock prices.
The Fund only will enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance the difference between the price at which the Futures
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GT GLOBAL GROWTH & INCOME FUND
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded, and may be modified significantly from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
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GT GLOBAL GROWTH & INCOME FUND
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is
"in-the-money"if the value of the underlying Futures Contract exceeds the
strike, I.E., exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund either may
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds bonds
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with the
guidelines approved by the Company's Board of Directors.
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GT GLOBAL GROWTH & INCOME FUND
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be predicted accurately, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund either may sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees entering, into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which the Manager believes will have a positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts,
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
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GT GLOBAL GROWTH & INCOME FUND
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash 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 the Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
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ILLIQUID SECURITIES
The Fund may invest up to 10% of its net assets in illiquid securities.
Securities may be considered illiquid if the Fund cannot reasonably expect
within seven days to sell the security approximately the amount at which the
Fund values such securities. The sale of illiquid securities, if they can be
sold at all, generally will require more time and result in higher brokerage
charges or dealer discounts and other selling expenses than the sale of liquid
securities, such as securities eligible for trading on U.S. securities exchanges
or in the over-the-counter markets. Moreover, restricted securities which may be
illiquid for purposes of this limitation, often sell, if at all, at a price
lower than similar securities that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
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-
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GT GLOBAL GROWTH & INCOME FUND
eligible restricted securities held by a Fund, however, could affect adversely
the marketability of such portfolio securities and the Fund might be unable to
dispose of such securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act, are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to the Manager in accordance with
procedures approved by the Company's Board of Directors. 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 who make quotes for the security; (iii) the number of dealers who have
undertaken to make a market in the security; (iv) the number of other potential
purchasers; and (v) the nature of the security and how trading is effected
(e.g., the time needed to sell the security, how offers are solicited and the
mechanics of transfer). The Manager monitors the liquidity of securities in the
Fund's portfolio and periodically reports on such decisions to the Board of
Directors.
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, the Fund could lose its entire investment in
any such country.
Certain countries in which the Fund may invest may have groups that advocate
radical religious or revolutionary philosophies or support ethnic independence.
Any disturbance on the part of such individuals could carry the potential for
widespread destruction or confiscation of property owned by individuals and
entities foreign to such country and could cause the loss of the Fund's
investment in those countries. Instability may also result from, among other
things: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which the Fund
invests and adversely affect the value of the Fund's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. The Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ in some cases significantly from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, 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 on foreign jurisdictions are
generally not subject to the same degree of regulation as are U.S. issuers with
respect to such
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matters as restrictions on market manipulation, insider trading rules,
shareholder proxy requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because the Fund, under normal circumstances, will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the movement of interest
rates, the pace of business activity in certain other countries and the U.S.,
and other economic and financial conditions affecting the world economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the U.S., and
foreign securities transactions usually are subject to fixed commissions, which
generally are higher than negotiated commissions on U.S. transactions. In
addition, foreign securities transactions may be subject to difficulties
associated with the settlement of such transactions. Delays in settlement could
result in temporary periods when assets of the Fund are uninvested and no return
is earned thereon. The inability of the Fund to make intended security purchases
due to settlement problems could cause the Fund to miss attractive
opportunities. Inability to dispose of a portfolio security due to settlement
problems either could result in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, could result in possible liability to the purchaser. The
Manager will consider such difficulties when determining the allocation of the
Fund's assets, although the Manager does not believe that such difficulties will
have a material adverse effect on the Fund's portfolio trading activities.
The Fund may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian; (ii) maintaining appropriate safeguards
to protect the Fund's investments and (iii) possible difficulties in obtaining
and enforcing judgments against such custodians.
WITHHOLDING TAXES. The Fund's net investment income from foreign issuers may
be subject to withholding taxes by the foreign issuer's country, thereby
reducing the Fund's net investment income or delaying the receipt of income
where those taxes may be recaptured. See "Taxes."
CONCENTRATION. To the extent the Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, it 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
Statement of Additional Information Page 15
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 the
Fund.
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
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 Fund intends 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 the Fund
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
Statement of Additional Information Page 16
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 into U.S. dollars and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation by any country, the Fund could lose its entire investment in any
such country.
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading value in issuers compared to the
volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities there may
be share registration and delivery delays or failures.
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 economies and securities
markets of certain emerging market countries.
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
The Fund has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the holders of the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, and
(ii) more than 50% of the outstanding shares.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts, and may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Prospectus and this Statement of Additional
Information and subject to operating policy (4) below;
Statement of Additional Information Page 17
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
(4) Acquire securities subject to restrictions on disposition or
securities for which there is no readily available market, or enter into
repurchase agreements or purchase time deposits maturing in more than seven
days, or purchase OTC options or hold assets set aside to cover OTC options
written by the Fund, if, immediately after and as a result, the value of
such securities would exceed, in the aggregate, 10% of the Fund's net
assets;
(5) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act;
(6) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(7) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts subject to operating policy (4) below;
(8) Borrow money except from banks for temporary or emergency purposes
not in excess of 33 1/3% of the value of the Fund's total assets at the
lower of cost or fair market value. The Fund will not purchase securities
while borrowings in excess of 5% of its total assets are outstanding. This
restriction shall not prevent the Fund from entering into reverse repurchase
agreements and engaging in "roll" transactions, provided that reverse
repurchase agreements, "roll" transactions and any other transactions
constituting borrowing by the Fund may not exceed one-third of the Fund's
total assets. In the event that the asset coverage for the Fund's borrowings
falls below 300%, the Fund will reduce, within three days (excluding Sundays
and holidays), the amount of its borrowings in order to provide for 300%
asset coverage;
(9) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities;
(10) Invest in interests in oil, gas, or other mineral exploration or
development programs; or
(11) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, its investment adviser, or its
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies and
may be changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund may not: (1) invest in securities of an issuer if
the investment would cause the Fund to own more than 10% of any class of
securities of any one issuer; (2) sell securities short, except to the extent
that the Fund contemporaneously owns or has the right to acquire at no
additional cost securities identical to those sold short; (3) invest more than
5% of its total assets in securities of companies having, together with their
predecessors, a record of less than three years of continuous operation; or (4)
enter into a futures contract, an option on a futures contract, or an option on
foreign currency traded on a CFTC-regulated exchange, in each case other than
for BONA FIDE hedging purposes (as defined by the CFTC), if the aggregate
initial margin and premiums required to establish all of those positions
(excluding the amount by which options are "in-the-money") exceeds 5% of the
liquidation value of the Fund's portfolio, after taking into account unrealized
profits and unrealized losses on any contracts the Fund has entered into.
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, the Manager
is responsible for the execution of the Fund's portfolio transactions and the
selection of broker/dealers who execute such transactions on behalf of the Fund.
In executing portfolio transactions, the Manager seeks the best net results for
the Fund, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. Although 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 the Fund may engage in soft dollar arrangements for
research services, as described below, the Fund has no obligation to deal with
any broker/dealer or group of broker/dealers in the execution of portfolio
transactions.
Debt securities generally are traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price of
the security usually includes a profit to the dealer. U.S. and foreign
government securities and money market instruments generally are traded in the
OTC markets. In underwritten offerings, securities usually are purchased at a
fixed price which includes an amount of compensation to the underwriter. On
occasion, securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Broker/dealers may receive commissions on
futures, currency and options transactions.
Consistent with the interests of the Fund, the Manager may select brokers to
execute the Fund's portfolio transactions, on the basis of the research and
brokerage services they provide to the Manager for its use in managing the Fund
and its other advisory accounts. Such services may include furnishing analyses,
reports and information concerning issuers, industries, securities, geographic
regions, economic factors and trends, portfolio strategy, and performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Research and brokerage
services received from such brokers are in addition to, and not in lieu of, the
services required to be performed by the Manager under the Management Contract
(defined below). A commission paid to such brokers may be higher than that which
another qualified broker would have charged for effecting the same transaction,
provided that 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 the Fund and its other clients and that the
total commissions paid by the Fund will be reasonable in relation to the
benefits received by the Fund over the long term. Research services may also be
received from dealers who execute Fund transactions in 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 the Fund toward payment of the Fund's expenses, such as
transfer agent and custodian fees.
Investment decisions for the Fund and for other investment accounts managed by
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 the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases, the Manager
believes that coordination and the ability to participate in volume transactions
will be beneficial to the Fund.
Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, the Manager may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which the
Manager serves as investment manager in selecting brokers and dealers for the
execution of portfolio transactions. This policy does not imply a commitment to
execute portfolio transactions through all broker/dealers that sell shares of
the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in
over-the-counter markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. The fixed commissions paid in
connection with most such foreign stock transactions generally are higher than
negotiated commissions on United States transactions. There generally is less
government supervision and
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the 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 the
Fund may invest generally are traded in the OTC markets.
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of the Liechtenstein Global Trust. The Company's Board of Directors
has adopted procedures in conformity with Rule 17e-1 under the 1940 Act to
ensure that all brokerage commissions paid to such affiliates are reasonable and
fair in the context of the market in which they are operating. Any such
transactions will be effected and related compensation paid only in accordance
with applicable SEC regulations.
For the fiscal years ended October 31, 1996, 1995 and 1994, the Fund paid
aggregate brokerage commissions of $257,953, $318,958 and $280,861,
respectively. For the fiscal year ended October 31, 1996, the Fund paid the LGT
Bank in Liechtenstein AG, an "affiliated" broker, aggregate brokerage
commissions of $16,898 for transactions involving purchases and sales of
portfolio securities which represented 6.55% of the total brokerage commissions
paid by the Fund and 0% of the aggregate dollar amount of transactions involving
payment of commissions by the Fund.
PORTFOLIO TRADING AND TURNOVER
The Fund engages in portfolio trading when the Manager has concluded that the
sale of a security owned by the Fund and/
or the purchase of another security of better value can enhance principal and/or
increase income. A security may be sold to avoid any prospective decline in
market value, or a security may be purchased in anticipation of a market rise.
Consistent with the Fund's investment objective, a security also may be sold and
a comparable security purchased coincidentally in order to take advantage of
what is believed to be a disparity in the normal yield and price relationship
between the two securities. Although the Fund does not intend generally to trade
for short-term profits, the securities in the Fund's portfolio will be sold
whenever management believes it is appropriate to do so, without regard to the
length of time a particular security may have been held. Portfolio turnover rate
is calculated by dividing the lesser of sales or purchases of portfolio
securities by the Fund's average month-end portfolio values, excluding
short-term investments. The portfolio turnover rate will not be a limiting
factor when the Manager deems portfolio changes appropriate. Higher portfolio
turnover involves correspondingly greater brokerage commissions and other
transaction costs that the Fund will bear directly, and may result in the
realization of net capital gains that are taxable when distributed to the Fund's
shareholders. For the fiscal years ended October 31, 1996 and 1995, the Fund's
portfolio turnover rates were 39% and 83%, respectively.
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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) since 1995; President, GT Global since 1995;
50 California Street President and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice President
San Francisco, CA 94111 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 21
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
James R. Tufts, 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 Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors for the
Company. Each of the Directors and officers of the Company is also a Director
and officer of G.T. Investment Portfolios, Inc., G.T. Global Developing Markets
Fund, Inc. and GT Floating Rate Fund, Inc., a Trustee and officer of G.T. Global
Growth Series and a Trustee of G.T. Global Eastern Europe Fund, G.T. Global
Variable Investment Trust, G.T. Global Variable Investment Series, Global High
Income Portfolio and Global Investment Portfolio, which are also registered
investment companies managed by the Manager. Each Director and officer serves in
total as a Director or Trustee and Officer, respectively, of 11 registered
investment companies with 41 series managed or administered 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 per annum, plus $300 per Fund for each
meeting of the Board attended, and reimburses travel and other expenses incurred
in connection with attendance at such meetings. Other Directors and Officers
receive no compensation or expense reimbursement from the Company. For the
fiscal year ended October 31, 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 which he or she serves as a
Director. For the fiscal year ended October 31, 1996, Mr. Anderson, Mr. Bayley,
Mr. Patterson and Ms. Quigley 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 accrued 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 the Fund or of all the
Company's funds in the aggregate.
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
The Manager serves as the Fund's investment manager and administrator 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 Fund and administers the
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 Fund,
and provides suitable office space, necessary small office equipment and
utilities. For these services, the Fund pays the Manager investment management
and administration fees, based on the Fund's average daily net assets, computed
daily and paid monthly, at the annualized rate of .975% on the first $500
million, .95% on the next $500 million, .925% on the next $500 million, and .90%
on amounts thereafter.
The Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract provides that with respect to the Fund, the Company or the
Manager may terminate the Contract without penalty upon sixty days' written
notice. The Management Contract terminates automatically in the event of its
assignment (as defined in the 1940 Act).
The following table discloses the amount of investment management and
administration fees paid by the Fund to the Manager during the Fund's last three
fiscal years:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1996....................................................................................................... $ 6,282,438
1995....................................................................................................... 6,301,399
1994....................................................................................................... 5,676,421
</TABLE>
DISTRIBUTION SERVICES
The Fund's Class A and Class B shares are offered continuously through the
Fund's principal underwriter and distributor, GT Global, on a "best efforts"
basis pursuant to a Distribution Contract between the Company and GT Global
dated February 24, 1989.
As described in the Prospectus, the Company has adopted a separate Distribution
Plan with respect to each class of the Fund in accordance with Rule 12b-1 under
the 1940 Act (the "Class A Plan" and "Class B Plan," respectively, and
collectively, "Plans"). The rate of payments by the Fund under the Plans, as
described in the Prospectus, may not be increased without the approval of the
majority of the outstanding voting securities of the Fund. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement. The Fund makes no payments to any party
other than GT Global, which is the distributor (principal underwriter) of the
Fund's shares. The Class B Plan took effect on October 22, 1992. The following
table discloses payments made by the Fund to GT Global under the Plans during
the Fund's last fiscal year:
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- -------------
<S> <C> <C>
Year ended October 31, 1996................................................................. $ 968,051 $ 3,702,842
</TABLE>
In approving the Plans, the Directors determined that the adoption of each Plan
was in the best interests of the shareholders of that Fund. Agreements related
to the Plans must also be approved by such vote of the Directors, including a
majority of Directors who are not "interested persons" of the Company (as
defined in the 1940 Act) and who have no direct or indirect financial interests
in the operation of the Plans, or in any agreement related thereto.
Each Plan requires that, at least quarterly, the Directors review the amounts
expended thereunder and the purposes for which such expenditures were made. Each
Plan requires that so long as it is in effect the selection and nomination of
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Directors who are not "interested persons" of the Company will be committed to
the discretion of the Directors who are not "interested persons" of the Company,
as defined in the 1940 Act.
As discussed in the Prospectus, GT Global collects sales charges on sales of
Class A shares of the Fund, retains certain amounts of such charges and reallows
other amounts of such charges to broker/dealers who sell shares.The following
table reviews the extent of such activity during the Fund's last three fiscal
years under a sales structure substantially similar to the current Class A
structure:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
YEAR ENDED OCTOBER 31, COLLECTED RETAINED REALLOWED
- ----------------------------------------------------------------------------------- ------------- --------- ----------
<S> <C> <C> <C>
1996............................................................................... $ 201,573 $ 55,131 $ 146,442
1995............................................................................... 556,296 80,112 476,184
1994............................................................................... 2,299,883 442,313 1,857,570
</TABLE>
GT Global receives any contingent deferred sales charges payable with respect to
redemptions of Class B shares and certain Class A shares. For the fiscal years
ended October 31, 1996, 1995 and 1994, GT Global collected contingent deferred
sales charges in the amounts of $1,485,113, $1,552,827 and $321,440,
respectively.
TRANSFER AGENCY AND ACCOUNTING AGENT SERVICES
The Transfer Agent has been retained by the Fund to perform shareholder
servicing, reporting and general transfer agent functions for the Fund. For
these services, the Transfer Agent receives an annual maintenance fee of $17.50
per account, a new account fee of $4.00 per account, a per transaction fee of
$1.75 for all transactions other than exchanges and a per exchange fee of $2.25.
The Transfer Agent also is reimbursed by the Fund for its out-of-pocket expenses
for such items as postage, forms, telephone charges, stationery and office
supplies. The Manager serves as the Fund's pricing and accounting agent. For the
fiscal years ended October 31, 1996 and October 31, 1995, the Fund paid transfer
agency and accounting service fees to the Manager of $1,398,892 and $1,414,035,
respectively.
EXPENSES OF THE FUND
The Fund pays all expenses not assumed by the Manager, GT Global and other
agents. These expenses include, in addition to the advisory, distribution,
transfer agency, pricing and accounting agency and brokerage fees discussed
above, legal and audit expenses, custodian fees, directors' fees, organizational
fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses
and the expenses of reports and prospectuses sent to existing investors. The
allocation of general Company expenses and expenses shared among the Fund and
other funds organized as series of the Company are allocated on a basis deemed
fair and equitable, which may be based on the relative net assets of the Fund or
the nature of the services performed and relative applicability to the Fund.
Expenditures, including costs incurred in connection with the purchase or sale
of portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are accounted
for as capital items and not as expenses. The ratio of the Fund's expenses to
its relative net assets can be expected to be higher than the expense ratios of
funds investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
the Fund generally are higher than the comparable expenses of such other funds.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the close of regular trading on the New York
Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern time, unless weather,
equipment failure or other factors contribute to an earlier closing time) on
each business day the NYSE is open for business. Currently, the NYSE is closed
on weekends and on certain days relating to the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
The Fund's portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs, and EDRs, which are traded on stock
exchanges, are valued at the last sale price on the exchange or in the principal
over-the-counter market in which such securities are traded, as of the close of
business on the day the securities are being valued or, lacking any sales, at
the last available bid price. In cases where securities are
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
traded on more than one exchange, the securities are valued on the exchange
determined by the Manager to be the primary market.
Long-term debt obligations are valued at the mean of representative quoted bid
and asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments are amortized to
maturity based on their cost, adjusted for foreign exchange translation,
provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or, in the case of OTC
options, at the average of the last bid prices obtained from dealers unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. The value of each security denominated in a currency other
than U.S. dollars will be translated into U.S. dollars at the prevailing market
rate as determined by the Manager on that day. When market quotations for
futures and options on futures held by the Fund are readily available, those
positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available (including restricted securities which are subject to limitations as
to their sale) are valued at fair value as determined in good faith by or under
the direction of the Company's Board of Directors. The valuation procedures
applied in any specific instance are likely to vary from case to case. However,
consideration generally is given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors also generally are considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Fund's net assets is so determined, that
value is then divided by the total number of shares outstanding (excluding
treasury shares), and the result, rounded to the nearer cent, is the net asset
value per share.
Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or at the mean of the
current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available, or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors, in good faith, will
establish a conversion rate for such currency.
European, Far Eastern, or Latin American securities trading may not take place
on all days on which the NYSE is open. Further, trading takes place in Japanese
markets on certain Saturdays and in various foreign markets on days on which the
NYSE is not open. In addition, trading in securities on European and Far Eastern
securities exchanges and OTC markets generally is completed well before the
close of the business day in New York. Consequently, the calculation of the
Fund's net asset value may not take place contemporaneously with the
determination of the prices of securities held by the Fund. Events affecting the
values of portfolio securities that occur between the time their prices are
determined and the close of regular trading on the NYSE will not be reflected in
the Fund's net asset value unless the Manager, under the supervision of the
Company's Board of Directors, determines that the particular event would
materially affect net asset value. As a result, the Fund's net asset value may
be significantly affected by such trading on days when a shareholder cannot
purchase or redeem shares of the Fund.
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Class A or Class B shares purchased should accompany the purchase
order, or funds should be wired to the Transfer Agent as described in the
Prospectus. Payment for Fund shares, other than by wire transfer, must be made
by check or money order drawn on a U.S. bank. Checks or money orders must be
payable in U.S. dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, on account of a check returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law. Such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.
LETTER OF INTENT -- CLASS A SHARES
The Letter of Intent ("LOI") is not a binding obligation to purchase the
indicated amount. During such time as Class A shares are held in escrow under an
LOI to assure payment of applicable sales charges if the indicated amount is not
met, all dividends and capital gain distributions on escrowed shares will be
reinvested in additional Class A shares or paid in cash, as specified by the
shareholder. If the intended investment is not completed within the specified
13-month period, the purchaser must remit to GT Global the difference between
the sales charge actually paid and the sales charge which would have been
applicable if the total Class A purchases had been made at a single time. If
this amount is not paid to GT Global within 20 business days after written
request, the appropriate number of escrowed shares will be redeemed and the
proceeds paid to GT Global.
A registered investment adviser, trust company or trust department seeking to
execute an LOI as a single purchaser with respect to accounts over which it
exercises investment discretion is required to provide the Transfer Agent with
information establishing that it has discretionary authority with respect to the
money invested (e.g., by providing a copy of the pertinent investment advisory
agreement). Class A shares purchased in this manner must be restrictively
registered with the Transfer Agent so that only the investment adviser, trust
company or trust department, and not the beneficial owner, will be able to place
purchase, redemption and exchange orders.
AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in the GT Global Automatic Investment Plan ("AIP"),
investors or their brokers should specify whether investment will be in Class A
shares or Class B shares and send the following documents to the Transfer Agent:
(1) an AIP Application; (2) a Bank Authorization Form; and (3) a voided personal
check from the pertinent bank account. The necessary forms are included at the
back of the Fund's prospectus. Providing that an investor's bank accepts the
Bank Authorization Form, investment amounts will be drawn on the designated
dates (monthly on the 25th day or beginning quarterly on the 25th day of the
month the investor first selects) in order to purchase full and fractional
shares of the Fund at the public offering price determined on that day. In the
event that the 25th day falls on a Saturday, Sunday or holiday, shares will be
purchased on the next business day. If an investor's check is returned because
of insufficient funds, a stop payment order or the account is closed, the AIP
may be discontinued, and any share purchase made upon deposit of such check may
be cancelled. Furthermore, the shareholder will be liable for any loss incurred
by the Fund by reason of such
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
cancellation. Investors should allow one month for the establishment of an AIP.
An AIP may be terminated by the Transfer Agent or the Fund upon 30 days' written
notice or by the participant, at any time, without penalty, upon written notice
to the Fund or the Transfer Agent.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Class A or Class B shares of the Fund may be purchased as the underlying
investment for an IRA meeting the requirements of section 408(a) of the Code.
IRA applications are available from brokers or GT Global.
EXCHANGES BETWEEN FUNDS
Shares of the Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Class A shares may be
exchanged only for Class A shares of other GT Global Mutual Funds. Class B
shares may be exchanged only for Class B shares of other GT Global Mutual Funds.
The exchange privilege is not an option or right to purchase shares but is
permitted under the current policies of the respective GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the funds
upon 60 days prior notice to the shareholders of such fund and is available only
in states where the exchange may be legally made. Before purchasing shares
through the exercise of the exchange privilege, a shareholder should obtain and
read a copy of the prospectus of the fund to be purchased and should consider
the investment objective(s) of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s) and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution, if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by the Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days' written notice.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders owning Class A or Class B shares of the Fund with a value of
$10,000 or more may establish a Systematic Withdrawal Plan ("SWP"). Under a SWP,
a shareholder will receive monthly or quarterly payments, in amounts of not less
than $100 per payment, through the automatic redemption of the necessary number
of shares on the designated dates (monthly on the 25th day or beginning
quarterly on the 25th day of the month the investor first selects). In the event
that the 25th day falls on a Saturday, Sunday or holiday, the redemption will
take place on the prior business day. Certificates, if any, for the shares being
redeemed must be held by the Transfer Agent. Checks will be made payable to the
designated recipient and mailed within seven days. If the recipient is other
than the registered shareholder, the signature of each shareholder must be
guaranteed on the SWP application (see "How to Redeem Shares" in the
Prospectus). A corporation (or partnership) also must submit a "Corporation
Resolution" or "Certification of Partnership" indicating the names, titles, and
signatures of the individuals authorized to act on its behalf, and the SWP
application must be signed by a duly authorized officer(s) and the corporate
seal affixed.
With respect to a SWP, the maximum annual SWP withdrawal is 12% of the initial
account value. Withdrawals in excess of 12% of the initial account value
annually may result in assessment of a contingent deferred sales charge. See
"How to Invest" in the Prospectus.
Shareholders should be aware that such systematic withdrawals may deplete or use
up entirely the initial investment and result in realized long-term or
short-term capital gains or losses. The SWP may be terminated at any time by the
Transfer Agent or the Fund upon 30 days' written notice or by a shareholder upon
written notice to the Fund or its Transfer Agent. Applications and further
details regarding establishment of a SWP are provided at the back of the Fund's
Prospectus.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as determined by the SEC, (2) when an
emergency exists, as defined by the SEC, which would prohibit the Fund from
disposing of its portfolio securities or in fairly determining the value of its
assets, or (3) as the SEC may otherwise permit.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemption in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the net
assets of the Fund at the beginning of such period. This election is irrevocable
so long as Rule 18f-1 remains in effect, unless the SEC by order upon
application permits the withdrawal of such election.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
GENERAL
In order to qualify or to continue to qualify for treatment as a regulated
investment company ("RIC") under the Code, the Fund must distribute to its
shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of net investment income, net short-term
capital gain and net gains from certain foreign currency transactions)
("Distribution Requirement") and must meet several additional requirements.
These requirements include the following: (1) the Fund must derive at least 90%
of its gross income each taxable year from dividends, interest, payments with
respect to securities loans and gains from the sale or other disposition of
securities or foreign currencies, or other income (including gains from options,
Futures or Forward Contracts) derived with respect to its business of investing
in securities or those currencies ("Income Requirement"); (2) the Fund must
derive less than 30% of its gross income each taxable year from the sale or
other disposition of securities, or any of the following, that were held for
less than three months -- options or Futures (other than those on foreign
currencies), or foreign currencies (or options, Futures or Forward Contracts
thereon) that are not directly related to the Fund's principal business of
investing in securities (or options and Futures with respect to securities)
("Short-Short Limitation"); (3) at the close of each quarter of the Fund's
taxable year, at least 50% of the value of its total assets must be represented
by cash and cash items, U.S. government securities, securities of other RICs and
other securities, with these other securities limited, in respect of any one
issuer, to an amount that does not exceed 5% of the value of the Fund's total
assets and that does not represent more than 10% of the issuer's outstanding
voting securities; and (4) at the close of each quarter of the Fund's taxable
year, not more than 25% of the value of its total assets may be invested in
securities (other than U.S. government securities or the securities of other
RICs) of any one issuer.
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
("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
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
taxes paid by it. Pursuant to the election, the 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 those taxes, (2)
treat his share of those taxes and of any dividend paid by the Fund that
represents income from foreign and U.S. possessions sources as his own income
from those sources, and (3) either deduct the taxes deemed paid by him in
computing his taxable income or, alternatively, use the foregoing information in
calculating the foreign tax credit against his federal income tax. The Fund will
report to its shareholders shortly after each taxable year their respective
shares of the Fund's income from sources within, and taxes paid to, foreign
countries and U.S. possessions if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund will be subject to
federal income tax on a portion of any "excess distribution" received on, or of
any gain from the disposition of, stock of a PFIC (collectively "PFIC income"),
plus interest thereon, even if the Fund distributes the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income will be included in
the Fund's investment company taxable income and, accordingly, will not be
taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if those earnings and
gain were not received by the Fund from the QEF. In most instances it will be
very difficult, if not impossible, to make this election because of certain
requirements thereof.
Pursuant to proposed regulations, an open-end RIC, such as the Fund, would be
entitled to elect to "mark-to-market" its stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. Distributions of net capital gain are not
subject to withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, those distributions ordinarily will be subject to
U.S. income tax at a rate of 30% (or lower treaty rate) if the individual is
physically present in the United States for more than 182 days during the
taxable year and the distributions are attributable to a fixed place of business
maintained by the individual in the United States.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
options, Futures and Forward Contracts derived by the Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement. However, income from the
disposition by the Fund of options and
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Futures (other than those on foreign currencies) will be subject to the
Short-Short Limitation if they are held for less than three months. Income from
the disposition by the Fund of foreign currencies, and options, Futures and
Forward Contracts on foreign currencies, that are not directly related to the
Fund's principal business of investing in securities (or options and Futures
with respect thereto) also will be subject to the Short-Short Limitation if they
are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all those transactions. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts and/or foreign currency positions beyond the time
when it otherwise would be advantageous to do so, in order for the Fund to
continue to qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, Futures and Forward
Contracts on foreign currencies ("Section 988" gains 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. The
Fund attempts to monitor section 988 transactions to minimize any adverse tax
impact.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL GROWTH & INCOME 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 and 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), 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, Germany.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Fund's independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. conducts an annual
audit of the Fund, assists in the preparation of the Fund's federal and state
income tax returns and consults with the Company and the Fund as to matters of
accounting, regulatory filings, and federal and state income taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of 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"
names and has reserved the right to withdraw its consent to the use of such
names by the Company and/or the Fund at any time, or to grant the use of such
names to any other company.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
STANDARDIZED RETURNS
The Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), are calculated
separately for Class A, and Class B shares of the 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) reinvestment of dividends and other distributions at net asset value
on the reinvestment date determined by the Company's Board of Directors; and (4)
a complete redemption at the end of any period illustrated.
The Standardized Returns for the Class A and Class B shares of the Fund, stated
as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND
INCOME FUND INCOME FUND
PERIOD (CLASS A) (CLASS B)
- -------------------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Fiscal year ended October 31, 1996.......................................................... 11.25% 11.06%
October 31, 1991 through October 31, 1996................................................... 10.07% N/A
October 22, 1992 (commencement of operations) through October 31, 1996...................... N/A 11.29%
September 25, 1990 (commencement of operations) through October 31, 1996.................... 10.83% N/A
</TABLE>
NON-STANDARDIZED RETURNS
In addition to Standardized Returns, the Fund may also 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 and Class B shares of the 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 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.
Average annual Non-Standardized 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) no deduction
of sales charges; (2) reinvestment of dividends and other distributions at net
asset value on the reinvestment date determined by the Board; and (3) a complete
redemption at the end of any period illustrated.
The average annual Non-Standardized Returns for the Class A and Class B shares
of the Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND
INCOME FUND INCOME FUND
PERIOD (CLASS A) (CLASS B)
- -------------------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Fiscal year ended October 31, 1996.......................................................... 16.80% 16.06%
October 31, 1991 through October 31, 1996................................................... 11.14% N/A
October 22, 1992 (commencement of operations) through October 31, 1996...................... N/A 11.65%
September 25, 1990 (commencement of operations) through October 31, 1996.................... 11.72% N/A
</TABLE>
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 and, as set
forth below, may or may not take sales charge into account.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Class B shares of the Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND
INCOME FUND INCOME FUND
PERIOD (CLASS A) (CLASS B)
- ------------------------------------------------------------------------------------------ --------------- ---------------
<S> <C> <C>
October 22, 1992 (commencement of operations) through October 31, 1996.................... N/A 55.82%
September 25, 1990 (commencement of operations) through October 31, 1996.................. 96.59% N/A
</TABLE>
The aggregate Non-Standardized Returns (taking sales charges into account) for
the Class A and B shares of the Fund, stated as aggregate total returns for the
periods shown, were:
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND
INCOME FUND INCOME FUND
PERIOD (CLASS A) (CLASS B)
- ------------------------------------------------------------------------------------------ --------------- ---------------
<S> <C> <C>
October 22, 1992 (commencement of operations) through October 31, 1996.................... N/A 53.82%
September 25, 1990 (commencement of operations) through October 31, 1996.................. 87.25% N/A
</TABLE>
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the Securities Act of 1933, on account of the
inclusion of such information herein.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of the Fund, nor is it a prediction
of such performance. The performance of the Fund will differ from the historical
performance of relevant indices. The performance of indices does not take
expenses into account, while the Fund incurs expenses in its operations, which
will reduce performance. The Fund is actively managed, I.E., the Manager, as the
Fund's investment manager, actively purchases and sells securities in seeking
the Fund's investment objective. Moreover, the Fund may invest a portion of its
assets in corporate bonds, while certain indices relate only to government
bonds. Each of these factors will cause the performance of the Fund to differ
from relevant indices.
In addition, GT Global may in its radio, television and other advertising,
employ the use of sound effects such as, for example, sounds of electronic data
being communicated.
The Fund and GT Global may from time to time compare the Fund with, but not
limited to, the following:
(1) Various Salomon Brothers World Bond Indices, which measure the total
return performance of high quality non-U.S. dollar denominated securities in
major sectors of the worldwide bond markets.
(2) The Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage-backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's Investors Service Inc.
or BBB by Standard and Poor's, or, in the case of nonrated bonds, BBB by
Fitch Investors Service, Inc. ("Fitch") (excluding Collateralized Mortgage
Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings and comparisons published or prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Company Services ("CDA/Wiesenberger") and/or other companies that
rank or compare mutual funds by overall performance, investment objectives,
assets, expense levels, periods of existence and/or other factors. In this
regard, the Fund may be compared to the Fund's "peer group" as defined by
Lipper, CDA/Wiesenberger and/or other firms, as applicable, or to specific
funds or groups of funds within or without such peer group. Morningstar is a
mutual fund rating service that also rates mutual funds on the basis of
risk-adjusted performance. Morningstar ratings are calculated from a fund's
three, five and ten year average annual returns with appropriate fee
adjustments and a risk factor that reflects fund performance relative to the
three-month U.S.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Treasury bill monthly returns. Ten percent of the funds in an investment
category receive five stars and 22.5% receive four stars. The ratings are
subject to change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and Gross National Product ("GNP") weighted
index, beginning in 1975. The returns are broken down by local market and
currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized index composed of the capitalization-weighted average of the
price of 500 of the largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-backed
fixed income securities.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies in Europe, Australia and the Far East.
(13) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(14) The World Bank Publication of Trends in Developing Countries (TIDE)
provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(15) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(16) Datastream and Worldscope each is an on-line database retrieval
service for information including but not limited to international financial
and economic data.
(17) International Financial Statistics, which is produced by the
International Monetary Fund.
(18) Various publications and annual reports by the World Bank and its
affiliates.
(19) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(20) Various publications including but not limited to ratings agencies
such as Moody's, S&P and Fitch.
(21) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(22) Bank Rate National Monitor Index, which is an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.
(23) International Finance Corporation ("IFC") Emerging Markets Data Base
which provides detailed statistics on stock and bond markets in developing
countries.
(24) Various publications from the Organization for Economic Cooperation
and Development (OECD).
Indices, economic and financial data prepared by the research departments of
various financial organizations such as Salomon Brothers, Inc., Lehman Brothers,
Merrill Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan Stanley, Smith
Barney, S.G. Warburg, Jardine Flemming, The Bank for International Settlements,
Asian Development Bank, Bloomberg, L.P. and Ibbottson Associates may be used as
well as information reported by the Federal Reserve and the respective Central
Banks of various nations. In addition, performance rankings, ratings and
commentary reported periodically in national financial publications, included
but not limited to Money Magazine, Mutual Fund 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
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
compare its performance to that of other compilations or indices of comparable
quality to those listed above and other indices which may be developed and made
available.
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.
GT Global believes the Fund is an appropriate investment for long-term
investment goals including, but not limited to funding retirement, paying for
education or purchasing a house. The Fund does not represent a complete
investment program and the investors should consider the Fund as appropriate for
a portion of their overall investment portfolio with regard to their long-term
investment goals.
GT Global believes that a growing number of consumer products, including, but
not limited to home appliances, automobiles and clothing, purchased by Americans
are manufactured abroad. GT Global believes that investing globally in the
companies that produce products for U.S. consumers can help U.S. investors seek
protection of the value of their assets against the potentially increasing costs
of foreign manufactured goods. Of course, there can be no assurance that there
will be any correlation between global investing and the costs of such foreign
goods unless there is a corresponding change in value of the U.S. dollar to
foreign currencies. From time to time, GT Global may refer to or advertise the
names of such companies although there can be no assurance that any GT Global
Mutual Fund may own the securities of these companies.
The Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above which may be developed and made
available in the future. The Fund may be compared in advertising to Certificates
of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan statistical areas, or other investments
issued by banks. The Fund differs from bank investments in several respects. The
Fund may offer greater liquidity or higher potential returns than CDs; but
unlike CDs, the Fund will have a fluctuating share price and return and is not
FDIC insured.
The Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
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 Fund. Ibbotson
calculates total returns in the same method as the Fund. The Fund may also
compare performance to that of other compilations or indices that may be
developed and made available in the future.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the Fund may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
addition, the Fund may quote financial or business publications and periodicals
as they relate to fund management, investment philosophy, and investment
techniques. Rankings that compare the performance of GT Global Mutual Funds to
one another in appropriate categories over specific periods of time may also be
quoted in advertising.
The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviation and R(2) in advertising. In addition, the Fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the Fund's historical share price fluctuations or total returns compared
to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
The Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after-tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Mutual Funds through various retirement accounts and
plans that offer deferral of income taxes on investment earnings and may also
enable you to make pre-tax contributions. Because of their advantages, these
retirement accounts and plans may produce returns superior to comparable
non-retirement investments. In sales material and advertisements, the Fund 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 roll over (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible 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 of amount of the distribution), unless you elect to 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 401(k) plans, but with fewer administrative requirements and
therefore lower annual administration expenses.
CODE SECTION 403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other not-for-profit corporations can make pre-tax salary reduction
contributions to these accounts.
PROFIT-SHARING (INCLUDING SECTION 401(K)) AND MONEY PURCHASE PENSION
PLANS: Corporations can sponsor these qualified defined contribution plans for
their employees. Section 401(k) plans, a type of profit-sharing plan,
additionally permit the eligible, participating employees to make pre-tax salary
reduction contributions to the plan (up to certain limitations).
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.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.
From time to time, the Fund and GT Global will quote information including but
not limited to data regarding: individual countries, regions, world stock
exchanges, and economic and demographic statistics from sources GT Global deems
reliable including the economic and financial data of the referenced financial
organizations such as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, IFC and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International Industry
Indices and IFC.
3) The number of listed companies: IFC, G.T. Guide to World Equity Markets,
Salomon Brothers, Inc., and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, 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: Organization for Economic Cooperation
and Development 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, G.T. Guide to World
Equity Markets, Salomon Brothers Inc., and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
17) Countries restructuring their debt, including those under the Brady Plan:
the Manager.
18) Political and economic structure of countries: Economist Intelligence Unit.
19) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
20) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 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.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 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.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
Moody's rates the debt securities issued by various entities from "Aaa" to
"C". Investment grade ratings are the first four categories:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or exceptionally stable margin, and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risk appear somewhat
greater.
A -- Upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Ba -- Have speculative elements and their future cannot be considered to
be well assured. Often the protection of interest and principal payments may
be very moderate, and thereby not well safeguarded during other good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B -- Generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small.
Caa -- Poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca -- Speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
C -- Lowest rated class of bonds. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
2. The issue or issuer belongs to a group of securities or companies that are
not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published in
Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the Company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "DD" according to quality. Investment grade ratings are the first four
categories:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal although
they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" are
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of this
obligation. "BB" indicates the lowest degree of speculation and "C" the
highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
BB -- Has less near-term vulnerability to default than other speculative
issues; however, it faces major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The "BB" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "BBB-" rating.
B -- Has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
CCC -- Has a currently indefinable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The "CCC" rating category
is also used for debt subordinated to senior debt that is assigned an actual
or implied "B" or "B-" rating.
CC -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC" rating.
C -- Typically applied to debt subordinated to senior debt which is
assigned an actual or implied "CCC-" debt rating. The "C" rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" rating is used when interest payments
are not made on the date due even if the applicable grace period has not
expired, unless S&P believes that such payments will be made during such
grace period. The "D" rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1" and "Prime-2" to indicate
commercial paper having the highest capacity for timely repayment. Issuers rated
Prime-1 have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity normally will be evidenced by the
following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protections; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2 have a strong
capacity for repayment of short-term promissory obligations. This normally will
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into four categories ranging from
"A" for the highest quality obligations to "D" for the lowest. A -- Issues
assigned its highest rating are regarded as having the greatest capacity for
timely payment. Issues in this category are delineated with numbers 1, 2, and 3
to indicate the relative degree of safety. A-1 -- This designation indicates
that the degree of safety regarding timely payment is either overwhelming or
very strong. Those issues determined to possess overwhelming safety
characteristics will be denoted with a plus (++) sign designation. A-2 --
Capacity for timely payments on issues with this designation is strong; however,
the relative degree of safety is not as high as for issues designated "A-1."
COMMERCIAL PAPER RATINGS
The Fund may invest only in high quality commercial paper, i.e. commercial paper
rated Prime-1 by Moody's, A-1 by S&P, or, if unrated, judged by the Manager to
be of comparable quality. Issuers rated Prime-1 by Moody's have, in Moody's
judgment, a superior capacity for repayment of short-term debt obligations.
Prime-1 repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structures with
moderate reliance on debt and ample asset protections; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issues assigned the A-1 rating by S&P are regarded by S&P
as having the greatest capacity for timely payment. This designation indicates
that the degree of safety regarding timely payment is either overwhelming or
very strong.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Fund as of October 31, 1996, and for its
fiscal year then-ended appear on the following pages.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of GT Global Growth & Income Fund and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of GT
Global Growth & Income Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1996, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 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 GT
Global Growth & Income Fund as of October 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 13, 1996
F1
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (22.8%)
Royal & Sun Alliance Insurance Group PLC ............... UK 2,081,400 $ 14,274,489 2.1
INSURANCE - MULTI-LINE
Schweizerischer Bankverein (Swiss Bank Corp.) .......... SWTZ 69,590 13,425,103 2.0
BANKS-MONEY CENTER
Union Bank of Switzerland - Bearer ..................... SWTZ 10,652 10,160,837 1.5
BANKS-MONEY CENTER
CS Holding AG - Registered ............................. SWTZ 98,500 9,852,341 1.5
BANKS-MONEY CENTER
AEGON N.V. ............................................. NETH 187,875 9,553,717 1.4
INSURANCE-LIFE
First Tennessee National Corp. ......................... US 245,400 8,926,425 1.3
BANKS-REGIONAL
ABN AMRO Holding N.V. .................................. NETH 151,374 8,553,866 1.3
BANKS-REGIONAL
ING Groep N.V. ......................................... NETH 264,262 8,237,263 1.2
OTHER FINANCIAL
Commonwealth Bank of Australia ......................... AUSL 757,700 7,113,005 1.1
BANKS-SUPER REGIONAL
American General Corp. ................................. US 170,000 6,332,500 0.9
INSURANCE-LIFE
IKB Deutsche Industriebank AG .......................... GER 33,700 6,123,629 0.9
BANKS-REGIONAL
Lloyds Abbey Life PLC .................................. UK 599,000 6,115,726 0.9
INSURANCE-LIFE
National Westminster Bank PLC .......................... UK 471,800 5,385,091 0.8
BANKS-MONEY CENTER
Deutsche Bank AG ....................................... GER 112,500 5,213,922 0.8
BANKS-MONEY CENTER
Generale de Banque S.A. ................................ BEL 14,762 5,162,201 0.8
BANKS-MONEY CENTER
General Accident PLC ................................... UK 400,000 4,764,074 0.7
INSURANCE - PROPERTY-CASUALTY
Kredietbank N.V. ....................................... BEL 12,980 4,195,492 0.6
BANKS-REGIONAL
Fortis Amev N.V. ....................................... NETH 135,042 4,034,311 0.6
OTHER FINANCIAL
Commercial Union PLC ................................... UK 361,550 3,823,747 0.6
INSURANCE - MULTI-LINE
Mercury Asset Management Group PLC ..................... UK 196,698 3,614,878 0.5
INVESTMENT MANAGEMENT
M & G Group PLC ........................................ UK 155,000 2,824,601 0.4
INVESTMENT MANAGEMENT
Banco de Santander S.A. ................................ SPN 48,750 2,503,823 0.4
BANKS-MONEY CENTER
Dresdner Bank AG ....................................... GER 72,350 1,936,154 0.3
BANKS-MONEY CENTER
Gerrard & National Holdings PLC ........................ UK 375,880 1,608,468 0.2
SECURITIES BROKER
Realty Development Corp., Ltd. "A" ..................... HK 5,000 19,142 --
REAL ESTATE
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Generale de Banque Strip VVPR .......................... BEL 1,342 $ 861 --
BANKS-MONEY CENTER
------------
153,755,666
------------
Energy (12.9%)
Elektrowatt AG ......................................... SWTZ 45,508 17,306,164 2.6
ELECTRICAL & GAS UTILITIES
Royal Dutch Petroleum Co. .............................. NETH 87,050 14,372,406 2.1
OIL
Exxon Corp. ............................................ US 91,300 8,091,463 1.2
OIL
Electrabel S.A. ........................................ BEL 34,760 8,073,866 1.2
ELECTRICAL & GAS UTILITIES
Mobil Corp. ............................................ US 63,800 7,448,650 1.1
OIL
Shell Transport & Trading Co., PLC ..................... UK 358,800 5,881,728 0.9
OIL
RWE AG ................................................. GER 134,620 5,545,269 0.8
ELECTRICAL & GAS UTILITIES
Reunies Electrobel & Tractebel S.A. .................... BEL 11,587 5,520,274 0.8
ELECTRICAL & GAS UTILITIES
Pacific Gas and Electric Co. ........................... US 220,000 5,170,000 0.8
ELECTRICAL & GAS UTILITIES
Elf Aquitaine .......................................... FR 52,475 4,197,589 0.6
OIL
Groupe Bruxelles Lambert S.A. .......................... BEL 31,025 3,856,974 0.6
OIL
British Gas PLC ........................................ UK 459,500 1,427,994 0.2
GAS PRODUCTION & DISTRIBUTION
------------
86,892,377
------------
Services (6.4%)
Telecom Corporation of New Zealand Limited: ............ NZ -- -- 2.3
TELEPHONE NETWORKS
Common ............................................... -- 2,614,200 13,588,663 --
ADR{\/} .............................................. -- 19,000 1,581,750 --
McGraw-Hill, Inc. ...................................... US 162,000 7,593,750 1.1
BROADCASTING & PUBLISHING
United News & Media PLC ................................ UK 639,291 7,010,773 1.0
BROADCASTING & PUBLISHING
Dun & Bradstreet Corp. ................................. US 109,800 6,354,675 0.9
BROADCASTING & PUBLISHING
Royal PTT Nederland N.V. ............................... NETH 112,735 4,078,681 0.6
TELEPHONE NETWORKS
EMI Group PLC .......................................... UK 158,900 3,121,896 0.5
LEISURE & TOURISM
------------
43,330,188
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (6.3%)
Western Mining Corporation Holdings Ltd. ............... AUSL 1,437,900 $ 9,033,151 1.3
METALS - NON-FERROUS
CSR Ltd. ............................................... AUSL 2,405,200 8,078,942 1.2
BUILDING MATERIALS & COMPONENTS
Solvay S.A. "A" ........................................ BEL 11,754 7,042,218 1.1
CHEMICALS
Akzo Nobel N.V. ........................................ NETH 51,450 6,481,651 1.0
CHEMICALS
Monsanto Co. ........................................... US 160,500 6,359,813 0.9
CHEMICALS
BASF AG ................................................ GER 180,800 5,782,159 0.8
CHEMICALS
------------
42,777,934
------------
Consumer Non-Durables (5.7%)
Avon Products, Inc. .................................... US 182,000 9,873,500 1.5
PERSONAL CARE/COSMETICS
EMAIL Ltd. ............................................. AUSL 3,264,200 8,973,124 1.3
HOUSEHOLD PRODUCTS
Philip Morris Cos., Inc. ............................... US 85,000 7,873,125 1.2
FOOD
Universal Corp. ........................................ US 280,500 7,643,625 1.1
TOBACCO
Brown-Forman Corp. "B" ................................. US 93,600 4,048,200 0.6
BEVERAGES - ALCOHOLIC
------------
38,411,574
------------
Health Care (3.7%)
Bristol Myers Squibb Co. ............................... US 138,700 14,667,525 2.2
PHARMACEUTICALS
Bayer AG ............................................... GER 258,600 9,777,383 1.5
PHARMACEUTICALS
------------
24,444,908
------------
Capital Goods (3.4%)
General Electric PLC ................................... UK 1,473,000 9,095,404 1.4
AEROSPACE/DEFENSE
BICC PLC ............................................... UK 1,559,172 7,420,400 1.1
INDUSTRIAL COMPONENTS
Lockheed Martin Corp. .................................. US 69,545 6,232,971 0.9
AEROSPACE/DEFENSE
------------
22,748,775
------------
Consumer Durables (1.9%)
GKN PLC ................................................ UK 685,800 12,888,041 1.9
------------
AUTO PARTS
Multi-Industry/Miscellaneous (1.4%)
VEBA AG ................................................ GER 170,200 9,083,556 1.4
------------
CONGLOMERATE
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (0.3%)
Alcatel Alsthom Compagnie Generale d'Electricite ....... FR 21,860 $ 1,864,976 0.3
TELECOM TECHNOLOGY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $317,278,795) ............. 436,197,995 64.8
------------ -----
<CAPTION>
PRINCIPAL % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (25.6%)
Australia (2.0%)
Australian Government, 7.5% due 7/15/05 .............. AUD 16,500,000 13,198,170 2.0
Canada (0.6%)
Canadian Government, 8.75% due 12/1/05 ............... CAD 5,000,000 4,348,475 0.6
Denmark (1.1%)
Kingdom of Denmark, 8% due 3/15/06 ................... DKK 40,000,000 7,409,447 1.1
Germany (5.9%)
Deutschland Republic:
6.75% due 4/22/03 .................................. DEM 23,000,000 16,167,173 2.4
6.25% due 1/4/24 ................................... DEM 23,000,000 14,113,222 2.1
Bundesschatzanweisungen, 6.875% due 12/2/98 .......... DEM 7,000,000 4,907,956 0.7
Treuhandanstalt, 6.375% due 7/1/99 ................... DEM 7,000,000 4,888,067 0.7
Italy (3.2%)
Italian Buoni Poliennali del Tesoro (BTPS):
10.5% due 4/15/98 .................................. ITL 17,645,000,000 12,144,605 1.8
10.5% due 9/01/05 .................................. ITL 12,295,000,000 9,267,211 1.4
Spain (1.5%)
Kingdom of Spain, 10.3% due 6/15/02 .................. ESP 1,162,430,000 10,354,587 1.5
Sweden (2.4%)
Swedish Government, 6% due 2/9/05 .................... SEK 115,000,000 16,132,404 2.4
United Kingdom (3.7%)
United Kingdom Treasury:
7.75% due 9/8/06 ................................... GBP 11,895,000 19,487,111 2.9
9.5% due 1/15/99 ................................... GBP 3,000,000 5,144,717 0.8
United States (5.2%)
United States Treasury Note:
7.25% due 5/15/04 .................................. USD 8,600,000 9,109,617 1.4
7.5% due 2/15/05 ................................... USD 8,050,000 8,666,328 1.3
United States Treasury Bond:
6.25% due 8/15/23 .................................. USD 10,000,000 9,405,859 1.4
6% due 2/15/26 ..................................... USD 8,200,000 7,492,429 1.1
------------
Total Government & Government Agency Obligations (cost
$160,273,837) ........................................... 172,237,378
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (4.5%)
Germany (2.2%)
Siemens Capital Corp., 8% due 6/24/02+/+ ............. USD 4,710,000 $ 6,224,265 0.9
Deutsche Bank AG, 9% due 12/31/02+/+ ................. DEM 5,625,000 4,395,112 0.7
Commerzbank AG, Convertible Bond, 9.45% due
12/31/00+ ........................................... DEM 4,173,000 4,056,088 0.6
United Kingdom (2.3%)
Daily Mail & General Trust, Convertible Bond, 5.75%
due 9/26/03 ......................................... GBP 3,405,000 8,836,601 1.3
Land Securities PLC, Convertible Bond, 9.375% due
7/31/04 ............................................. GBP 3,485,000 6,560,600 1.0
------------
Total Corporate Bonds (cost $26,125,358) ................. 30,072,666
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $186,399,195) ....... 202,310,044 30.1
------------ -----
<CAPTION>
% OF NET
REPURCHASE AGREEMENT VALUE 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 $8,645,000 U.S. Treasury Bond,
7.125% due 2/15/23 (market value of collateral is
$9,130,814, including accrued interest). (cost
$8,946,379) ........................................... 8,946,379 1.3
------------ -----
TOTAL INVESTMENTS (cost $512,624,369) * ................. 647,454,418 96.2
Other Assets and Liabilities ............................. 25,799,981 3.8
------------ -----
NET ASSETS ............................................... $673,254,399 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
+ The coupon rate shown on floating rate note represents the rate at
period end.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
* For Federal income tax purposes, cost is $513,138,202 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 141,338,898
Unrealized depreciation: (7,022,682)
-------------
Net unrealized appreciation: $ 134,316,216
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depository Receipt
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL GROWTH & INCOME 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, SHORT-TERM
RIGHTS & &
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS OTHER TOTAL
- -------------------------------------- ------------- ---------- ----- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 4.9 2.0 6.9
Belgium (BEL/BEF) .................... 5.1 5.1
Canada (CAN/CAD) ..................... 0.6 0.6
Denmark (DEN/DKK) .................... 1.1 1.1
France (FR/FRF) ...................... 0.9 0.9
Germany (GER/DEM) .................... 6.5 8.1 14.6
Italy (ITLY/ITL) ..................... 3.2 3.2
Netherlands (NETH/NLG) ............... 8.2 8.2
New Zealand (NZ/NZD) ................. 2.3 2.3
Spain (SPN/ESP) ...................... 0.4 1.5 1.9
Sweden (SWDN/SEK) .................... 2.4 2.4
Switzerland (SWTZ/CHF) ............... 7.6 7.6
United Kingdom (UK/GBP) .............. 13.2 6.0 19.2
United States & Other (US/USD) ....... 15.7 5.2 5.1 26.0
----- ----- ----- -----
Total ............................... 64.8 30.1 5.1 100.0
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $673,254,399.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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........................... 978,657 5.14010 11/19/96 $ 5,913
------------ ------------
Total Contracts to Buy (Payable
amount $972,744)................... 978,657 5,913
------------ ------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 0.15%.
CONTRACTS TO SELL:
- ----------------------------------------
Deutsche Marks 30,578,692 1.46710 11/29/96 912,004
French Francs 1,389,297 4.99600 11/06/96 31,840
French Francs 3,777,615 5.05905 11/19/96 37,330
Netherland Guilders 12,432,967 1.64860 11/15/96 365,771
Swiss Francs 14,014,758 1.23274 12/19/96 262,381
------------ ------------
Total Contracts to Sell (Receivable
amount $63,802,655)................ 62,193,329 1,609,326
------------ ------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 9.24%.
Total Open Forward Foreign Currency
Contracts.......................... $1,615,239
------------
------------
</TABLE>
- --------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $512,624,369) (Note 1)............................. $647,454,418
U.S. currency..................................................................... $ 756
Foreign currencies (cost $44,124)................................................. 44,048 44,804
---------
Receivable for Fund shares sold.............................................................. 20,169,512
Interest and interest withholding tax reclaims receivable.................................... 5,131,683
Receivable for open forward foreign currency contracts, net (Note 1)......................... 1,615,239
Dividends and dividend withholding tax reclaims receivable................................... 1,127,871
Miscellaneous receivable..................................................................... 4,762
Cash held as collateral for securities loaned (Note 1)....................................... 109,660,818
-----------
Total assets............................................................................... 785,209,107
-----------
Liabilities:
Payable for Fund shares repurchased (Note 2)................................................. 1,082,087
Payable for investment management and administration fees (Note 2)........................... 534,801
Payable for service and distribution expenses (Note 2)....................................... 401,630
Payable for printing and postage expenses.................................................... 106,632
Payable for transfer agent fees (Note 2)..................................................... 61,755
Payable for professional fees................................................................ 49,075
Payable for custodian fees (Note 1).......................................................... 22,818
Payable for registration and filing fees..................................................... 13,380
Payable for fund accounting fees (Note 2).................................................... 12,818
Payable for Directors' fees and expenses (Note 2)............................................ 4,464
Other accrued expenses....................................................................... 4,430
Collateral for securities loaned (Note 1).................................................... 109,660,818
-----------
Total liabilities.......................................................................... 111,954,708
-----------
Net assets..................................................................................... $673,254,399
-----------
-----------
Class A:
Net asset value and redemption price per share ($286,203,273 DIVIDED BY 40,255,902 shares
outstanding).................................................................................. $ 7.11
-----------
-----------
Maximum offering price per share (100/95.25 of $7.11) *........................................ $ 7.46
-----------
-----------
Class B:+
Net asset value and offering price per share ($383,966,080 DIVIDED BY 53,993,849 shares
outstanding).................................................................................. $ 7.11
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($3,085,046 DIVIDED
BY 434,291 shares outstanding)................................................................ $ 7.10
-----------
-----------
Net assets consist of:
Paid in capital (Note 4)..................................................................... $544,529,295
Undistributed net investment income.......................................................... 755,291
Accumulated net realized loss on investments and foreign currency transactions............... (8,514,803)
Net unrealized appreciation on translation of assets and liabilities in foreign currencies... 1,654,567
Net unrealized appreciation of investments................................................... 134,830,049
-----------
Total -- representing net assets applicable to capital shares outstanding...................... $673,254,399
-----------
-----------
<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.
F8
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income (net of foreign withholding tax of $70,369)................................ $15,829,738
Dividend income (net of foreign withholding tax of $1,768,337)............................. 15,064,935
----------
Total investment income.................................................................. 30,894,673
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 6,282,438
Transfer agent fees (Note 2)............................................................... 1,236,857
Service and distribution expenses: (Note 2)
Class A...................................................................... $ 968,051
Class B...................................................................... 3,702,842 4,670,893
----------
Custodian fees (Note 1).................................................................... 456,141
Printing and postage expenses.............................................................. 170,158
Fund accounting fees (Note 2).............................................................. 162,035
Audit fees................................................................................. 57,724
Registration and filing fees............................................................... 43,188
Legal fees................................................................................. 25,986
Directors' fees and expenses (Note 2)...................................................... 16,712
Other expenses............................................................................. 23,615
----------
Total expenses before reductions......................................................... 13,145,747
----------
Expense reductions (Note 1 & 5)........................................................ (426,518)
----------
Total net expenses....................................................................... 12,719,229
----------
Net investment income........................................................................ 18,175,444
----------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments............................................... 11,446,471
Net realized gain on foreign currency transactions............................. 4,285,938
----------
Net realized gain during the year........................................................ 15,732,409
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies......................................................... 1,957,055
Net change in unrealized appreciation of investments........................... 62,236,320
----------
Net unrealized appreciation during the year.............................................. 64,193,375
----------
Net realized and unrealized gain on investments and foreign currencies....................... 79,925,784
----------
Net increase in net assets resulting from operations......................................... $98,101,228
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
------------ ------------
Increase (Decrease) in net assets
Operations:
Net investment income...................................................... $ 18,175,444 $ 22,728,600
Net realized gain (loss) on investments and foreign currency
transactions.............................................................. 15,732,409 (17,910,394)
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies.............................. 1,957,055 (583,752)
Net change in unrealized appreciation of investments....................... 62,236,320 32,281,086
------------ ------------
Net increase in net assets resulting from operations..................... 98,101,228 36,515,540
------------ ------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................................................. (9,963,848) (10,790,288)
From net realized gain on investments...................................... (1,766,763) (506,546)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................................................. (10,894,963) (10,618,028)
From net realized gain on investments...................................... (2,225,842) (580,255)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................................................. (65,132) (18,236)
From net realized gain on investments...................................... (5,890) --
------------ ------------
Total distributions...................................................... (24,922,438) (22,513,353)
------------ ------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested........................... 237,835,679 150,425,919
Decrease from capital shares repurchased................................... (279,569,655) (199,707,569)
------------ ------------
Net decrease from capital share transactions............................. (41,733,976) (49,281,650)
------------ ------------
Total increase (decrease) in net assets...................................... 31,444,814 (35,279,463)
Net assets:
Beginning of year.......................................................... 641,809,585 677,089,048
------------ ------------
End of year................................................................ $673,254,399* $641,809,585**
------------ ------------
------------ ------------
<FN>
- --------------
* Includes undistributed net investment income of $755,291.
** Includes undistributed net investment income of $3,503,788.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
1996 1995 1994 1993 (D) 1992
--------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.25
--------- --------- --------- --------- --------
Income from investment
operations:
Net investment income....... 0.22 0.24 0.22 0.24* 0.21*
Net realized and unrealized
gain (loss) on
investments................ 0.82 0.13 (0.03) 1.05 0.10
--------- --------- --------- --------- --------
Net increase (decrease)
from investment
operations............... 1.04 0.37 0.19 1.29 0.31
--------- --------- --------- --------- --------
Distributions to shareholders:
From net investment
income..................... (0.24) (0.22) (0.21) (0.24) (0.14)
From net realized gain on
investments................ (0.04) (0.01) (0.06) -- (0.14)
From sources other than net
investment income.......... -- -- -- (0.04) --
--------- --------- --------- --------- --------
Total distributions....... (0.28) (0.23) (0.27) (0.28) (0.28)
--------- --------- --------- --------- --------
Net asset value, end of
period....................... $ 7.11 $ 6.35 $ 6.21 $ 6.29 $ 5.28
--------- --------- --------- --------- --------
--------- --------- --------- --------- --------
Total investment return (e)... 16.80% 6.27% 3.14% 25.1% 5.9%
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $286,203 $284,069 $317,847 $251,428 $27,754
Ratio of net investment income
to average net assets........ 3.17% 3.85% 3.30% 3.3%* 4.1%*
Ratio of expenses to average
net assets:
With expense reductions
(Notes 1 & 5).............. 1.59% 1.70% 1.67% 1.8%* 1.9%*
Without expense
reductions................. 1.66% 1.74% --%** --%** --%**
Portfolio turnover rate++++... 39% 83% 117% 24% 53%
Average commission rate per
share paid on portfolio
transactions++++............. $ 0.0139 N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing among the
classes of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.005 and $0.02 for the year ended October
31, 1993 and 1992, respectively. Without such reimbursements, the
expense ratios would have been 1.9% and 2.2%, and the net investment
income to average net assets would have been 3.2% and 3.7% for the
year ended October 31, 1993 and 1992, respectively.
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) Ratios are not meaningful due to short period of operations of Class B
shares.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
(e) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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>
CLASS B++
----------------------------------------------------------- ADVISOR CLASS+++
OCTOBER 22, --------------------------
1992 YEAR JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO ENDED TO
--------------------------------------------- OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1994 1993 (D) 1992 (D) 1996 1995
--------- --------- --------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.29 $ 6.35 $ 6.24
--------- --------- --------- --------- ----------- ----------- ------------
Income from investment
operations:
Net investment income....... 0.17 0.20 0.18 0.20 0.01 0.23 0.11
Net realized and unrealized
gain (loss) on
investments................ 0.82 0.13 (0.03) 1.05 (0.02) 0.82 0.13
--------- --------- --------- --------- ----------- ----------- ------------
Net increase (decrease)
from investment
operations............... 0.99 0.33 0.15 1.25 (0.01) 1.05 0.24
--------- --------- --------- --------- ----------- ----------- ------------
Distributions to shareholders:
From net investment
income..................... (0.20) (0.18) (0.17) (0.20) -- (0.26) (0.13)
From net realized gain on
investments................ (0.03) (0.01) (0.06) -- -- (0.04) --
From sources other than net
investment income.......... -- -- -- (0.04) -- -- --
--------- --------- --------- --------- ----------- ----------- ------------
Total distributions....... (0.23) (0.19) (0.23) (0.24) -- (0.30) (0.13)
--------- --------- --------- --------- ----------- ----------- ------------
Net asset value, end of
period....................... $ 7.11 $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 7.10 $ 6.35
--------- --------- --------- --------- ----------- ----------- ------------
--------- --------- --------- --------- ----------- ----------- ------------
Total investment return (e)... 16.06% 5.57% 2.48% 24.3% (0.2)% (a) 17.19% 3.83% (a)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $383,966 $356,796 $359,242 $150,768 $ 280 $ 3,085 $ 944
Ratio of net investment income
to average net assets........ 2.52% 3.20% 2.65% 2.6% N/A(c) 3.52% 4.20% (b)
Ratio of expenses to average
net assets:
With expense reductions
(Notes 1 & 5).............. 2.24% 2.35% 2.32% 2.5% N/A(c) 1.24% 1.35% (b)
Without expense
reductions................. 2.31% 2.39% --%** --%** --% **(c) 1.31% 1.39% (b)
Portfolio turnover rate++++... 39% 83% 117% 24% 53% 39% 83%
Average commission rate per
share paid on portfolio
transactions++++............. $ 0.0139 N/A N/A N/A N/A $ 0.0139 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing among the
classes of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.005 and $0.02 for the year ended October
31, 1993 and 1992, respectively. Without such reimbursements, the
expense ratios would have been 1.9% and 2.2%, and the net investment
income to average net assets would have been 3.2% and 3.7% for the
year ended October 31, 1993 and 1992, respectively.
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) Ratios are not meaningful due to short period of operations of Class B
shares.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
(e) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Growth & Income Fund ("Fund") is a separate series of GT Investment
Funds, Inc. ("Company"). The Company is organized as a Maryland corporation and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a non-diversified, open-end management investment company. The Company has
twelve series of shares in operation, each series corresponding to a distinct
portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective service and distribution expenses, and
may differ in its transfer agent, registration, and certain other class-specific
fees and expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
the financial statements may include certain estimates made by management.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by, Chancellor LGT Asset
Management, Inc. (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 fluctuations, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Fund after translation
to U.S. dollars based on the exchange rates on that day. The cost of each
security is determined using historical exchange rates. Income and withholding
taxes are translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss
F13
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
equal to the difference between the value at the time it was opened and the
value at the time it was closed. Forward Contracts involve market risk in excess
of the amounts shown in the Fund's "Statement of Assets and Liabilities." The
Fund could be exposed to risk if a counter party is unable to meet the terms of
the contract or if the value of the currency changes unfavorably. The Fund may
enter into Forward Contracts in connection with planned purchases or sales of
securities, or to hedge against adverse fluctuations in exchange rates between
currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. If an option expires on its
stipulated expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Fund can write options only on a covered
basis, which, for a call, requires that the Fund hold the underlying security
and, for a put, requires the Fund to set aside cash, U.S. government securities,
or other liquid, high grade debt securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund may use options to manage its exposure to the
stock or bond market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently 'marked-to-market' to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock or bond
market and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1996, stocks with an aggregate value of approximately
$103,616,512 were on loan to brokers. The loans were secured by cash collateral
of $109,660,818. For international securities, cash collateral is received by
the Fund against loaned securities in an amount at least equal to 105% of the
market value of the loaned securities at the inception of each loan. This
collateral must be maintained at not less than 103% of the market value of the
loaned securities during the period of the loan. For domestic securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the loan. For
the year ended October 31, 1996, the Fund received $408,455 of income from
securities lending which was used to offset the Fund's custody expenses.
F14
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carry forward of
$6,939,210, which expires in 2003.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investment of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the price of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(M) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc., is the Fund's 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. The Fund 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 the Fund's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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 $55,131
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $11,699 for the year ended October 31, 1996. 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 Fund's current
prospectus. For the year ended October 31, 1996, GT Global collected CDSCs in
the amount of $1,473,414. 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 Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for 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 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for 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, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for 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%
F15
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 1.85%, 2.50%, and 1.50% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of 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 Fund. 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 Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the 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.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1996, purchases and sales of investment
securities by the Fund, other than short-term investments and U.S. government
obligations, aggregated $221,734,292 and $306,804,136, respectively. Purchases
and sales of U.S. government obligations were $27,669,250 and $12,391,250,
respectively, for the year ended October 31, 1996.
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, 200,000,000 were
classified as shares of the 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 Latin
America Growth Fund; 200,000,000 were classified as shares of GT Global Small
Companies Fund (inactive); 400,000,000 were classified as shares of GT Global
Telecommunications Fund; 200,000,000 were classified as shares of GT Global
Emerging Markets 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; 200,000,000 were classified as shares of GT Global High
Income 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 Fund were as follows:
F16
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
CAPITAL SHARE TRANSACTIONS
<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............................. 21,196,018 $143,350,526 11,447,072 $ 70,539,906
Shares issued in connection with
reinvestment of distributions......... 1,500,319 9,894,388 1,579,506 9,534,463
----------- ------------ ----------- -------------
22,696,337 153,244,914 13,026,578 80,074,369
Shares repurchased...................... (27,157,086) (182,477,096) (19,470,580) (119,773,578)
----------- ------------ ----------- -------------
Net decrease............................ (4,460,749) $(29,232,182) (6,444,002) $ (39,699,209)
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 9,561,545 $ 63,970,280 9,868,499 $ 60,082,182
Shares issued in connection with
reinvestment of distributions......... 1,656,409 10,934,244 1,542,069 9,322,768
----------- ------------ ----------- -------------
11,217,954 74,904,524 11,410,568 69,404,950
Shares repurchased...................... (13,373,837) (89,395,191) (13,074,922) 79,926,629)
----------- ------------ ----------- -------------
Net decrease............................ (2,155,883) $(14,490,667) (1,664,354) $ (10,521,679)
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
YEAR ENDED SHARES) TO OCTOBER 31,
OCTOBER 31, 1996 1995
------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,416,928 $ 9,616,882 146,947 $ 928,364
Shares issued in connection with
reinvestment of distributions......... 10,469 69,359 2,927 18,236
----------- ------------ ----------- -------------
1,427,397 9,686,241 149,874 946,600
Shares repurchased...................... (1,141,817) (7,697,368) (1,163) (7,362)
----------- ------------ ----------- -------------
Net increase............................ 285,580 $ 1,988,873 148,711 $ 939,238
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1996, the Fund's expenses
were reduced by $18,063 under these arrangements.
F17
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL 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 on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUNDS
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
FIXED INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, 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 GROWTH & INCOME 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.
GROSA703 MC
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
March 1, 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Class A and Class B
shares of GT Global Latin America Growth Fund ("Fund"). The Fund is a
non-diversified series of G.T. Investment Funds, Inc. (the "Company"), a
registered open-end management investment company. This Statement of Additional
Information, which is not a prospectus, supplements and should be read in
conjunction with the Fund's current Class A and Class B Prospectus dated March
1, 1997. A copy of the Fund's Prospectus is available without charge by either
writing to the above address or by calling the Fund at the toll-free telephone
number printed above.
Chancellor LGT Asset Management, Inc. (the "Manager") serves as the Fund's
investment manager and administrator. The distributor of the Fund's shares is GT
Global, Inc. ("GT Global"). The Fund's transfer agent is GT Global Investor
Services, Inc. ("GT Services" or the "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 5
Risk Factors............................................................................................................. 14
Investment Limitations................................................................................................... 18
Execution of Portfolio Transactions...................................................................................... 19
Directors and Executive Officers......................................................................................... 22
Management............................................................................................................... 24
Valuation of Fund Shares................................................................................................. 26
Information Relating to Sales and Redemptions............................................................................ 27
Taxes.................................................................................................................... 29
Additional Information................................................................................................... 32
Investment Results....................................................................................................... 33
Description of Debt Ratings.............................................................................................. 39
Financial Statements..................................................................................................... 41
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is capital appreciation. The Fund will
normally invest at least 65% of its total assets in securities of a broad range
of Latin American issuers. Under current market conditions, the Fund expects to
invest primarily in equity and debt securities issued by companies and
governments in Mexico, Chile, Brazil and Argentina. Though the Fund can normally
invest up to 35% of its total assets in U.S. securities, the Fund reserves the
right to be primarily invested in U.S. securities for temporary defensive
purposes or pending investment of the proceeds of the offering made hereby.
SELECTION OF EQUITY INVESTMENTS
In determining the appropriate distribution of investments among various
countries for the Fund, the Manager ordinarily considers the following factors:
prospects for relative economic growth between the different countries in which
the Fund may invest; expected levels of inflation; government policies
influencing business conditions; the outlook for interest rates; the outlook for
currency relationships; and the range of the individual investment opportunities
available to international investors.
In analyzing companies for investment by the Fund, the Manager ordinarily looks
for one or more of the following characteristics: an above-average earnings
growth per share; high return on invested capital; healthy balance sheet; sound
financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; efficient service; pricing flexibility; strength of management; and
general operating characteristics which will enable the companies to compete
successfully in their respective marketplaces. In certain countries,
governmental restrictions and other limitations on investment may affect the
maximum percentage of equity ownership in any one company by the Fund. In
addition, in some instances only special classes of securities may be purchased
by foreigners and the market prices, liquidity and rights with respect to those
securities may vary from shares owned by nationals.
There may be times when, in the opinion of the Manager, prevailing market,
economic or political conditions warrant reducing the proportion of the Fund's
assets invested in equity securities and increasing the proportion held in cash
or short-term obligations denominated in U.S. dollars or other currencies. A
portion of the Fund's assets normally will be held in U.S. dollars or short-term
interest-bearing dollar-denominated securities to provide for ongoing expenses
and redemptions.
The Fund may be prohibited under the Investment Company Act of 1940, as amended
(the "1940 Act") from purchasing the securities of any foreign company that, in
its most recent fiscal year, derived more than 15% of its gross revenues from
securities-related activities ("securities-related companies"). In a number of
Latin American countries, commercial banks act as securities broker/dealers,
investment advisers and underwriters or otherwise engage in securities-related
activities, which may limit the Fund's ability to hold securities issued by
banks. The Fund has obtained an exemption from the Securities and Exchange
Commission ("SEC") to permit it to invest in certain of these securities subject
to certain restrictions.
DEBT CONVERSIONS
Several Latin American countries have adopted debt conversion programs, pursuant
to which investors may use external debt of a country, directly or indirectly,
to make investments in local companies. The terms of the various programs vary
from country to country, although each program includes significant restrictions
on the application of the proceeds received in the conversion and on the
remittance of profits on the investment and of the invested capital. The Fund
intends to acquire Sovereign Debt, as defined in the Prospectus, to hold and
trade in appropriate circumstances as described in the Prospectus, as well as to
participate in Latin American debt conversion programs. The Manager will
evaluate opportunities to enter into debt conversion transactions as they arise
but does not currently intend to invest more than 5% of the Fund's assets in
such programs.
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries investments by the Fund presently may be made
only by acquiring shares of other investment companies with local governmental
approval to invest in those countries. The Fund may invest in the securities of
closed-end investment companies within the limits of the 1940 Act. These
limitations currently provide, in part, that the Fund may purchase shares of a
closed-end investment company unless (a) such a purchase would cause the Fund to
own in the aggregate more than 3 percent of the total outstanding voting stock
of the investment company or (b) such a purchase would cause the Fund to have
more than 5 percent of its total assets invested in the investment company or
more than 10 percent of its total assets invested in the aggregate in all such
investment companies. Investment in such investment companies may involve the
payment of substantial premiums above the value of such companies' portfolio
securities. The Fund does not intend to invest in such funds unless, in the
judgment of 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. At such time as direct
investment in these countries is allowed, the Fund anticipates investing
directly in these markets.
DEPOSITORY RECEIPTS
The Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs") or other securities convertible into securities of
eligible foreign issuers. These securities may not necessarily be denominated in
the same currency as the securities for which they may be exchanged. ADRs and
ADSs are typically issued by an American bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
receipts issued in Europe typically by foreign banks and trust companies that
evidence ownership of either foreign or domestic securities. Generally, ADRs and
ADSs in registered form are designed for use in United States securities markets
and EDRs and CDRs in bearer form are designed for use in European securities
markets. For purposes of the Fund's investment policies, the Fund's investments
in ADRs, ADSs, EDRs, and CDRs will be deemed to be investments in the equity
securities representing securities of foreign issuers into which they may be
converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass-through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 25% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans be continuously secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The Fund may pay reasonable
administrative and custodial fees in connection with loans of its securities.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund will have a right to call each loan and obtain the securities on five
business days' notice. The Fund will not have the right to vote equity
securities while they are lent, but it
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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 the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations may, however, be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund will typically acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not a
fundamental investment policy or restriction of the Fund. For the purposes of
calculation with respect to the $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which the Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed-upon price, date, and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Fund if the other party
to the repurchase agreement becomes bankrupt, the Fund intends to enter into
repurchase agreements only with banks and dealers believed by the Manager to
present minimal credit risks in accordance with guidelines established by the
Company's Board of Directors as applicable. The Manager will review and monitor
the creditworthiness of such institutions under the Board's general supervision.
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 10% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING AND REVERSE REPURCHASE AGREEMENTS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, I.E.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of the Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, the Fund may be required to sell
portfolio securities to restore 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. The Fund also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to meet redemptions. Any borrowing by the Fund may cause greater
fluctuation in the value of its shares than would be the case if the Fund did
not borrow. The Fund's fundamental investment limitations prohibit the Fund from
purchasing securities during times when outstanding borrowings represent more
than 5% of its total assets.
The Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. The Fund will maintain in a segregated
account with a custodian cash or other liquid securities in an amount sufficient
to cover its obligations under reverse repurchase agreements with
broker/dealers. No segregation is required for reverse repurchase agreements
with banks.
SHORT SALES
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility.
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GT GLOBAL LATIN AMERICA GROWTH FUND
When the Fund makes a short sale of a security it does not own, it must borrow
the security sold short and deliver it to the broker-dealer or other
intermediary through which it made the short sale. The Fund may have to pay a
fee to borrow particular securities and will often be obligated to pay over any
payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral deposited with the intermediary.
The Fund 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
the Fund on such security, the Fund may not receive any payments (including
interest) on its collateral deposited with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss is theoretically unlimited.
The Fund will not make a short sale if, after giving effect to such sale, the
market value of the securities sold short exceeds 25% of the value of its total
assets or the Fund's aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of the Fund's net assets or 2% of the securities of any
class of the issuer. Moreover, the Fund may engage in short sales only with
respect to securities listed on a national securities exchange. The Fund may
make short sales "against the box" without respect to such limitations. In this
type of short sale, at the time of the sale the Fund owns the security it has
sold short or has the immediate and unconditional right to acquire at no
additional cost the identical security.
TEMPORARY DEFENSIVE STRATEGIES
The Latin America Growth Fund may invest in the following types of money market
securities (i.e., debt instruments with less than 12 months remaining until
maturity) denominated in U.S. dollars or in the currency of any Latin American
country, which consist of: (a) obligations issued or guaranteed by (i) the U.S.
government or the government of a Latin American country, their agencies or
instrumentalities, or municipalities; (ii) international organizations designed
or supported by multiple foreign governmental entities to promote economic
reconstruction or development ("supranational entities"); (b) finance company
obligations, corporate commercial paper and other short-term commercial
obligations; (c) bank obligations (including certificates of deposit, time
deposits, demand deposits and bankers' acceptances) (d) repurchase agreements
with respect to the foregoing; and (e) other substantially similar short-term
debt securities with comparable risk characteristics.
The Latin America Growth Fund may invest in commercial paper rated as low as A-3
by S&P or P-3 by Moody's. Such obligations are considered to have an acceptable
capacity for timely repayment. However, these securities may be more vulnerable
to adverse effects or changes in circumstances than obligations carrying higher
designations.
- --------------------------------------------------------------------------------
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
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GT GLOBAL LATIN AMERICA GROWTH FUND
using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if the Fund entered into a
short hedge because the Manager projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, the Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options will generally be written on securities and currencies that, in the
opinion of 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 Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objectives. When writing a call option, the Fund, in return
for the premium, gives up the opportunity for profit from a price increase in
the underlying security or currency above the exercise price, and retains the
risk of loss should the price of the security or currency decline. Unlike one
who owns securities or currencies not subject to an option, the Fund has no
control over when it may be required to sell the underlying securities or
currencies, since most options may be exercised at any time prior to the
option's expiration. If a call option that the Fund has written expires, the
Fund will realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security or currency
during the option period. If the call option is exercised, the Fund will realize
a gain or loss from the sale of the underlying security or currency, which will
be increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, the Manager will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
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GT GLOBAL LATIN AMERICA GROWTH FUND
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity are normally higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option will generally reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
The Fund would generally write put options in circumstances where the Manager
wishes to purchase the underlying security or currency for the Fund's portfolio
at a price lower than the current market price of the security or currency. In
such event, the Fund would write a put option at an exercise price that, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund would also receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at more than its market value.
PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, the Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund to protect against an anticipated decline
in the value of the security or currency. Such protection is provided only
during the life of the put option when the Fund, as the holder of the put
option, is able to sell the underlying security or currency at the put exercise
price regardless of any decline in the underlying security's market price or
currency's exchange value. For example, a put option may be purchased in order
to protect unrealized appreciation of a security or currency when 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.
The Fund may also purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable,
Statement of Additional Information Page 7
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GT GLOBAL LATIN AMERICA GROWTH FUND
the market price of the underlying security or currency must decline
sufficiently below the exercise price to cover the premium and transaction
costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique may also be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options may also be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in using
Forward Contracts by purchasing put or call options on currencies. A put option
gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be offset, in whole or in part, by an increase in the value of the put.
If the value of the currency instead should rise against the dollar, any gain to
the Fund would be reduced by the premium it had paid for the put option. A
currency call option might be purchased, for example, in anticipation of, or to
protect against, a rise in the value against the dollar of a currency in which
the Fund anticipates purchasing securities.
Options may be either listed on an exchange or traded 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. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the SEC considers purchased OTC options to be illiquid securities.
The Fund may also sell OTC options and, in connection therewith, segregate
assets or cover its obligations with respect to OTC options written by the Fund.
The assets used as cover for OTC options written by the Fund will be considered
illiquid unless the OTC options are sold to qualified dealers who agree that the
Fund may repurchase any OTC option it writes at a maximum price to be calculated
Statement of Additional Information Page 8
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GT GLOBAL LATIN AMERICA GROWTH FUND
by a formula set forth in the option agreement. The cover for an OTC option
written subject to this procedure would be considered illiquid only to the
extent that the maximum repurchase price under the formula exceeds the intrinsic
value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When an index option is exercised, the amount of cash that the holder
is entitled to receive is determined by the difference between the exercise
price and the closing index level on the date when the option is exercised. As
with other kinds of options, the Fund, as the call writer, will not know that it
has been assigned until the next business day at the earliest. The time lag
between exercise and notice of assignment poses no risk for the writer of a
covered call on a specific underlying security, such as common stock, because
there the writer's obligation is to deliver the underlying security, not to pay
its value as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
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GT GLOBAL LATIN AMERICA GROWTH FUND
INTEREST RATE AND CURRENCY FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collectively, "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock prices in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by the Fund. The Fund's transactions may include sales of Futures as an offset
against the effect of expected increases in interest rates, and decreases in
currency exchange rates and stock prices, and purchases of Futures as an offset
against the effect of expected declines in interest rates, and increases in
currency exchange rates and stock prices.
The Fund will only enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. An
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts are usually closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Treasury Bills on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Treasury Bills on the same
exchange. In such instance the difference between the price at which the Futures
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded and may be significantly modified from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
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There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference 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.
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GT GLOBAL LATIN AMERICA GROWTH FUND
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds securities
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds securities denominated in U.S.
dollars, but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with
guidelines approved by the Company's Board of Directors.
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
will not generally be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
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GT GLOBAL LATIN AMERICA GROWTH FUND
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts are usually entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, at the same time
they limit any potential gain that might result should the value of the
currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which the Manager believes will have a positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if 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 the Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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GT GLOBAL LATIN AMERICA GROWTH FUND
RISK FACTORS
- --------------------------------------------------------------------------------
ILLIQUID SECURITIES
The Fund may invest up to 10% of its net assets in illiquid securities.
Securities may be considered illiquid if the Fund cannot reasonably expect
within seven days to sell the securities for approximately the amount at which
the Fund values such securities. See "Investment Limitations." The sale of
illiquid securities, if they can be sold at all, generally will require more
time and result in higher brokerage charges or dealer discounts and other
selling expenses than will the sale of liquid securities such as securities
eligible for trading on U.S. securities exchanges or in the over-the-counter
markets. Moreover, restricted securities, which may be illiquid for purposes of
this limitation, often sell, if at all, at a price lower than similar securities
that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
the Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act,are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to the Manager in accordance with
procedures approved by the Company's Board of Directors. 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 who make quotes for the security; (iii) the number of dealers that have
undertaken to make a market in the security; (iv) the number of other potential
purchasers; and (v) the nature of the security and how trading is effected
(e.g., the time needed to sell the security, how offers are solicited and the
mechanics of transfer). The Manager monitors the liquidity of securities in the
Fund's portfolio and periodically reports such determinations to the Board of
Directors. Moreover, as noted in the Prospectus, certain securities, such as
those subject to repatriation restrictions of more than seven days, will
generally be treated as illiquid.
More than 10% of the Fund's total assets may consist of illiquid securities from
time to time either because of adverse events which occur following the purchase
of the securities which cause them to become illiquid or because liquid
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GT GLOBAL LATIN AMERICA GROWTH FUND
securities are sold to meet redemption requests or other needs of the Fund.
Illiquid securities are more difficult to value accurately due to, among other
things, the fact that such securities often trade infrequently or only in
smaller amounts.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of Latin
American companies may entail additional risks due to the potential political,
social and economic instability of certain countries and the risks of
expropriation, nationalization, confiscation or the imposition of restrictions
on foreign investment, convertibility of currencies into U.S. dollars and on
repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation by any country, the Fund could lose its
entire investment in any such country.
In addition, even though opportunities for investment may exist in Latin
American countries, any change in the leadership or policies of the governments
of those countries or in the leadership or policies of any other government
which exercises a significant influence over those countries, may halt the
expansion of or reverse the liberalization of foreign investment policies now
occurring and thereby eliminate any investment opportunities which may currently
exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property, similar to the property which
will be represented by the securities purchased by the Fund. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Fund will not also be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Fund could lose a substantial portion of
its investments in such countries. The Fund's investments would similarly be
adversely affected by exchange control regulations in any of those countries.
RELIGIOUS AND ETHNIC INSTABILITY. Certain countries in which the Fund may
invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries. Instability may also
result from, among other things: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
the Fund invests and adversely affect the value of the Fund's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. The Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, 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. In addition, for
Statement of Additional Information Page 15
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GT GLOBAL LATIN AMERICA GROWTH FUND
companies that keep accounting records in local currency, inflation accounting
rules in some Latin American countries require, for both tax and accounting
purposes, that certain assets and liabilities be restated on the company's
balance sheet in order to express items in terms of currency of constant
purchasing power. Inflation accounting may indirectly generate losses or
profits. There is substantially less publicly available information about
foreign companies, including Latin American companies, and the governments of
Latin American countries than there are reports and ratings published about U.S.
companies and the U.S. Government. Issuers of securities in foreign
jurisdictions are generally not subject to the same degree of regulation as are
U.S. issuers with respect to such matters as restrictions on market
manipulation, insider trading rules, shareholder proxy requirements and timely
disclosure of information.
CURRENCY FLUCTUATIONS. Because the Fund under normal circumstances will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates, and pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to the Fund at one rate, while offering a lesser rate of exchange should the
Fund desire to sell that currency to the dealer.
Certain Latin American countries may have managed currencies which 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 dollar. Certain Latin
American countries also may restrict the free conversion of their currency into
foreign currencies, including the U.S. dollar. There is no significant foreign
exchange market for certain currencies and it would, as a result, be difficult
for the Fund to engage in foreign currency transactions designed to protect the
value of the Fund's certain interests in securities denominated in such
currencies.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers are generally
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions are usually subject to fixed
commissions, which are generally higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of the Fund are
uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. The Manager will consider such difficulties when
determining the allocation of the Fund's assets, although the Manager does not
believe that such difficulties will have a material adverse effect on the Fund's
portfolio trading activities.
A high proportion of the shares of many Latin American companies may be held by
a limited number of persons, which may further limit the number of shares
available for investment by the Fund. A limited number of issuers in most, if
not all, Latin American securities markets may represent a disproportionately
large percentage of market capitalization and trading value. The limited
liquidity of Latin American securities markets also may affect the Fund's
ability to acquire or dispose of securities at the price and time it wishes to
do so. In addition, certain Latin American securities markets, including those
of Argentina, Brazil, Chile and Mexico, are susceptible to being influenced by
large investors trading
Statement of Additional Information Page 16
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
significant blocks of securities or by large dispositions of securities
resulting from the failure to meet margin calls when due.
The high volatility of certain Latin American securities markets is evidenced by
dramatic movements in the Brazilian and Mexican markets in recent years. This
market volatility may result in greater volatility in the Fund's net asset value
than would be the case for companies investing in domestic securities. If the
Fund were to experience unexpected net redemptions, it could be forced to sell
securities in its portfolio without regard to investment merit, thereby
decreasing the asset base over which Fund expenses can be spread and possibly
reducing the Fund's rate of return.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Emerging securities
markets, such as the markets of Latin America, are substantially smaller, less
developed, less liquid and more volatile than the major securities markets. The
limited size of emerging securities markets and limited trading volume in
issuers compared to the volume of trading in U.S. securities could cause prices
to be erratic for reasons apart from factors that affect the quality of the
securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets. In addition, securities traded in certain emerging markets may be
subject to risks due to the inexperience of financial intermediaries, a lack of
modern technology, the lack of a sufficient capital base to expand business
operations, and the possibility of permanent or temporary termination of
trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. This has, in turn, lead to
high interest rates, extreme measures by governments to keep inflation in check
and a generally debilitating effect on economic growth. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain Latin American countries.
It should be noted that some Latin American countries require governmental
approval for the repatriation of investment income, capital or the proceeds of
securities sales by foreign investors. For instance, at present, capital
invested directly in Chile cannot under most circumstances be repatriated for at
least one year. The Fund could be adversely affected by delays in, or a refusal
to grant, any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investments.
SOVEREIGN DEBT. Sovereign Debt generally offers high yields, reflecting not
only perceived credit risk, but also the need to compete with other local
investments in domestic financial markets. Certain Latin American countries are
among the largest debtors to commercial banks and foreign governments. A
sovereign debtor's willingness or ability to repay principal and interest due in
a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy towards
the International Monetary Fund and the political constraints to which a
sovereign debtor may be subject. Sovereign debtors may default on their
Sovereign Debt. Sovereign debtors may also be dependent on expected
disbursements from foreign governments, multilateral agencies and others abroad
to reduce principal and interest arrearages on their debt. The commitment on the
part of these governments, agencies and others to make such disbursements may be
conditioned on a sovereign debtor's implementation of economic reforms and/or
economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
In recent years, some of the Latin American countries in which the Fund expects
to invest have encountered difficulties in servicing their Sovereign Debt. Some
of these countries have withheld payments of interest and/or principal of
Sovereign Debt. These difficulties have also led to agreements to restructure
external debt obligations -- in particular, commercial bank loans, typically by
rescheduling principal payments, reducing interest rates and extending new
credits to finance interest payments on existing debt. In the future, holders of
Sovereign Debt may be requested to participate in similar reschedulings of such
debt.
The ability of Latin American governments to make timely payments on their
Sovereign Debt is likely to be influenced strongly by a country's balance of
trade and its access to trade and other international credits. A country whose
exports are concentrated in a few commodities could be vulnerable to a decline
in the international prices of one or more of such commodities. Increased
protectionism on the part of a country's trading partners could also adversely
affect its exports.
Statement of Additional Information Page 17
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
Such events could diminish a country's trade account surplus, if any. To the
extent that a country receives payment for its exports in currencies other than
hard currencies, its ability to make hard currency payments could be affected.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing Sovereign Debt could adversely affect the Fund's investments.
The countries issuing such instruments are faced with social and political
issues and some of them have experienced high rates of inflation in recent years
and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance governmental
programs, and may have other adverse social, political and economic
consequences. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their Sovereign Debt. While the Manager intends to manage the Fund's portfolio
in a manner that will minimize the exposure to such risks, there can be no
assurance that adverse political changes will not cause the Fund to suffer a
loss of interest or principal on any of its holdings.
Periods of economic uncertainty may result in the volatility of market prices of
Sovereign Debt and in turn, the Fund's net asset value, to a greater extent than
the volatility inherent in domestic securities. The value of Sovereign Debt will
likely vary inversely with changes in prevailing interest rates, which are
subject to considerable variance in the international market. If the Fund were
to experience unexpected net redemptions, it may be forced to sell Sovereign
Debt in its portfolio without regard to investment merit, thereby decreasing its
asset base over which Fund expenses can be spread and possibly reducing its rate
of return.
WITHHOLDING TAXES. The Fund's net investment income from foreign issuers may
be subject to withholding taxes by the foreign issuer's country, thereby
reducing the Fund's net investment income or delaying the receipt of income
where those taxes may be recaptured. See "Taxes."
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
The Fund has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the holders of the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, and
(ii) more than 50% of the outstanding shares.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts, and may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Prospectus and this Statement of Additional
Information;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act;
(4) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and may make loans of portfolio securities;
(5) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts;
(6) Borrow money except from banks for temporary or emergency purposes
not in excess of 33 1/3% of the value of the Fund's total assets (at the
lower of cost or fair market value). The Fund will not purchase securities
while borrowings (including reverse repurchase agreements) in excess of 5%
of its total assets are outstanding. This
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
restriction shall not prevent the Fund from entering into reverse repurchase
agreements, provided that reverse repurchase agreements, and any other
transactions constituting borrowing by the Fund may not exceed one-third of
the Fund's total assets. In the event that the asset coverage for the Fund's
borrowings falls below 300%, the Fund will reduce, within three days
(excluding Sundays and holidays), the amount of its borrowings in order to
provide for 300% asset coverage;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities; or
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, the Fund may invest in the
securities of companies that engage in these activities.
For purposes of the Fund's concentration policy contained in limitation (1),
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government are considered to be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies and
may be changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 10% of its 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 Fund's investment adviser, or its
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer;
or
(6) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into.
The Fund has the authority to invest up to 10% of its total assets in shares of
other investment companies pursuant to the 1940 Act. The Fund may not invest
more than 5% of its total assets in any one investment company or acquire more
than 3% of the outstanding voting securities of any one investment company.
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, the Manager
is responsible for the execution of the Fund's portfolio transactions and the
selection of broker/dealers who execute such transactions on behalf of the Fund.
In executing portfolio transactions, the Manager seeks the best net results for
the Fund, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. While the Manager
generally seeks reasonably competitive commission rates
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
and spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. While the Fund may engage in soft dollar
arrangements for research services, as described below, the Fund has no
obligation to deal with any broker/dealer or group of broker/dealers in the
execution of portfolio transactions.
Consistent with the interests of the Fund, the Manager may select brokers to
execute the Fund's portfolio transactions on the basis of the research and
brokerage services they provide to the Manager for its use in managing the Fund
and its other advisory accounts. Such services may include furnishing analyses,
reports and information concerning issuers, industries, securities, geographic
regions, economic factors and trends, portfolio strategy, and performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Research and brokerage
services received from such brokers are in addition to, and not in lieu of, the
services required to be performed by the Manager under the Management Contract
(defined below). A commission paid to such broker/dealers may be higher than
that which another qualified broker would have charged for effecting the same
transaction, provided that 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 the Fund and its other clients and that
the total commissions paid by the Fund will be reasonable in relation to the
benefits received by the Fund over the long term. Research services may also be
received from dealers who execute Fund transactions in 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 the Fund toward payment of the Fund's expenses, such as
transfer agent and custodian fees.
Investment decisions for the Fund and for other investment accounts managed by
the Manager are made independently of each other in light of differing
conditions. However, the same investment decision may occasionally be made for
two or more of such accounts including the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases the Manager
believes that coordination and the ability to participate in volume transactions
will be beneficial to the Fund.
Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, the Manager may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which the
Manager serves as investment manager in selecting brokers and dealers for the
execution of portfolio transactions. This policy does not imply a commitment to
execute portfolio transactions through all broker/dealers that sell shares of
the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in OTC markets
or stock exchanges located in the countries in which the respective principal
offices of the issuers of the various securities are located, if that is the
best available market. The fixed commissions paid in connection with most such
foreign stock transactions generally are higher than negotiated commissions on
United States transactions. There generally is less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the 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 the
Fund may invest are generally traded in the OTC markets.
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of Liechtenstein Global Trust. The Company's Board of Directors has
adopted procedures in conformity with Rule 17e-1 under the 1940 Act to ensure
that all brokerage commissions paid to such affiliates are reasonable and fair
in the context of the market in which they are operating. Any such transactions
will be effected and related compensation paid only in accordance with
applicable SEC regulations. For the Fund's fiscal years ended October 31, 1996,
1995 and 1994, the Fund paid aggregate brokerage commissions of $2,094,634,
$891,513 and $708,799, respectively.
PORTFOLIO TRADING AND TURNOVER
The Fund engages in portfolio trading when the Manager has concluded that the
sale of a security owned by the Fund and/ or the purchase of another security of
better value can enhance principal and/or increase income. A security may be
sold to avoid any prospective decline in market value, or a security may be
purchased in anticipation of a market rise. Consistent
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
with the Fund's investment objective, a security also may be sold and a
comparable security purchased coincidentally in order to take advantage of what
is believed to be a disparity in the normal yield and price relationship between
the two securities. Although the Fund does not intend generally to trade for
short-term profits, the securities in the Fund's portfolio will be sold whenever
management believes it is appropriate to do so, without regard to the length of
time a particular security may have been held. The portfolio turnover rate is
calculated by dividing the lesser of sales or purchases of portfolio securities
by the Fund's average month-end portfolio value, excluding short-term
investments. The Fund's portfolio turnover rate will not be a limiting factor
when the Manager deems portfolio changes appropriate. Higher portfolio turnover
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly, and may result in the realization of net
capital gains that are taxable when distributed to the Fund's shareholders. The
Fund's portfolio turnover rates for the fiscal years ended October 31, 1996 and
1995 were 101% and 125%, respectively.
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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) since 1995; President, GT Global since 1995;
50 California Street President and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice President
San Francisco, CA 94111 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 22
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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 for 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., 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 High Income
Portfolio, Global Investment Portfolio and Growth Portfolio, which are also
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 administered 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 per annum, plus $300
per Fund for each meeting of the Board attended, and reimburses travel and other
expenses incurred in connection with attendance at such meetings. Other
Directors and officers receive no compensation or expense reimbursement from the
Company. For the fiscal year ended October 31, 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 year ended October 31, 1996, Mr. Anderson, Mr. Bayley, Mr.
Patterson and Ms. Quigley 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 accrued 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 the Fund or of all the
Company's funds in the aggregate.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION
The Manager serves as the Fund's investment manager and administrator 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 Fund and administers the
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 Fund,
and provides suitable office space, necessary small office equipment and
utilities.
The Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract provides that with respect to the Fund either the Company or
the Manager may terminate the Contract without penalty upon sixty (60) days'
written notice. The Management Contract terminates automatically in the event of
its assignment (as defined in the 1940 Act).
For the fiscal years ended October 31, 1996, 1995 and 1994, the Fund paid
investment management and administration fees to the Manager in the amounts of
$3,365,375, $3,913,429 and $3,601,031, respectively.
Certain Latin American countries require a local entity to provide
administrative services for all direct investments by foreigners. Where required
by local law, the Fund intends to retain a local entity to provide such
administrative services. The local administrator will be paid a fee by the Fund
for its services.
DISTRIBUTION SERVICES
The Fund's Class A and Class B shares are continuously offered through the
Fund's principal underwriter and distributor, GT Global, on a "best efforts"
basis pursuant to separate Distribution Contracts between the Company and GT
Global.
As described in the Prospectus, the Company has adopted a separate Distribution
Plan with respect to Class A and Class B of shares of the Fund in accordance
with Rule 12b-1 under the 1940 Act (the "Class A Plan" and "Class B Plan"
respectively, collectively, "Plans"). The rate of payments by the Fund under the
Plans, as described in the Prospectus, may not be increased without the approval
of the majority of the outstanding voting securities of the affected class. All
expenses for which GT Global is reimbursed under the Class A Plan will have been
incurred within one year of such reimbursement. The following table discloses
payments made by the Fund to GT Global under the Plans during the Fund's last
fiscal year:
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- --------------
<S> <C> <C>
Year ended October 31, 1996.................................................. $ 1,007,846 $ 1,425,667
</TABLE>
In approving the Plans, the Directors determined that each Plan was in the best
interests of the shareholders of the Fund. Agreements related to the Plans must
also be approved by such vote of the Directors, including a majority of the
Directors who are not "interested persons" of the Company (as defined in the
1940 Act) and who have no direct or indirect financial interests in the
operations of the plans, or in any agreement related thereto.
Each Plan requires that, at least quarterly, the Directors review the amounts
expended thereunder and the purposes for which such expenditures were made. Each
Plan requires that so long as they are in effect the selection and nomination of
Directors who are not "interested persons" of the Company will be committed to
the discretion of the Directors who are not "interested persons" of the Company,
as defined in the 1940 Act.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
As discussed in the Prospectus, GT Global collects sales charges on sales of
Class A shares of the Fund, retains certain amounts of such charges and reallows
other amounts of such charges to broker/dealers which sell shares. The following
table reviews the extent of such activity for the Fund during the periods shown:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
YEAR ENDED OCTOBER 31, COLLECTED RETAINED REALLOWED
- ------------------------------------------------------------------------------ ------------- ----------- -------------
<S> <C> <C> <C>
1996.......................................................................... $ 262,651 $ 98,352 $ 164,299
1995.......................................................................... 2,082,087 291,788 1,790,299
1994.......................................................................... 4,668,275 443,629 4,224,646
</TABLE>
GT Global receives any contingent deferred sales charges payable with respect to
redemptions of Class B shares and certain Class A shares. For the fiscal year
ended October 31, 1996, GT Global collected contingent deferred sales charges in
the amount of $824,774. For the fiscal year ended October 31, 1995, GT Global
collected contingent deferred sales charges in the amount of $730,248. For the
fiscal year ended October 31, 1994, GT Global collected contingent deferred
sales charges in the amount of $362,155. Purchases of Class A shares exceeding
$500,000 may be subject to a contingent deferred sales charge upon redemption.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agent has been retained by the Fund to perform shareholder
servicing, reporting and general transfer agent functions for the Fund. For
these services, the Transfer Agent receives an annual maintenance fee of $17.50
per account, a new account fee of $4.00 per account, a per transaction fee of
$1.75 for all transactions other than exchanges and a per exchange fee of $2.25.
The Transfer Agent is also reimbursed by the Fund for its out-of-pocket expenses
for such items as postage, forms, telephone charges, stationary and office
supplies. The Manager also serves as the Fund's pricing and accounting agent.
For the fiscal years ended October 31, 1995 and October 31, 1996, the Fund paid
transfer agency and accounting services fees to the Manager of $1,737,638 and
$1,532,798, respectively.
EXPENSES OF THE FUND
The Fund pays all expenses not assumed by the Manager, GT Global and other
agents. These expenses include, in addition to the advisory, distribution,
transfer agency, pricing and accounting agency and brokerage fees discussed
above, legal and audit expenses, custodian fees, directors' fees, organizational
fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses
and the expenses of reports and prospectuses sent to existing investors. The
allocation of general Company expenses and expenses shared by the Fund and other
funds organized as series of the Company with one another are allocated on a
basis deemed fair and equitable, which may be based on the relative net assets
of the Fund or the nature of the services performed and relative applicability
to the Fund. Expenditures, including costs incurred in connection with the
purchase or sale of portfolio securities, which are capitalized in accordance
with generally accepted accounting principles applicable to investment
companies, are accounted for as capital items and not as expenses. The ratio of
the Fund's expenses to its relative net assets can be expected to be higher than
the expense ratios of funds investing solely in domestic securities, since the
cost of maintaining the custody of foreign securities and the rate of investment
management fees paid by the Fund generally are higher than the comparable
expenses of such other funds.
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
VALUATION OF FUND SHARES
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The Fund's portfolio securities and other assets are valued as follows:
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the close of normal trading on the NYSE
(currently 4:00 p.m. Eastern time) (unless weather, equipment failure or other
factors contribute to an earlier closing time) on each day for which the NYSE is
open for business. Currently, the NYSE is closed on weekends and on certain days
relating to the following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, July 4th, Labor Day, Thanksgiving Day and Christmas Day.
Equity securities, including ADRs, ADSs, CDRs and EDRs, which are traded on
stock exchanges are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. In cases
where securities are traded on more than one exchange, the securities are valued
on the exchange determined by the Manager to be the primary market. Securities
traded in the over-the-counter market are valued at the last available bid price
prior to the time of valuation.
Long-term debt obligations are valued at the mean of representative quoted bid
and asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
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,
provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or, in the case of OTC
options, at the average of the last bid prices obtained from dealers unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. The value of each security denominated in a currency other
than U.S. dollars will be translated into U.S. dollars at the prevailing
exchange rate as determined by the Manager on that day. When market quotations
for futures and options on futures held by the Fund are readily available, those
positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Company's Board of Directors. The valuation procedures applied
in any specific instance are likely to vary from case to case. However,
consideration is generally given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors are also generally considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Fund's net assets is so determined, that
value is then divided by the total number of shares outstanding (excluding
treasury shares), and the result, rounded to the nearer cent, is the net asset
value per share.
Any assets or liabilities initially denominated in terms of foreign currencies
are translated into U.S. dollars at the official exchange rate or at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors in good faith will
establish a conversion rate for such currency.
Latin American securities trading may not take place on all days on which the
NYSE is open. Further, trading takes place in various foreign markets on days on
which the NYSE is not open. Consequently, the calculation of the Fund's net
asset value may not take place contemporaneously with the determination of the
prices of securities held by the Fund. Events
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
affecting the values of portfolio securities that occur between the time their
prices are determined and the close of regular trading on the NYSE will not be
reflected in the Fund's net asset value unless the Manager, under the
supervision of the Company's Board of Directors, determines that the particular
event would materially affect net asset value. As a result, the Fund's net asset
value may be significantly affected by such trading on days when a shareholder
cannot purchase or redeem shares of the Fund.
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INFORMATION RELATING TO SALES AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Class A or Class B shares purchased should accompany the purchase
order, or funds should be wired to the Transfer Agent as described in the
Prospectus. Payment, other than by wire transfer, must be made by check or money
order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, because a check is returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law. Such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.
LETTER OF INTENT -- CLASS A SHARES
The Letter of Intent ("LOI") is not a binding obligation to purchase the
indicated amount. During such time as Class A shares are held in escrow under an
LOI to assure payment of applicable sales charges if the indicated amount is not
met, all dividends and capital gain distributions on escrowed shares will be
reinvested in additional Class A shares or paid in cash, as specified by the
shareholder. If the intended investment is not completed within the specified
13-month period, the purchaser must remit to GT Global the difference between
the sales charge actually paid and the sales charge which would have been
applicable if the total Class A purchases had been made at a single time. If
this amount is not paid to GT Global within 20 days after written request, the
appropriate number of escrowed shares will be redeemed and the proceeds paid to
GT Global.
A registered investment adviser, trust company or trust department seeking to
execute an LOI as a single purchaser with respect to accounts over which it
exercises investment discretion is required to provide the Transfer Agent with
information establishing that it has discretionary authority with respect to the
money invested (e.g., by providing a copy of the pertinent investment advisory
agreement). Class A shares purchased in this manner must be restrictively
registered with the Transfer Agent so that only the investment adviser, trust
company or trust department, and not the beneficial owner, will be able to place
purchase, redemption and exchange orders.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Class A or Class B shares of the Fund may also be purchased as the underlying
investment for an IRA meeting the requirements of section 408(a) of the Code.
IRA applications are available from brokers or GT Global.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
EXCHANGES BETWEEN FUNDS
A shareholder may exchange shares of the Fund for shares of other GT Global
Mutual Funds, based on their respective net asset values without imposition of
any sales charges provided the registration remains identical. The exchange
privilege is not an option or right to purchase shares but is permitted under
the current policies of the respective GT Global Mutual Funds. The privilege may
be discontinued or changed at any time by any of the funds upon 60 days' written
notice to the shareholders of such fund and is available only in states where
the exchange may be legally made. Class A shares may be exchanged only for Class
A shares of other GT Global Mutual Funds. Class B shares may be exchanged for
Class B shares of other GT Global Mutual Funds. Before purchasing shares through
the exercise of the exchange privilege, a shareholder should obtain and read a
copy of the prospectus of the fund to be purchased and should consider the
investment objectives of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
will be borne by the Fund. Proceeds of less than $1,000 will be mailed to the
shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days' written notice.
AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in the Funds' Automatic Investment Plan ("AIP"),
investors or their brokers should specify whether the investment will be in
Class A shares or Class B shares and send the following documents to the
Transfer Agent: (1) an AIP Application; (2) a Bank Authorization Form; and (3) a
voided personal check from the pertinent bank account. The necessary forms are
provided at the back of the prospectus. Providing that an investor's bank
accepts the Bank Authorization Form, investment amounts will be drawn on the
designated dates (monthly on the 25th day or beginning quarterly on the 25th day
of the month the investor first selects) in order to purchase full and
fractional shares of a Fund at the public offering price determined on that day.
In the event that the 25th day falls on a Saturday, Sunday or holiday, shares
will be purchased on the next business day. If an investor's check is returned
because of insufficient funds, a stop payment order or the account is closed,
the AIP may be discontinued, and any share purchase made upon deposit of such
check may be cancelled. Furthermore, the shareholder will be liable for any loss
incurred by a Fund by reason of such cancellation. Investors should allow one
month for the establishment of an AIP. An AIP may be terminated by the Transfer
Agent or the Funds upon 30 days' written notice or by the participant, at any
time, without penalty, upon written notice to the pertinent Fund or the Transfer
Agent.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders owning Class A or Class B shares of the Fund with a value of
$10,000 or more may establish a Systematic Withdrawal Plan ("SWP"). Under a SWP,
a shareholder will receive monthly or quarterly payments, in amounts of not less
than $100 per payment, through the automatic redemption of the necessary number
of shares on the designated dates (monthly on the 25th day or beginning
quarterly on the 25th day of the month the investor first selects). In the event
that the 25th day falls on a Saturday, Sunday or holiday, the redemption will
take place on the prior business day. Certificates, if any, for the shares being
redeemed must be held by the Transfer Agent. Checks will be made payable to the
designated recipient and mailed within seven days. If the recipient is other
than the registered shareholder, the signature of each shareholder must be
guaranteed on the SWP application (see "How to Redeem Shares" in the
Prospectus). A corporation (or partnership) also must submit a "Corporation
Resolution" or "Certification of Partnership" indicating the names, titles, and
signatures of the individuals authorized to act on its behalf, and the SWP
application must be signed by a duly authorized officer(s) and the corporate
seal affixed.
With respect to a SWP, the maximum annual SWP withdrawal is 12% of the initial
account value. Withdrawals in excess of 12% of the initial account value
annually may result in assessment of a contingent deferred sales charge. See
"How to Invest" in the Prospectus.
Shareholders should be aware that such systematic withdrawals may deplete or use
up entirely the initial investment and result in realized long-term or
short-term capital gains or losses. The SWP may be terminated at any time by the
Transfer Agent or the Fund upon 30 days' written notice or by a shareholder upon
written notice to the Fund or its Transfer Agent. Applications and further
details regarding establishment of a SWP are provided at the back of the Fund's
Prospectus.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
exists, as defined by the SEC, which would prohibit the Fund from disposing of
its portfolio securities or in fairly determining the value of its assets, or
(3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the net
assets of the Fund at the beginning of such period. This election will be
irrevocable so long as Rule 18f-1 remains in effect, unless the SEC by order
upon application permits the withdrawal of such election.
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TAXES
- --------------------------------------------------------------------------------
GENERAL
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Code, the Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income, net short-term capital gain and net gains
from certain foreign currency transactions) ("Distribution Requirement") and
must meet several additional requirements. These requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, Futures or Forward
Contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); (2) the Fund must derive less than 30%
of its gross income each taxable year from the sale or other disposition of
securities, or any of the following, that were held for less than three months
- -- options or Futures (other than those on foreign currencies), or foreign
currencies (or options, Futures or Forward Contracts thereon) that are not
directly related to the Fund's principal business of investing in securities (or
options and Futures with respect to securities) ("Short-Short Limitation"); (3)
at the close of each quarter of the Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
government securities, securities of other RICs and other securities, with these
other securities limited, in respect of any one issuer, to an amount that does
not exceed 5% of the value of the Fund's total assets and that does not
represent more than 10% of the issuer's outstanding voting securities; and (4)
at the close of each quarter of the Fund's taxable year, not more than 25% of
the value of its total assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer.
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding, or other taxes imposed by foreign countries and U.S. possessions
("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
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
taxes paid by it. Pursuant to the election, the 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 those taxes, (2)
treat his share of those taxes and of any dividend paid by the Fund that
represents income from foreign and U.S. possessions sources as his own income
from those sources, and (3) either deduct the taxes deemed paid by him in
computing his taxable income or, alternatively, use the foregoing information in
calculating the foreign tax credit against his federal income tax. The Fund will
report to its shareholders shortly after each taxable year their respective
shares of the Fund's income from sources within, and taxes paid to, foreign
countries and U.S. possessions if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund will be subject to
federal income tax on a portion of any "excess distribution" received on, or of
any gain from the disposition of, stock of a PFIC (collectively "PFIC income"),
plus interest thereon, even if the Fund distributes the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income will be included in
the Fund's investment company taxable income and, accordingly, will not be
taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if those earnings and
gain were not received by the Fund from the QEF. In most instances it will be
very difficult, if not impossible, to make this election because of certain
requirements thereof.
Pursuant to proposed regulations, an open-end RIC, such as the Fund, would be
entitled to elect to "mark-to-market" its stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. Distributions of net capital gain are not
subject to withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, those distributions ordinarily will be subject to
U.S. income tax at a rate of 30% (or lower treaty rate) if the individual is
physically present in the United States for more than 182 days during the
taxable year and the distributions are attributable to a fixed place of business
maintained by the individual in the United States.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
options, Futures and Forward Contracts derived by the Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement. However, income from the
disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities (or options and Futures with respect thereto) also will be subject to
the Short-Short Limitation if they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all those transactions. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts and/or foreign currency positions beyond the time
when it otherwise would be advantageous to do so, in order for the Fund to
continue to qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, Futures and Forward
Contracts on foreign currencies ("Section 988" gains 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. The
Fund attempts to monitor section 988 transactions to minimize any adverse tax
impact.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
ADDITIONAL INFORMATION
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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, Australia; and LGT Asset Management GmbH, formerly BIL Asset
Management GmbH, in Frankfurt.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. will conduct an
annual audit of the Fund, assists in the preparation of the Fund's federal and
state income tax returns and consults with the Company and the Fund as to
matters of accounting, regulatory filings, and federal and state income
taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of 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"
names and has reserved the right to withdraw its consent to the use of such
names by the Company and/or the Fund at any time, or to grant the use of such
names to any other company.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
STANDARDIZED RETURNS
The Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), are calculated
separately for Class A and Class B shares of the 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) reinvestment of dividends and other distributions at net asset value
on the reinvestment date determined by the Company's Board of Directors; and (4)
a complete redemption at the end of any period illustrated.
The Standardized Returns for the Class A and Class B shares of the Fund, stated
as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
LATIN AMERICA LATIN AMERICA
PERIOD FUND (CLASS A) FUND (CLASS B)
- ----------------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Fiscal year ended October 31, 1996....................................................... 11.94% 12.02%
October 31, 1991 through October 31, 1996................................................ 4.31% n/a
April 1, 1993 (commencement of operations) through October 31, 1996...................... n/a 4.13%
August 13, 1991 (commencement of operations) through October 31, 1996.................... 6.98% n/a
</TABLE>
NON-STANDARDIZED RETURNS
In addition to Standardized Returns, the Fund may also 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 and Class B shares of the 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 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.
Average annual Non-Standardized 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) no deduction
of sales charges; (2) reinvestment of dividends and other distributions at net
asset value on the reinvestment date determined by the Board; and (3) a complete
redemption at the end of any period illustrated.
The average annual Non-Standardized Returns for the Class A and Class B shares
of the Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
LATIN AMERICA LATIN AMERICA
PERIOD FUND (CLASS A) FUND (CLASS B)
- ----------------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Fiscal year ended October 31, 1996....................................................... 17.52% 17.02%
October 31, 1991 through October 31, 1996................................................ 5.33% n/a
April 1, 1993 (commencement of operations) through October 31, 1996...................... n/a 4.87%
August 13, 1991 (commencement of operations) through October 31, 1996.................... 7.98% n/a
</TABLE>
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 and, as set
forth below, may or may not take sales charges into account.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Class B shares of the Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
LATIN AMERICA LATIN AMERICA
PERIOD FUND (CLASS A) FUND (CLASS B)
- ----------------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through October 31, 1996...................... n/a 18.60%
August 13, 1991 (commencement of operations) through October 31, 1996.................... 49.27% n/a
</TABLE>
The aggregate Non-Standardized Returns (taking sales charges into account) for
the Class A and B shares of the Fund, stated as aggregate total returns for the
periods shown, were:
<TABLE>
<CAPTION>
LATIN AMERICA LATIN AMERICA
PERIOD FUND (CLASS A) FUND (CLASS B)
- ----------------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through October 31, 1996...................... n/a 15.60%
August 13, 1991 (commencement of operations) through October 31, 1996.................... 42.18% n/a
</TABLE>
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Information relating to foreign market performance, market capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the Securities Act of 1933 on account of the
inclusion of such information herein.
GT Global believes information relating to foreign market performance, market
capitalization and diversification may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in equity and/or debt securities on a global basis.
However, this data is not a representation of the past performance of the Fund
nor is it a prediction of such performance. The performance of the Fund will
differ from the historical performance of the indices represented above. The
performance of indices does not take expenses into account, while the Fund
incurs expenses in its operations that will reduce performance. Moreover, the
Fund is actively managed, i.e. the Manager as the Fund's investment manager
actively purchases and sells securities in seeking the Fund's investment
objective. Moreover, the Fund's concentration in the equity and debt securities
of Latin American issuers will cause the Fund's performance to differ from the
general equity and bond indices referred to in the historical performance data
provided above.
The Fund and GT Global may from time to time compare the Fund with, but not
limited to, the following:
(1) The Salomon Brothers Non-U.S. Dollars Indices, which are measures of
the total return performance of high quality non-U.S. dollar denominated
securities in major sectors of the worldwide bond markets.
(2) The Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's Investors Service,
Inc. ("Moody's") or BBB by Standard & 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) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Company Service ("CDA/Wiesenberger"), Morningstar, Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard the Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger, Morningstar and/or other
firms as applicable, or to specific funds or groups of funds within or
without such peer group. Morningstar is a mutual fund rating service that
also rates mutual funds on the basis of risk-adjusted performance.
Morningstar ratings are calculated from a fund's three, five and ten year
average annual returns with appropriate fee adjustments and a risk factor
that reflects fund performance relative to the three-
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
month U.S. Treasury bill monthly returns. Ten percent of the funds in an
investment category receive five stars and 22.5% receive four stars. The
ratings are subject to change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and Gross National Product ("GNP") weighted
index, beginning in 1975. The returns are broken down by local market and
currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized index composed of the capitalization-weighted average of the
price of 500 of the largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-back
fixed income securities.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies in Europe, Australia and the Far East.
(13) Morgan Stanley Capital International Latin America Emerging Market
Indices, including the Morgan Stanley Emerging Markets Free Latin America
Index (which excludes Mexican banks and securities companies which cannot be
purchased by foreigners) and the Morgan Stanley Emerging Markets Global
Latin America Index. Both indices include 60% of the market capitalization
of the following countries: Argentina, Brazil, Chile and Mexico. The indices
are weighted by market capitalization and are calculated without dividends
reinvested.
(14) International Financial Corporation ("IFC") Latin American Indices
which include 60% of the market capitalization in the covered countries and
are market weighted. One index includes dividends and one excludes
dividends.
(15) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(16) The World Bank Publication of Trends in Developing Countries (TIDE)
provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(17) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(18) Datastream and Worldscope each is an on-line database retrieval
service for information including but not limited to international financial
and economic data.
(19) International Financial Statistics, which is produced by the
International Monetary Fund.
(20) Various publications and reports produced by the World Bank and its
affiliates.
(21) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(22) Various publications including but not limited to ratings agencies
such as Moody's S&P and Fitch.
(23) Various publications from the Organization for Economic Cooperation
and Development (OECD).
(24) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
Indices, economic and financial data prepared by the research departments of
various financial organizations such as Salomon Brothers, Inc., Lehman Brothers,
Merrill Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan Stanley, Smith
Barney, S.G. Warburg, Jardine Flemming, The Bank for International Settlements,
Asian Development Bank, Bloomberg, L.P. and Ibbottson Associates, may be used as
well as information reported by the Federal Reserve and the respective Central
Banks of various nations. In addition, GT Global may use performance rankings,
ratings and commentary reported periodically in national financial publications,
included but not limited to, Money Magazine, Mutual Funds
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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. The Fund may compare its performance to that of other
compilations or indicies of comparable quality to those listed above and other
indicies which may be developed and made available.
GT Global believes the Fund is an appropriate investment for long-term
investment goals including but not limited to funding retirement, paying for
education or purchasing a house. The Fund does not represent a complete
investment program and the investors should consider the Fund as appropriate for
a portion of their overall investment portfolio with regard to their long-term
investment goals.
GT Global believes that a growing number of consumer products, including but not
limited to home appliances, automobiles and clothing, purchased by Americans are
manufactured abroad. GT Global believes that investing globally in the companies
that produce products for U.S. consumers can help U.S. investors seek protection
of the value of their assets against the potentially increasing costs of foreign
manufactured goods. Of course, there can be no assurance that there will be any
correlation between global investing and the costs of such foreign goods unless
there is a corresponding change in value of the U.S. dollar to foreign
currencies. From time to time, GT Global may refer to or advertise the names of
such companies although there can be no assurance that any GT Global Mutual Fund
may own the securities of these companies.
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.
The Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above which may be developed and made
available in the future. The Fund may be compared in advertising to Certificates
of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan statistical areas, or other investments
issued by banks. The Fund differs from bank investments in several respects. The
Fund may offer greater liquidity or higher potential returns than CDs; but
unlike CDs, the Fund will have a fluctuating share price and return and is not
FDIC insured.
The Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
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 Fund. Ibbotson
calculates total returns in the same method as the Fund. The Fund may also
compare performance to that of other compilations or indices that may be
developed and made available in the future.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the Fund may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, the Fund may quote financial or
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of GT Global Mutual Funds to one another in appropriate categories
over specific periods of time may also be quoted in advertising.
The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviation and R(2) in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns compared
to those of a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Mutual Funds through various retirement accounts and
plans that offer deferral of income taxes on investment earnings and may also
enable an investor to make pre-tax contributions. Because of their advantages,
these retirement accounts and plans may produce returns superior to comparable
non-retirement investments. The Funds may also discuss these accounts and plans
which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): 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.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can roll over (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible 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 401(k) plans, but with fewer administrative requirements and
therefore lower annual administration expenses.
CODE SECTION 403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other not-for-profit corporations can make pre-tax salary reduction
contributions to these accounts.
PROFIT-SHARING (INCLUDING 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).
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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 methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk, 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.
From time to time, the Fund and GT Global will quote information regarding
individual companies, countries, regions, world stock exchanges, and economic
and demographic statistics from sources GT Global deems reliable including 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, G.T. Guide to World Equity Markets,
Salomon Brothers, Inc., and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, 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: Organization for Economic Cooperation
and Development 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, G.T. Guide to World
Equity Markets, Salomon Brothers Inc., and S.G. Warburg.
15) Foreign Direct Investments to developing countries.
16) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
17) Countries restructuring their debt, including those under the Brady Plan:
the Manager.
18) Political and economic structure of countries: Economist Intelligence Unit.
19) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
20) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
21) Supply, consumption, demand and growth in demand of certain products,
services and industries including, but not limited to, electricity, water,
transportation, construction materials, natural resources, financial
services, health care services and supplies, consumer products and services
and telecommunications equipment and services (sources of such information
may include, but would not be limited to, The World Bank, OECD, IMF,
Bloomberg and Datastream).
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 the Manager provided assistance to the government of Hong Kong
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
in linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed GT Asset Management Ltd. as one of the first foreign
discretionary investment management 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 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.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1," "Prime-2" and "Prime-3" to indicate
commercial paper having the highest capacity for timely repayment. Issuers rated
Prime-1 have a superior capacity for repayment of senior short-term promissory
obligations. Prime-1 repayment ability will often be evidenced by the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protections; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issuers rated Prime-2 have a strong capacity for repayment
of short-term promissory obligations. This will normally be evidenced by many of
the characteristics cited above, but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained. Issuers rated Prime-3 have
an acceptable ability for repayment of senior short-term obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
S&P ratings of commercial paper are graded into four categories ranging from "A"
for the highest quality obligations to "D" for the lowest. A -- Issues assigned
its highest rating are regarded as having the greatest capacity for timely
payment. Issues in this category are delineated with numbers 1, 2, and 3 to
indicate the relative degree of safety. A-1 -- This designation indicates that
the degree of safety regarding timely payment is either overwhelming or very
strong. Those issues determined to possess overwhelming safety characteristics
will be denoted with a plus (++) sign designation. A-2 -- Capacity for timely
payments on issues with this designation is strong. However, the relative degree
of safety is not as high as for issues designated "A-1." A-3 -- Issues carrying
this designation have a satisfactory capacity for timely payment. They are,
however, somewhat more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Statement of Additional Information Page 39
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GT GLOBAL LATIN AMERICA GROWTH FUND
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bond because margins of protection may not be as large as in
Aaa securities, fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than the Aaa securities.
A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well.
Ba -- These bonds are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate, and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- These bonds generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa -- These bonds are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Ca -- These bonds represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C -- These bonds are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published
in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
ranking; and the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.
S&P rates the long-term securities debt of various entities in categories
ranging from "AAA" to "D" according to quality. Investment grade ratings are as
follows:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change
in circumstances and economic conditions, than debt in higher rated
categories.
Speculative grade ratings are as follows:
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB -- Have less near-term vulnerability to default than other
speculative issues. However, these bonds face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
inadequate capacity to meet timely interest and principal payments. This
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'BBB-' rating.
B -- Have greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. This rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied 'BB' or 'BB-' rating.
CCC -- Have a currently identifiable vulnerability to default and are
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, these bonds are not
likely to have the capacity to pay interest and repay principal. The 'CCC'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'B' or 'B-' rating.
CC -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' rating.
C -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC-' debt rating. This rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.
CI -- This rating is reserved for income bonds on which no interest is
being paid.
D -- Are in payment default. This rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. This rating also will be
used up on the filing of a bankruptcy petition if debt service payments are
jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of GT Global Latin America Growth Fund as of
October 31, 1996 and for the period then ended appear on the following pages.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of GT Global Latin America Growth Fund and Board of
Directors of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of GT
Global Latin America Growth Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1996, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and 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 GT
Global Latin America Growth Fund as of October 31, 1996, the results of
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 13, 1996
F1
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (23.0%)
Uniao Bancos Brasileiras "A" Preferred-/- ............... BRZL 378,050,000 $ 10,488,100 3.3
BANKS-MONEY CENTER
Banco Bradesco S.A. Preferred ........................... BRZL 1,227,498,430 10,467,134 3.3
BANKS-MONEY CENTER
Grupo Financiero Banamex Accival, S.A. de C.V. "B"-/- ... MEX 4,727,000 10,019,825 3.2
BANKS-MONEY CENTER
Inversiones y Representaciones S.A. (IRSA): ............. ARG -- -- 2.9
REAL ESTATE
Common-/- ............................................. -- 2,378,500 7,279,666 --
GDR-/- {\/} ........................................... -- 58,300 1,778,150 --
Banco Provincial S.A. ................................... VENZ 3,183,913 6,421,963 2.0
OTHER FINANCIAL
Banco BHIF - ADR-/- {\/} ................................ CHLE 344,500 6,201,000 2.0
BANKS-REGIONAL
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} ................................................ PAN 91,700 4,791,325 1.5
OTHER FINANCIAL
Grupo Financiero Banorte "B"-/- ......................... MEX 4,439,000 4,427,930 1.4
BANKS-REGIONAL
Administradora de Fondos de Pensiones Provida S.A. -
ADR{\/} ................................................ CHLE 170,800 3,971,100 1.3
OTHER FINANCIAL
Grupo Financiero Bancomer, S.A. de C.V.: ................ MEX -- -- 1.1
BANKS-MONEY CENTER
"B"-/- ................................................ -- 7,167,000 3,047,315 --
"L"-/- ................................................ -- 817,296 280,245 --
Seguros Comercial America S.A. "B"-/- ................... MEX 6,965,000 2,084,289 0.7
INSURANCE - MULTI-LINE
Banco de Galicia y Buenos Aires S.A. de C.V. -
ADR{\/} ................................................ ARG 40,500 734,063 0.2
BANKS-MONEY CENTER
Grupo Financiero Probusa S.A. de C.V. "B"-/- ............ MEX 7,621,563 465,657 0.1
OTHER FINANCIAL
------------
72,457,762
------------
Services (21.5%)
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR{\/} ................................................ BRZL 185,000 13,782,498 4.4
TELEPHONE NETWORKS
Disco S.A. - ADR-/- {\/} ................................ ARG 464,350 10,447,875 3.3
RETAILERS-FOOD
Univision Communications, Inc.-/- ....................... US 274,400 9,261,000 2.9
BROADCASTING & PUBLISHING
Cifra S.A. de C.V.: ..................................... MEX -- -- 2.8
RETAILERS-OTHER
"B" - ADR-/- {\/} ..................................... -- 3,125,000 3,781,250 --
"C"-/- ................................................ -- 2,878,000 3,696,185 --
"B" ................................................... -- 1,100,000 1,409,975 --
Lojas Americanas S.A. Preferred-/- ...................... BRZL 467,535,469 7,350,042 2.3
RETAILERS-OTHER
Santa Isabel S.A. - ADR{\/} ............................. CHLE 254,800 7,166,250 2.3
RETAILERS-FOOD
TV Filme, Inc.-/- {\/} .................................. BRZL 428,200 6,423,000 2.0
CABLE TELEVISION
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Telecomunicacoes do Rio de Janeiro S.A. (Telerj)
Preferred-/- ........................................... BRZL 47,791,322 $ 4,605,608 1.5
TELEPHONE NETWORKS
------------
67,923,683
------------
Energy (17.9%)
Centrais Eletricas Brasileiras S.A. (Eletrobras): ....... BRZL -- -- 5.4
ELECTRICAL & GAS UTILITIES
"B" Preferred{z} ...................................... -- 36,600,000 11,863,915 --
Common-/- ............................................. -- 16,500,000 5,123,625 --
Companhia Energetica de Minas Gerais (CEMIG): ........... BRZL -- -- 3.6
ELECTRICAL & GAS UTILITIES
ADR-/- {\/} ........................................... -- 208,600 6,518,750 --
Preferred-/- {z} ...................................... -- 146,792,050 4,672,540 --
Compania Boliviana de Energia Electrica{::} {\/} ........ BOL 224,800 9,497,800 3.0
ELECTRICAL & GAS UTILITIES
C.A. La Electricidad de Caracas-/- ...................... VENZ 8,070,933 8,860,015 2.8
ELECTRICAL & GAS UTILITIES
Enron Global Power & Pipelines L.L.C. ................... US 296,250 8,332,031 2.6
ENERGY SOURCES
Electricidad de Argentina S.A.(.) -/- {\/} .............. ARG 110,857 1,507,655 0.5
ELECTRICAL & GAS UTILITIES
------------
56,376,331
------------
Materials/Basic Industry (17.0%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" .............. MEX 581,700 11,242,332 3.6
PAPER/PACKAGING
Companhia Vale do Rio Doce Preferred{z} ................. BRZL 509,400 10,561,881 3.3
METALS - NON-FERROUS
Cia de Minas Buenaventura: .............................. PERU -- -- 3.3
METALS - NON-FERROUS
"C" ................................................... -- 1,268,276 9,846,344 --
"B"-/- ................................................ -- 61,942 525,787 --
Venezolana de Cementos, S.A.C.A. "A" .................... VENZ 2,476,397 6,784,433 2.2
CEMENT
Sociedad Quimica y Minera de Chile S.A. - ADR{\/} ....... CHLE 98,200 5,646,500 1.8
CHEMICALS
Cemex, S.A. de C.V. "B" ................................. MEX 1,202,000 4,323,903 1.4
CEMENT
Companhia Siderurgica Nacional S.A. ..................... BRZL 117,700,000 2,921,591 0.9
METALS - STEEL
Apasco S.A. ............................................. MEX 261,000 1,594,638 0.5
CEMENT
------------
53,447,409
------------
Consumer Non-Durables (14.4%)
Companhia Cervejaria Brahma Preferred{z} ................ BRZL 17,520,000 10,829,553 3.4
BEVERAGES - ALCOHOLIC
Grupo Industrial Maseca, S.A. de C.V. "B" ............... MEX 7,852,000 9,575,132 3.0
FOOD
Grupo Modelo S.A. "C" ................................... MEX 1,805,000 9,373,847 3.0
BEVERAGES - ALCOHOLIC
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Grupo Industrial Bimbo, S.A. de C.V. "A" ................ MEX 1,523,000 $ 7,558,030 2.4
FOOD
Mavesa S.A. - ADR{\/} ................................... VENZ 715,000 4,468,750 1.4
FOOD
Multicanal Participacoes S.A. - ADR-/- {\/} ............. BRZL 149,500 2,093,000 0.7
OTHER CONSUMER GOODS
Compania Nacional de Chocolates S.A. .................... COL 130,800 1,098,720 0.3
FOOD
Companhia Tecidos Norte de Mina Preferred ............... BRZL 1,311,300 440,376 0.1
TEXTILES & APPAREL
Jugos Del Valle S.A. "B"-/- ............................. MEX 227,000 312,479 0.1
BEVERAGES - NON-ALCOHOLIC
------------
45,749,887
------------
Multi-Industry/Miscellaneous (4.9%)
San Luis "CPO"{::} ...................................... MEX 1,710,000 8,592,643 2.7
CONGLOMERATE
Brazil Realty S.A. -144A ADR{.} -/- {\/} ................ BRZL 312,000 6,357,000 2.0
MISCELLANEOUS
Grupo Sidek, S.A. de C.V. - ADR-/- {\/} ................. MEX 608,800 608,800 0.2
CONGLOMERATE
------------
15,558,443
------------ -----
TOTAL EQUITY INVESTMENTS (cost $272,965,225) .............. 311,513,515 98.7
------------ -----
<CAPTION>
NO. OF % OF NET
RIGHTS COUNTRY RIGHTS VALUE ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Banco de Galicia y Buenos Aires S.A. de C.V. ADR Rights,
expire 11/1/96{\/ } .................................... ARG 12,385 -- --
------------ -----
BANKS-REGIONAL (Cost $0)
TOTAL INVESTMENTS (cost $272,965,225) * .................. 311,513,515 98.7
Other Assets and Liabilities .............................. 4,078,457 1.3
------------ -----
NET ASSETS ................................................ $315,591,972 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{z} All or part of the Fund's holdings in this security is segregated
as collateral for written futures. See Note 1 of Notes to Financial
Statements.
-/- Non-income producing security.
{\/} U.S. currency denominated.
(.) Restricted securities: At October 31, 1996, the Fund owned the
following restricted security constituting 0.5% of net assets which
may not be publicly sold without registration under the Securities
Act of 1933 (Note 1). Additional information on the restricted
security is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION MARKET VALUE
DESCRIPTION DATE SHARES COST PER SHARE
- ------------------------------ ----------- ------- ----------- ------------
<S> <C> <C> <C> <C>
Electricidad de Argentina
S.A.......................... 12/23/93 110,857 $ 1,939,998 $13.60
</TABLE>
{::} See Note 5 of Notes to Financial Statements.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
{.} 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.
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
* For Federal income tax purposes, cost is $273,597,742 and
appreciation (depreciation) is as follows:
</TABLE>
<TABLE>
<S> <C>
Unrealized appreciation: $ 53,931,731
Unrealized depreciation: (16,015,958)
-------------
Net unrealized appreciation: $ 37,915,773
-------------
-------------
</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}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Argentina (ARG/ARS) .................. 6.9 6.9
Bolivia (BOL/BOL) .................... 3.0 3.0
Brazil (BRZL/BRL) .................... 36.2 36.2
Chile (CHLE/CLP) ..................... 7.4 7.4
Colombia (COL/COP) ................... 0.3 0.3
Mexico (MEX/MXN) ..................... 26.2 26.2
Panama (PAN/PND) ..................... 1.5 1.5
Peru (PERU/PES) ...................... 3.3 3.3
United States & Other (US/USD) ....... 5.5 1.3 6.8
Venezuela (VENZ/VEB) ................. 8.4 8.4
------ --- -----
Total ............................... 98.7 1.3 100.0
------ --- -----
------ --- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $315,591,972.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN FUTURES CONTRACTS OUTSTANDING
OCTOBER 31, 1996
<TABLE>
<CAPTION>
EXPIRATION NO. OF
DESCRIPTION DATE CONTRACTS CURRENCY MARKET VALUE
- ---------------------------------------- ------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C>
Brazilian Real Futures (face
$28,818,000)........................... 12/31/96 300 USD $ 28,818,000
</TABLE>
- --------------
See Note 1 to the Financial Statements.
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $272,965,225) (Note 1)........................... $311,513,515
Receivable for Fund shares sold............................................................ 12,300,099
Receivable for securities sold............................................................. 9,449,458
Dividends receivable....................................................................... 806,579
Receivable for initial & variation margin (Note 1)......................................... 311,370
Miscellaneous receivable................................................................... 2,623
Cash held as collateral for securities loaned (Note 1)..................................... 17,198,999
------------
Total assets............................................................................. 351,582,643
------------
Liabilities:
Due to custodian........................................................................... 13,449,049
Payable for Fund shares repurchased........................................................ 2,400,422
Payable for securities purchased........................................................... 2,093,000
Payable for investment management and administration fees (Note 2)......................... 285,657
Payable for service and distribution expenses (Note 2)..................................... 207,738
Payable for transfer agent fees (Note 2)................................................... 142,254
Payable for printing and postage expenses.................................................. 105,957
Payable for professional fees.............................................................. 51,201
Payable for registration and filing fees................................................... 25,324
Payable for custodian fees (Note 1)........................................................ 11,871
Payable for fund accounting fees (Note 2).................................................. 6,971
Payable for Directors' fees and expenses (Note 2).......................................... 4,003
Other accrued expenses..................................................................... 8,225
Collateral for securities loaned (Note 1).................................................. 17,198,999
------------
Total liabilities........................................................................ 35,990,671
------------
Net assets................................................................................... $315,591,972
------------
------------
Class A:
Net asset value and redemption price per share ($177,373,411 DIVIDED BY 9,881,172 shares
outstanding)................................................................................ $ 17.95
------------
------------
Maximum offering price per share (100/95.25 of $17.95) *..................................... $ 18.85
------------
------------
Class B:+
Net asset value and offering price per share ($137,400,074 DIVIDED BY 7,725,949 shares
outstanding)................................................................................ $ 17.78
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($818,487 DIVIDED
BY 45,630 shares outstanding)............................................................... $ 17.94
------------
------------
Net assets consist of:
Paid in capital (Note 4)................................................................... $377,749,062
Accumulated net realized loss on investments and foreign currency transactions............. (100,673,019)
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies................................................................................ (32,361)
Net unrealized appreciation of investments................................................. 38,548,290
------------
Total -- representing net assets applicable to capital shares outstanding.................... $315,591,972
------------
------------
<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.
F6
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $499,299)............................... $7,792,298
Interest income............................................................................ 813,731
----------
Total investment income.................................................................. 8,606,029
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 3,365,375
Service and distribution expenses: (Note 2)
Class A...................................................................... $1,007,846
Class B...................................................................... 1,425,667 2,433,513
----------
Transfer agent fees (Note 2)............................................................... 1,446,362
Printing and postage expenses.............................................................. 202,870
Custodian fees (Note 1).................................................................... 200,934
Fund accounting fees (Note 2).............................................................. 86,436
Audit fees................................................................................. 80,126
Registration and filing fees............................................................... 62,704
Legal fees................................................................................. 28,182
Amortization of organization costs (Note 1)................................................ 16,576
Directors' fees and expenses (Note 2)...................................................... 13,712
Other expenses............................................................................. 13,870
----------
Total expenses before reductions......................................................... 7,950,660
----------
Expense reductions (Notes 1 & 6)....................................................... (223,037)
----------
Total net expenses....................................................................... 7,727,623
----------
Net investment income........................................................................ 878,406
----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized loss on investments............................................... (1,655,860)
Net realized loss on foreign currency transactions............................. (3,308,864)
----------
Net realized loss during the year........................................................ (4,964,724)
Net change in unrealized depreciation on translation of assets and liabilities
in foreign currencies......................................................... 608,089
Net change in unrealized appreciation of investments........................... 63,484,288
----------
Net unrealized appreciation during the year.............................................. 64,092,377
----------
Net realized and unrealized gain on investments and foreign currencies....................... 59,127,653
----------
Net increase in net assets resulting from operations......................................... $60,006,059
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
------------- -------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income.................................................... $ 878,406 $ 2,650,890
Net realized loss on investments and foreign currency transactions....... (4,964,724) (98,872,602)
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 608,089 (795,171)
Net change in unrealized appreciation (depreciation) of investments...... 63,484,288 (97,151,861)
------------- -------------
Net increase (decrease) in net assets resulting from operations........ 60,006,059 (194,168,744)
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................... (842,524) --
From net realized gain on investments.................................... -- (19,567,238)
In excess of net investment income....................................... (381,092) --
Class B:
Distributions to shareholders: (Note 1)
From net investment income............................................... (93,201) --
From net realized gain on investments.................................... -- (14,468,347)
In excess of net investment income....................................... (42,157) --
Advisor Class:
Distributions to shareholders:
From net investment income............................................... (4,285) --
In excess of net investment income....................................... (1,938) --
------------- -------------
Total distributions.................................................... (1,365,197) (34,035,585)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 1,551,794,195 1,098,477,187
Decrease from capital shares repurchased................................. (1,612,200,649) (1,101,548,404)
------------- -------------
Net decrease from capital share transactions........................... (60,406,454) (3,071,217)
------------- -------------
Total decrease in net assets............................................... (1,765,592) (231,275,546)
Net assets:
Beginning of year........................................................ 317,357,564 548,633,110
------------- -------------
End of year.............................................................. $ 315,591,972* $ 317,357,564**
------------- -------------
------------- -------------
<FN>
- --------------
* Includes undistributed net investment income of $0.
** Includes undistributed net investment income of $1,356,776.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1996 (A) 1995 (A) 1994 (A) 1993 (A) 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 15.38 $ 26.11 $ 19.78 $ 15.59 $ 16.45
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.09 0.15 (0.08) 0.18 0.25*
Net realized and unrealized gain
(loss) on investments................ 2.59 (9.28) 6.75 5.21 (0.98)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 2.68 (9.13) 6.67 5.39 (0.73)
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.08) -- (0.19) (0.12) (0.13)
From net realized gain on
investments.......................... -- (1.60) (0.15) (1.08) --
In excess of net investment income.... (0.03) -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.11) (1.60) (0.34) (1.20) (0.13)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 17.95 $ 15.38 $ 26.11 $ 19.78 $ 15.59
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (d)............. 17.52% (37.16)% 34.10% 37.1% (4.5)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 177,373 $ 182,462 $ 336,960 $ 129,280 $ 94,085
Ratio of net investment income (loss) to
average net assets..................... 0.46% 0.86% (0.29)% 1.3%* 1.3%*
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 2.03% 2.11% 2.04% 2.4%* 2.4%*
Without expense reductions............ 2.10% 2.12% --%** --%** --%**
Portfolio turnover rate++++............. 101% 125% 155% 112% 159%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0005 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.
++ 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 among the
classes of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02 and $0.04 for the years ended October
31, 1993 and 1992, respectively. Without such reimbursements, the
expense ratios would have been 2.49% and 2.62% and the ratios of net
investment income to average net assets would have been 1.25% and
1.07% for the years ended October 31, 1993 and 1992, respectively.
** Calculation of "Ratio of expenses to net assets" was made without
considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon average
shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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>
CLASS B++ ADVISOR CLASS+++
---------------------------------------------- ----------------------
APRIL 1, JUNE 1,
1993 1995
TO YEAR ENDED TO
YEAR ENDED OCTOBER 31, OCTOBER OCTOBER OCTOBER
---------------------------------- 31, 31, 31,
1996 (A) 1995 (A) 1994 (A) 1993 (A) 1996 (A) 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 15.21 $ 25.94 $ 19.75 $ 16.26 $ 15.40 $ 15.95
---------- ---------- ---------- ---------- ---------- ----------
Income from investment
operations:
Net investment income
(loss)..................... (0.00) 0.06 (0.22) (0.07) 0.17 0.09
Net realized and unrealized
gain (loss) on
investments................ 2.59 (9.19) 6.74 3.56 2.58 (0.64)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease)
from investment
operations............... 2.59 (9.13) 6.52 3.49 2.75 (0.55)
---------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment
income..................... (0.01) -- (0.18) -- (0.14) --
From net realized gain on
investments................ -- (1.60) (0.15) -- -- --
In excess of net investment
income..................... (0.01) -- -- -- (0.07) --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions....... (0.02) (1.60) (0.33) -- (0.21) --
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period....................... $ 17.78 $ 15.21 $ 25.94 $ 19.75 $ 17.94 $ 15.40
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Total investment return (d)... 17.02% (37.42)% 33.33% 21.5%(b) 18.16% (3.45)%(b)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $ 137,400 $ 134,527 $ 211,673 $ 13,576 $ 818 $ 369
Ratio of net investment income
(loss) to average net
assets....................... (0.04)% 0.36% (0.79)% (0.7)%(c) 0.96% 1.36%(c)
Ratio of expenses to average
net assets:
With expense reductions
(Notes 1 & 6).............. 2.53% 2.61% 2.54% 2.9%(c) 1.53% 1.61%(c)
Without expense
reductions................. 2.60% 2.62% --%** --%** 1.60% 1.62%(c)
Portfolio turnover rate++++... 101% 125% 155% 112% 101% 125%
Average commission rate per
share paid on portfolio
transactions++++............. $ 0.0005 N/A N/A N/A $ 0.0005 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing among the
classes of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02 and $0.04 for the years ended October
31, 1993 and 1992, respectively. Without such reimbursements, the
expense ratios would have been 2.49% and 2.62% and the ratios of net
investment income to average net assets would have been 1.25% and
1.07% for the years ended October 31, 1993 and 1992, respectively.
** Calculation of "Ratio of expenses to net assets" was made without
considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon average
shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Latin America Growth Fund ("Fund") is a separate series of GT
Investment Funds, Inc. ("Company"). The Company is organized as a Maryland
corporation and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as a non-diversified, open-end management investment
company. The Company has twelve series of shares in operation, each series
corresponding to a distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective service and distribution expenses, and
may differ in its transfer agent, registration, and certain other class-specific
fees and expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
the financial statements may include certain estimates made by management.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (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 maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records are maintained in U.S. dollars. The market values of
foreign securities, currency holdings, and other assets and liabilities are
recorded in the books and records of the Fund after translation to U.S. dollars
based on the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are translated at
prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss
F11
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
equal to the difference between the value at the time it was opened and the
value at the time it was closed. Forward Contracts involve market risk in excess
of the amount shown in the Fund's "Statement of Assets and Liabilities." The
Fund could be exposed to risk if a counterparty is unable to meet the terms of
the contract or if the value of the currency changes unfavorably. The Fund may
enter into Forward Contracts in connection with planned purchases or sales of
securities, or to hedge against adverse fluctuations in exchange rates between
currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. If an option expires on its
stipulated expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Fund can write options only on a covered
basis, which, for a call, requires that the fund hold the underlying securities
and, for a put, requires the Fund to maintain in a segregated account cash, U.S.
government securities, or other liquid, high-grade debt securities in an amount
not less than the exercise price or otherwise provide adequate cover at all
times while the put option is outstanding. The Fund may use options to manage
its exposure to the stock or bond market and to fluctuations in currency values
or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock or bond
market and to fluctuations in currency values or interest rates. At October 31,
1996, the fund had segregated securities valued at $34,032,814 and cash of
$311,370 to cover margin requirements on open futures contracts.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Interest income is recorded on the
accrual basis. Where a high level of uncertainty exists as to its collection,
income is recorded net of all withholding tax with any rebate recorded when
received. The Fund may trade securities on other than normal settlement terms.
This may increase the risk if the other party to the transaction fails to
deliver and causes the Fund to subsequently invest at less advantageous prices.
(H) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carry forward of
$100,040,502, of which $93,313,175 expires in 2003 and $6,727,327 expires in
2004.
(I) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ
F12
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
from generally accepted accounting principles. These differences are primarily
due to differing treatments of income and gains on various investment securities
held by the Fund and timing differences.
(J) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $177,793. These
expenses have been amortized on a straight line basis over a five-year period.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(M) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(N) PORTFOLIO SECURITIES LOANED
At October 31, 1996, stocks with an aggregate value of approximately $15,138,626
were on loan to brokers. The loans were secured by cash collateral of
$17,198,999. For international securities, cash collateral is received by the
Fund against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For domestic securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the loan. For
the year ended October 31, 1996, the Fund received $48,028 of income from
securities lending which was used to offset the Fund's custody expenses.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's 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. The Fund pays investment management and
administration fees to the Manager at the annualized rate of 0.975% of the first
$500 million of average daily net assets of the Fund; 0.95% of the next $500
million; 0.925% of the next $500 million and 0.90% on amounts thereafter. These
fees are computed daily and paid monthly, and are subject to reduction in any
year to the extent that the Fund's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, is the Fund's
distributor. The Fund offers Class A, Class B and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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 $98,352
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $18,250 for the year ended October 31, 1996. 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 Fund's current
prospectus. For the year ended October 31, 1996, GT Global collected CDSCs in
the amount of $824,774. 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 Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for 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.
F13
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for 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 the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40%, 2.90%, and 1.90% of the average
net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of 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 Fund. 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 Fund. The monthly fee
for these services to the manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the results according to the Funds 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.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1996, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$323,525,648 and $362,046,941. There were no purchases or sales of U.S.
government obligations for the year ended October 31, 1996.
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, 200,000,000 were
classified as shares of the 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
Natural Resources Fund; 200,000,000 were classified as shares of GT Global
Infrastructure Fund; 400,000,000 were classified as shares of GT Global
Telecommunications Fund; 200,000,000 were classified as shares of GT Global
Emerging Markets Fund; and 200,000,000 were classified as shares of GT Global
Financial Services Fund; 200,000,000 were classified as shares of GT Global High
Income 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 Fund were as follows:
F14
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
CAPITAL SHARE TRANSACTIONS
<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............................. 76,364,877 $1,304,172,875 52,467,821 $ 904,752,193
Shares issued in connection with
reinvestment of distributions......... 66,851 1,023,814 673,780 16,139,240
----------- ------------- ----------- -------------
76,431,728 1,305,196,689 53,141,601 920,891,433
Shares repurchased...................... (78,414,835) (1,346,357,898) (54,183,599) (943,221,637)
----------- ------------- ----------- -------------
Net decrease............................ (1,983,107) $ (41,161,209) (1,041,998) $ (22,330,204)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 13,503,991 $ 230,324,732 9,341,199 $ 166,467,703
Shares issued in connection with
reinvestment of distributions......... 6,914 105,073 439,250 10,440,947
----------- ------------- ----------- -------------
13,510,905 230,429,805 9,780,449 176,908,650
Shares repurchased...................... (14,627,921) (250,064,111) (9,097,593) (158,042,884)
----------- ------------- ----------- -------------
Net increase (decrease)................. (1,117,016) $ (19,634,306) 682,856 $ 18,865,766
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
YEAR ENDED SHARES) TO OCTOBER 31,
OCTOBER 31, 1996 1995
-------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 932,074 $ 16,161,478 41,561 $ 677,104
Shares issued in connection with
reinvestment of distributions......... 408 6,223 -- --
----------- ------------- ----------- -------------
932,482 16,167,701 41,561 677,104
Shares repurchased...................... (910,792) (15,778,640) (17,621) (283,883)
----------- ------------- ----------- -------------
Net increase............................ 21,690 $ 389,061 23,940 $ 393,221
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1996, amounted to
$18,090,443, at value.
Transactions with affiliated companies are as follows:
<TABLE>
<CAPTION>
PURCHASES NET REALIZED DIVIDEND
AFFILIATES COST SALES COST GAIN INCOME
- ---------------------------------------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C>
Compania Boliviana de Energia
Electrica.............................. $ -- $ 671,076 $ 264,155 $190,749
Dixie Toga S.A. Preferred............... 729,186 5,847,339 1,577,576 39,312
San Luis "CPO".......................... 5,394,408 3,680,995 2,247,803 242,517
</TABLE>
6. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1996, the Fund's expenses
were reduced by $175,009 under these arrangements.
F15
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL 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 on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUNDS
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
FIXED INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, 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 LATIN AMERICA GROWTH 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.
LATSA703MC
<PAGE>
GT GLOBAL EMERGING
MARKETS FUND
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
March 1, 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Class A and Class B
shares of GT Global Emerging Markets Fund ("Fund"). The Fund is a diversified
series of G.T. Investment Funds, Inc. (the "Company"), a registered open-end
management investment company. This Statement of Additional Information, which
is not a prospectus, supplements and should be read in conjunction with the
Fund's current Class A and Class B Prospectus dated March 1, 1997. A copy of the
Fund's Prospectus is available without charge by writing to the above address or
by calling the Fund at the toll-free telephone number listed above.
Chancellor LGT Asset Management, Inc. (the "Manager") serves as the Fund's
investment manager and administrator. The distributor of the Fund's shares is GT
Global, Inc. ("GT Global"). The Fund's transfer agent is GT Global Investor
Services, Inc. ("GT Services" or the "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 6
Risk Factors............................................................................................................. 14
Investment Limitations................................................................................................... 18
Execution of Portfolio Transactions...................................................................................... 20
Directors and Executive Officers......................................................................................... 22
Management............................................................................................................... 24
Valuation of Fund Shares................................................................................................. 25
Information Relating to Sales and Redemptions............................................................................ 27
Taxes.................................................................................................................... 29
Additional Information................................................................................................... 32
Investment Results....................................................................................................... 33
Description of Debt Ratings.............................................................................................. 39
Financial Statements..................................................................................................... 41
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term growth of capital. The Fund
seeks this objective by investing, under normal circumstances, at least 65% of
its total assets in equity securities of companies in emerging markets. The Fund
does not consider the following countries to be emerging markets: Australia,
Austria, Belgium, Canada, Denmark, England, Finland, France, Germany, Ireland,
Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland
and United States. The Fund normally may invest up to 35% of its assets in a
combination of (i) debt securities of government or corporate issuers in
emerging markets; (ii) equity and debt securities of issuers in developed
countries, including the United States; (iii) securities of issuers in emerging
markets not included in the list of emerging markets set forth in the Fund's
current Prospectus, if investing therein becomes feasible and desirable
subsequent to the date of the Fund's current Prospectus; and (iv) cash and money
market instruments.
In determining what countries constitute emerging markets, the Manager will
consider, among other things, data, analysis, and classification of countries
published or disseminated by the International Bank for Reconstruction and
Development (commonly known as the World Bank) and the International Finance
Corporation.
SELECTION OF EQUITY INVESTMENTS
In determining the appropriate distribution of investments among various
countries and geographic regions for the Fund, the Manager ordinarily considers
the following factors: prospects for relative economic growth between the
different countries in which the Fund may invest; expected levels of inflation;
government policies influencing business conditions; the outlook for currency
relationships; and the range of the individual investment opportunities
available to international investors.
In analyzing companies in emerging markets for investment by the Fund, the
Manager ordinarily looks for one or more of the following characteristics: an
above-average earnings growth per share; high return on invested capital;
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; efficient service; pricing flexibility;
strength of management; and general operating characteristics which will enable
the companies to compete successfully in their respective marketplaces. In
certain countries, governmental restrictions and other limitations on investment
may affect the maximum percentage of equity ownership in any one company by the
Fund. In addition, in some instances only special classes of securities may be
purchased by foreigners and the market prices, liquidity and rights with respect
to those securities may vary from shares owned by nationals.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
The Fund may be prohibited under the Investment Company Act of 1940, as amended
("1940 Act") from purchasing the securities of any foreign company that, in its
most recent fiscal year, derived more than 15% of its gross revenues from
securities-related activities ("securities-related companies"). In a number of
countries, commercial banks act as securities broker/dealers, investment
advisers and underwriters or otherwise engage in securities-related activities,
which may limit the Fund's ability to hold securities issued by banks. The Fund
has obtained an exemption from the Securities and Exchange Commission ("SEC") to
permit it to invest in certain of these securities subject to certain
restrictions.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries investments by the Fund presently may be made
only by acquiring shares of other investment companies with local governmental
approval to invest in those countries. The Fund may invest in the securities of
closed-end investment companies within the limits of the 1940 Act. These
limitations currently provide, in part, that the Fund may purchase shares of a
closed-end investment company unless (a) such a purchase would cause the Fund to
own in
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
the aggregate more than 3 percent of the total outstanding voting stock of the
investment company or (b) such a purchase would cause the Fund to have more than
5 percent of its total assets invested in the investment company or more than 10
percent of its total assets invested in the aggregate in all such investment
companies. Investment in such investment companies may involve the payment of
substantial premiums above the value of such companies' portfolio securities.
The Fund does not intend to invest in such funds unless, in the judgment of 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. At such time as direct investment in these countries
is allowed, the Fund anticipates investing directly in these markets.
SAMURAI AND YANKEE BONDS
Subject to its fundamental investment restrictions, the Fund may invest in
yen-denominated bonds sold in Japan by non-Japanese issuers ("Samurai bonds"),
and may invest in dollar-denominated bonds sold in the United States by non-U.S.
issuers ("Yankee bonds"). As compared with bonds issued in their countries of
domicile, such bond issues normally carry a higher interest rate but are less
actively traded. It is the policy of the Fund to invest in Samurai or Yankee
bond issues only after taking into account considerations of quality and
liquidity, as well as yield. These bonds would be issued by governments which
are members of the Organization for Economic Cooperation and Development or have
AAA ratings.
DEPOSITORY RECEIPTS
The Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs"), or other securities convertible into securities of
eligible foreign issuers. These securities may not necessarily be denominated in
the same currency as the securities for which they may be exchanged. ADRs and
ADSs typically are issued by an American bank or trust company and evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
issued in Europe typically by foreign banks and trust companies and evidence
ownership of either foreign or domestic securities. Generally, ADRs and ADSs in
registered form are designed for use in United States securities markets and
EDRs and CDRs in bearer form are designed for use in European securities
markets. For purposes of the Fund's investment policies, the Fund's investments
in ADRs, ADSs, EDRs, and CDRs will be deemed to be investments in the equity
securities representing securities of foreign issuers into which they may be
converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
obligations of domestic issuers. Although the Fund typically will acquire
obligations issued and supported by the credit of U.S. or foreign banks having
total assets at the time of purchase in excess of $1 billion, this $1 billion
figure is not a fundamental investment policy or restriction of the Fund. For
the purposes of calculation with respect to the $1 billion figure, the assets of
a bank will be deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which the Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed-upon price, date and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Fund if the other party
to the repurchase agreement becomes bankrupt, the Fund intends to enter into
repurchase agreements only with banks and dealers believed by the Manager to
present minimal credit risks in accordance with guidelines approved by the
Company's Board of Trustees. The Manager reviews and monitors the
creditworthiness of such institutions under the Board's general supervision.
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 15% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, I.E.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of the Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, the Fund may be required to sell
portfolio securities to restore 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. The Fund also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to meet redemptions. Any borrowing by the Fund may cause greater
fluctuation in the value of its shares than would be the case if the Fund did
not borrow.
The Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. The Fund, however, currently is prohibited, pursuant to
a non-fundamental investment policy, from purchasing securities during times
when outstanding borrowings represent more than 5% of its assets. Nevertheless,
this policy may be changed in the future by vote of a majority of the Company's
Board of Directors. In the event that the Fund employs leverage in the future,
it would be subject to certain additional risks. Use of leverage creates an
opportunity for greater growth of capital but would exaggerate any increases or
decreases in the Fund's net asset value. When the income and gains on securities
purchased with the proceeds of borrowings exceed the costs of such borrowings,
the Fund's earnings or net asset value will increase faster than otherwise would
be the case; conversely, if such income and gains fail to exceed such costs, the
Fund's earnings or net asset value would decline faster than would otherwise be
the case.
The Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. The Fund also may engage in "roll"
borrowing transactions which involve the Fund's sale of Government National
Mortgage Association certificates or other securities together with a commitment
(for which the Fund may receive a fee) to purchase similar, but not identical,
securities at a future date. The Fund will maintain in a segregated account with
a custodian cash or other 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.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans continuously be secured by collateral at
least equal at all times to the value of the
Statement of Additional Information Page 4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
securities lent plus any accrued interest, "marked to market" on a daily basis.
The Fund may pay reasonable administrative and custodial fees in connection with
loans of its securities. While the securities loan is outstanding, the Fund will
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities, as well as interest on the investment of the
collateral or a fee from the borrower. The Fund has a right to call each loan
and obtain the securities on five business days' notice. The Fund will not have
the right to vote equity securities while they are being lent, but it will call
in a loan in anticipation of any important vote. Loans only will 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.
SHORT SALES
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility.
When the Fund makes a short sale of a security it does not own, it must borrow
the security sold short and deliver it to the broker/dealer or other
intermediary through which it made the short sale. The Fund may have to pay a
fee to borrow particular securities and will often be obligated to pay over any
payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral deposited with the intermediary.
The Fund also will 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
the Fund on such security, the Fund may not receive any payments (including
interest) on its collateral deposited with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss theoretically is unlimited.
The Fund will not make a short sale if, after giving effect to such sale, the
market value of the securities sold short exceeds 25% of the value of its total
assets or the Fund's aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of the Fund's net assets or 2% of the securities of any
class of the issuer. Moreover, the Fund may engage in short sales only with
respect to securities listed on a national securities exchange. The Fund may
make short sales "against the box" without respect to such limitations. In this
type of short sale, at the time of the sale the Fund owns the security it has
sold short or has the immediate and unconditional right to acquire at no
additional cost the identical security.
TEMPORARY DEFENSIVE STRATEGIES
The Emerging Markets Fund may invest in the following types of money market
instruments (i.e., debt instruments with less than 12 months remaining until
maturity) denominated in U.S. dollars or other currencies: (a) obligations
issued or guaranteed by the U.S. or foreign governments, their agencies,
instrumentalities or municipalities; (b) obligations of international
organizations designed or supported by multiple foreign governmental entities to
promote economic reconstruction or development; (c) finance company obligations,
corporate commercial paper and other short-term commercial obligations; (d) bank
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances); (e) repurchase agreements with respect to the
foregoing; and (f) other substantially similar short-term debt securities with
comparable characteristics.
The Emerging Markets Fund may invest in commercial paper rated as low as A-3 by
S&P or P-3 by Moody's or, if not rated, determined by the Manager to be of
comparable quality. Obligations rated A-3 and P-3 are considered by S&P and
Moody's, respectively, to have an acceptable capacity for timely repayment.
However, these securities may be more vulnerable to adverse effects of changes
in circumstances than obligations carrying higher designations.
Statement of Additional Information Page 5
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
OPTIONS, FUTURES AND
CURRENCY STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon 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 the Fund entered into a
short hedge because the Manager projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, the Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options generally will be written on securities and currencies that, in the
opinion of 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 Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). As long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objectives. When writing a call option, the Fund, in return
for the
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premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Fund has no control
over when it may be required to sell the underlying securities or currencies,
since most options may be exercised at any time prior to the option's
expiration. If a call option that the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, 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 the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity are normally higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is identical substantially to that of call options.
The Fund generally would write put options in circumstances where the Manager
wishes to purchase the underlying security or currency for the Fund's portfolio
at a price lower than the current market price of the security or currency. In
such event, the Fund would write a put option at an exercise price that, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund would also receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to sell the security or currency at more than its market value.
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PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, the Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund to protect against an anticipated decline
in the value of the security or currency. Such protection is provided only
during the life of the put option when the Fund, as the holder of the put
option, is able to sell the underlying security or currency at the put exercise
price regardless of any decline in the underlying security's market price or
currency's exchange value. For example, a put option may be purchased in order
to protect unrealized appreciation of a security or currency when 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.
The Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique also may be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options also may be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in its
use of Forward Contracts by purchasing put or call options on currencies. A put
option gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be
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GT GLOBAL EMERGING MARKETS FUND
offset, in whole or in part, by an increase in the value of the put. If the
value of the currency instead should rise against the dollar, any gain to the
Fund would be reduced by the premium it had paid for the put option. A currency
call option might be purchased, for example, in anticipation of, or to protect
against, a rise in the value against the dollar of a currency in which the Fund
anticipates purchasing securities.
Options may be either listed on an exchange or traded 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. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the SEC considers purchased OTC options to be illiquid securities.
The Fund may also sell OTC options and, in connection therewith, segregate
assets or cover its obligations with respect to OTC options written by the Fund.
The assets used as cover for OTC options written by the Fund will be considered
illiquid unless the OTC options are sold to qualified dealers who agree that the
Fund may repurchase any OTC option it writes at a maximum price to be calculated
by a formula set forth in the option agreement. The cover for an OTC option
written subject to this procedure would be considered illiquid only to the
extent that the maximum repurchase price under the formula exceeds the intrinsic
value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When
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GT GLOBAL EMERGING MARKETS FUND
an index option is exercised, the amount of cash that the holder is entitled to
receive is determined by the difference between the exercise price and the
closing index level on the date when the option is exercised. As with other
kinds of options, the Fund, as the call writer, will not know that it has been
assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE AND CURRENCY FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collectively, "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock prices in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by the Fund. The Fund's transactions may include sales of Futures as an offset
against the effect of expected increases in interest rates, and decreases in
currency exchange rates and stock prices, and purchases of Futures as an offset
against the effect of expected declines in interest rates, and increases in
currency exchange rates and stock prices.
The Fund will only enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. An
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts are usually closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance the difference between the price at which the Futures
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Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded and may be modified significantly from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
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increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds securities
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds securities denominated in U.S.
dollars, but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with
guidelines approved by the Company's Board of Directors.
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GT GLOBAL EMERGING MARKETS FUND
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
will not generally be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which the Manager believes will have a positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
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Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash 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 the Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
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ILLIQUID SECURITIES
The Fund may invest up to 15% of its net assets in illiquid securities.
Securities may be considered illiquid if the Fund cannot reasonably expect
within seven days to sell the securities for approximately the amount at which
the Fund values such securities. See "Investment Limitations." The sale of
illiquid securities, if they can be sold at all, generally will require more
time and result in higher brokerage charges or dealer discounts and other
selling expenses than the sale of liquid securities such as securities eligible
for trading on U.S. securities exchanges or in the over-the-counter markets.
Moreover, restricted securities, which may be illiquid for purposes of this
limitation, often sell, if at all, at a price lower than similar securities that
are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-
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GT GLOBAL EMERGING MARKETS FUND
eligible restricted securities held by the Fund, however, could affect adversely
the marketability of such portfolio securities and the Fund might be unable to
dispose of such securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1993
Act, are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to the Manager, in accordance with
procedures approved by the Company's Board of Directors. 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 who make quotes for the security: (iii) the number of dealers who have
undertaken to make a market in the security; (iv) the number of other potential
purchasers; and (v) the nature of the security and how trading is affected
(E.G., the time needed to sell the security, how offers are solicited and the
mechanics of transfer). The Manager monitors the liquidity of securities in the
Fund's portfolio and periodically reports on such decisions to the Board of
Directors.
FOREIGN SECURITIES
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in equity
securities of companies in emerging markets may entail greater risks than
investing in equity securities in developed countries. These risks include (i)
less social, political and economic stability; (ii) the small current size of
the markets for such securities and the currently low or nonexistent volume of
trading, which result in a lack of liquidity and in greater price volatility;
(iii) certain national policies which may restrict the Fund's investment
opportunities, including restrictions on investment in issuers or industries
deemed sensitive to national interests; (iv) foreign taxation; and (v) the
absence of developed structures governing private or foreign investment or
allowing for judicial redress for injury to private property. Investing in the
securities of companies in emerging markets, including the markets of Latin
America and certain Asian markets such as Taiwan, Malaysia and Indonesia, may
entail special risks relating to the potential political and economic
instability and the risks of expropriation, nationalization, confiscation or the
imposition of restrictions on foreign investment, convertibility of currencies
into U.S. dollars and on repatriation of capital invested. In the event of such
expropriation, nationalization or other confiscation by any country, the Fund
could lose its entire investment in any such country.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
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 economies and securities
markets of certain emerging market countries.
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 the 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 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 Fund intend to invest in Hong Kong, which will revert to
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GT GLOBAL EMERGING MARKETS FUND
Chinese Administration on July 1, 1997. Investments in Hong Kong may be subject
to expropriation, national, nationalization or confiscation, in which case the
Fund 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.
CONCENTRATION. To the extent the Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, the Fund may be subject to greater risks and may experience greater
volatility than a fund that is more broadly diversified geographically.
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars, and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, the Fund could lose its entire investment in
any such country.
In addition, even though opportunities for investment may exist in emerging
markets, any change in the leadership or policies of the governments of those
countries or in the leadership or policies of any other government which
exercises a significant influence over those countries, may halt the expansion
of or reverse the liberalization of foreign investment policies now occurring
and thereby eliminate any investment opportunities which may currently exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property similar to the property which
will be represented by the securities purchased by the Fund. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Fund will not also be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Fund could lose its entire investment in
such countries. The Fund's investments would similarly be adversely affected by
exchange control regulation in any of those countries.
RELIGIOUS AND ETHNIC INSTABILITY. Certain countries in which the Fund may
invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries. Instability may also
result from, among other things: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
the Fund invests and adversely affect the value of the Fund's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit
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GT GLOBAL EMERGING MARKETS FUND
the amount of investment by foreign persons in a particular company, or may
limit the investment by foreign persons to only a specific class of securities
of a company that may have less advantageous terms than securities of the
company available for purchase by nationals. Moreover, the national policies of
certain countries may restrict investment opportunities in issuers or industries
deemed sensitive to national interests. In addition, some countries require
governmental approval for the repatriation of investment income, capital or the
proceeds of securities sales by foreign investors. In addition, if there is a
deterioration in a country's balance of payments or for other reasons, a country
may impose restrictions on foreign capital remittances abroad. The Fund could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, 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 the Fund, under normal circumstances, will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and pace of business activity in the other countries, and the
U.S., and other economic and financial conditions affecting the world economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers are generally
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions are usually subject to fixed
commissions, which are generally higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of the Fund are
uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could
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GT GLOBAL EMERGING MARKETS FUND
result in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser. The Manager will
consider such difficulties when determining the allocation of the Fund's assets,
although the Manager does not believe that such difficulties will have a
material adverse effect on the Fund's portfolio trading activities.
The Fund may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian; (ii) maintaining appropriate safeguards
to protect the Fund's investments and (iii) possible difficulties in obtaining
and enforcing judgments against such custodians.
WITHHOLDING TAXES. The Fund's net investment income from foreign issuers may
be subject to withholding taxes by the foreign issuer's country, thereby
reducing the Fund's net investment income or delaying the receipt of income
where those taxes may be recaptured. See "Taxes."
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INVESTMENT LIMITATIONS
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The Fund has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the holders of the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, and
(ii) more than 50% of the outstanding shares.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Purchase or sell real estate, provided that the Fund may invest in
securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell commodities or commodity contracts, except that the
Fund may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in transactions in
foreign currencies;
(4) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund may be
deemed an underwriter under federal or state securities laws;
(5) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(6) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with the use of options, futures contracts, options thereon or
forward currency contracts. The Fund may make deposits of margin in
connection with futures and forward contracts and options thereon;
(7) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(8) Mortgage, pledge, or in any other manner transfer as security for
any indebtedness any of its assets, except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of the Fund's assets;
(9) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs, however, the Fund may invest in
securities of companies that engage in these activities; or
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GT GLOBAL EMERGING MARKETS FUND
(10) With respect to 75% of its total assets, invest more than 5% of its
assets in the securities of any one issuer or purchase more than 10% of the
outstanding voting securities of any one issuer.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies and
may be changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Purchase or retain the securities of any issuer, if, to the Fund's
knowledge, one or more of the officers or Directors of the Company, the
Fund's investment adviser, or its distributor, each own beneficially more
than 1/2 of 1% of the securities of such issuer and together own
beneficially more than 5% of the securities of such issuer;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into;
(5) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Fund's total
assets, except that the Fund may purchase securities when outstanding
borrowings represent less than 5% of the Fund's assets;
(6) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation; or
(7) Invest more than 10% of its total assets in securities that are
restricted as to resale without registration under the 1933 Act.
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
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EXECUTION OF PORTFOLIO
TRANSACTIONS
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Subject to policies established by the Company's Board of Directors, the Manager
is responsible for the execution of the Fund's portfolio transactions and the
selection of brokers and dealers who execute such transactions on behalf of the
Fund. In executing portfolio transactions, the Manager seeks the best net
results for the Fund, taking into account such factors as the price (including
the applicable brokerage commission or dealer spread), size of the order,
difficulty of execution and operational facilities of the firm involved.
Although 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 the Fund may engage in soft dollar
arrangements for research services, as described below, the Fund has no
obligation to deal with any broker/dealer or group of broker/dealers in the
execution of portfolio transactions.
Consistent with the interests of the Fund, the Manager may select brokers to
execute the Fund's portfolio transactions on the basis of the research and
brokerage services they provide to the Manager for its use in managing the Fund
and its other advisory accounts. Such services may include furnishing analyses,
reports and information concerning issuers, industries, securities, geographic
regions, economic factors and trends, portfolio strategy, and performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Research and brokerage
services received from such brokers are in addition to, and not in lieu of, the
services required to be performed by the Manager under the Management Contract
(defined below). A commission paid to such brokers may be higher than that which
another qualified broker would have charged for effecting the same transaction,
provided that 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 the Fund and its other clients and that the
total commissions paid by the Fund will be reasonable in relation to the
benefits received by the Fund over the long term. Research services may also be
received from dealers who execute Fund transactions in 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 the Fund toward payment of the Fund's expenses, such as
transfer agent and custodian fees.
Investment decisions for the Fund and for other investment accounts managed by
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 the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases the Manager
believes that coordination and the ability to participate in volume transactions
will be beneficial to the Fund.
Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, the Manager may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which the
Manager serves as investment manager in selecting brokers and dealers for the
execution of portfolio transactions. This policy does not imply a commitment to
execute portfolio transactions through all broker/dealers that sell shares of
the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in
over-the-counter markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. The fixed commissions paid in
connection with most such foreign stock transactions generally are higher than
negotiated commissions on United States transactions. There generally is less
government supervision and regulation of foreign stock exchanges and
broker/dealers than in the United States. Foreign security settlements may in
some instances be subject to delays and related administrative uncertainties.
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the 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
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
negotiated commission rates. The foreign and domestic debt securities and money
market instruments in which the Fund may invest are generally traded in OTC
markets.
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are affiliates of Liechtenstein Global Trust. The Company's Board of Directors
has adopted procedures in conformity with Rule 17e-1 under the 1940 Act to
ensure that all brokerage commissions paid to affiliates are reasonable and fair
in the context of the market in which they are operating. Any such transactions
will be effected and related compensation paid only in accordance with
applicable SEC regulations. For the fiscal years ended October 31, 1994, 1995
and 1996, the Fund paid aggregate brokerage commissions of $1,747,307,
$3,307,402 and $3,648,347, respectively.
PORTFOLIO TRADING AND TURNOVER
The Fund engages in portfolio trading when the Manager has concluded that the
sale of a security owned by the Fund and/ or the purchase of another security of
better value can enhance principal and/or increase income. A security may be
sold to avoid any prospective decline in market value, or a security may be
purchased in anticipation of a market rise. Consistent with the Fund's
investment objective, a security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two securities.
Although the Fund generally does not intend to trade for short-term profits, the
securities in the Fund's portfolio will be sold whenever the Manager believes it
is appropriate to do so, without regard to the length of time a particular
security may have been held. The portfolio turnover rate is calculated by
dividing the lesser of sales or purchases of portfolio securities by the Fund's
average month-end portfolio value, excluding short-term investments. 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 Fund will bear directly, and may result in realization of net capital gains
that are taxable when distributed to the Fund's shareholders. For the fiscal
years ended October 31, 1995 and 1996, the Fund's portfolio turnover rates were
114% and 104%, respectively.
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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) since 1995; President, GT Global since 1995;
50 California Street President and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice President
San Francisco, CA 94111 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 22
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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 of 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 Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors of the
Company. Each of the Directors and Officers of the Company is also a Director
and Officer of G.T. Investment Portfolios, Inc., G.T. Global Developing Markets
Fund, Inc., and GT Global Floating Rate Fund, Inc., 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, 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 administered 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 per annum, plus $300
per Fund for each meeting of the Board attended, and reimburses travel and other
expenses incurred in connection with attendance at such meetings. Other
Directors and Officers receive no compensation or expense reimbursement from the
Company. For the fiscal year ended October 31, 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 year ended October 31, 1996, Mr. Anderson, Mr. Bayley, Mr.
Patterson and Ms. Quigley received total compensation of $80,100, $80,100,
$72,600 and $81,100, 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 accrued 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 the Fund or of all the
Company's funds in the aggregate.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
The Manager serves as the Fund's investment manager and administrator 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 Fund and administers the
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 Fund,
and provides suitable office space, necessary small office equipment and
utilities. For these services, the Fund pays the Manager investment management
and administration fees, based on the Fund's average daily net assets, computed
daily and paid monthly at the annualized rate of .975% on the first $500
million, .95% on the next $500 million, .925% on the next $500 million and .90%
on amounts thereafter.
The Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract provides that with respect to the Fund either the Company or
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).
For the fiscal years ended October 31, 1994, 1995 and 1996, the Fund paid
investment management and administration fees to the Manager in the amounts of
$4,702,869, $5,410,744 and $4,883,626, respectively.
Certain emerging market countries require a local entity to provide
administrative services for all direct investments by foreigners. Where required
by local law, the Fund intends to retain a local entity to provide such
administrative services. The local administrator will be paid a fee by the Fund
for its services.
DISTRIBUTION SERVICES
The Fund's Class A and Class B shares are offered through the Fund's principal
underwriter and distributor, GT Global, on a "best efforts" basis pursuant to
separate Distribution Contracts between the Company and GT Global.
As described in the Prospectus, the Company has adopted a separate Distribution
Plan with respect to each Class of shares of the Fund in accordance with the
provisions of Rule 12b-1 under the 1940 Act ("Class A Plan" and "Class B Plan")
(collectively, "Plans"). The rate of payments by the Fund under the Plans, as
described in the Prospectus, may not be increased without the approval of the
majority of the outstanding voting securities of the affected class. All
expenses for which GT Global is reimbursed under the Class A Plan will have been
incurred within one year of such reimbursement. The Fund makes no payments under
the Plans to any party other than GT Global, which is the distributor (principal
underwriter) of the Fund's shares. The following table discloses payments made
by the Fund to GT Global under the two plans of distribution during the Fund's
fiscal year ended October 31, 1996:
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- -------------
<S> <C> <C>
Year ended October 31, 1996................................................................. $ 1,301,360 $ 2,387,891
</TABLE>
In approving the Plans, the Directors determined that the continuation of each
Plan was in the best interests of the shareholders of the Fund. Agreements
related to the Plans must also be approved by such vote of the Directors,
including a majority of the Directors who are not "interested persons" of the
Company (as defined in the 1940 Act) and who have no direct or indirect
financial interests in the operation of the Plans, or in any agreement related
thereto.
Each Plan requires that, at least quarterly, the Directors review the amounts
expended thereunder and the purposes for which such expenditures were made. Each
Plan requires that so long as it is in effect the selection and nomination of
Directors who are not "interested persons" of the Company will be committed to
the discretion of the Directors who are not "interested persons" of the Company,
as defined in the 1940 Act.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
As discussed in the Prospectus, GT Global collects sales charges on sales of
Class A shares of the Fund, retains certain amounts of such charges and reallows
other amounts of such charges to broker/dealers that sell shares. The following
table reviews the extent of such activity for the fiscal years ended October 31,
1994, 1995 and 1996:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNTS AMOUNTS
YEAR ENDED OCTOBER 31, COLLECTED RETAINED REALLOWED
- ----------------------------------------------------------------------------------- ------------- --------- ----------
<S> <C> <C> <C>
1996............................................................................... $ 426,749 $ 118,254 $ 308,495
1995............................................................................... 1,652,309 230,239 1,422,070
1994............................................................................... 4,228,962 460,124 3,768,838
</TABLE>
GT Global receives any contingent deferred sales charges payable with respect to
redemption of Class B shares and certain Class A shares. For the fiscal years
ended October 31, 1994, 1995 and 1996, GT Global collected contingent deferred
sales charges in the amount of $433,744, $1,115,487 and $1,269,740,
respectively.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agent has been retained by the Fund to perform shareholder
servicing, reporting and general transfer agent functions for the Fund. For
these services, the Transfer Agent receives an annual maintenance fee of $17.50
per account, a new account fee of $4.00 per account, a per transaction fee of
$1.75 for all transactions other than exchanges and a per exchange fee of $2.25.
The Transfer Agent also is reimbursed by the Fund for its out-of-pocket expenses
for such items as postage, forms, telephone charges, stationery and office
supplies. The Manager also serves as the Fund's pricing and accounting agent.
For the fiscal years ended October 31, 1996 and October 31, 1995, the Fund paid
transfer agency and accounting services fees to the Manager of $2,055,856 and
$1,994,216, respectively.
EXPENSES OF THE FUND
As described in the Prospectus, the Fund pays all of its own expenses not
assumed by other parties. These expenses include, in addition to the advisory,
distribution, transfer agency, pricing and accounting agency and brokerage fees
discussed above, legal and audit expenses, custodian fees, directors' fees,
organizational fees, fidelity bond and other insurance premiums, taxes,
extraordinary expenses and expenses of reports and prospectuses sent to existing
investors. The allocation of general Company expenses and expenses shared among
the Fund and other funds organized as series of the Company are allocated on a
basis deemed fair and equitable, which may be based on the relative net assets
of the Fund or the nature of the services performed and relative applicability
to the Fund. Expenditures, including costs incurred in connection with the
purchase or sale of portfolio securities, which are capitalized in accordance
with generally accepted accounting principles applicable to investment
companies, are accounted for as capital items and not as expenses. The ratio of
the Fund's expenses to its relative net assets can be expected to be higher than
the expense ratios of funds investing solely in domestic securities, since the
cost of maintaining the custody of foreign securities and the rate of investment
management fees paid by the Fund generally are higher than the comparable
expenses of such other funds.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the end of regular trading on the New York
Stock Exchange ("NYSE") (currently at 4:00 p.m. Eastern time, unless weather,
equipment failure or other factors contribute to an earlier closing time), on
each Business Day as open for business. Currently, the NYSE is closed on
weekends and on certain days relating to the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day, Thanksgiving
Day and Christmas Day.
The Fund's portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs, CDRs and EDRs, which are traded on
stock exchanges, are valued at the last sale price on the exchange, or in the
principal over-the-counter market on which such securities are traded, as of the
close of business on the day the securities are being valued or, lacking any
sales, at the last available bid price. In cases where securities are traded on
more than one exchange, the securities are valued on the exchange determined by
the Manager to be the primary market. Securities and assets for which market
quotations are not readily available (including restricted securities which are
subject to limitations as to their sale) are valued at fair value as determined
in good faith by or under
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
the direction of the Board of Directors. Trading in securities on European and
Far Eastern securities exchanges and over-the-counter markets is normally
completed well before the close of the business day in New York.
Long-term debt obligations are valued at the mean of representative quoted bid
and asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments are amortized to
maturity based on their cost, adjusted for foreign exchange translation,
provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or, in the case of OTC
options, at the average of the last bid prices obtained from dealers unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. The value of each security denominated in a currency other
than U.S. dollars will be translated into U.S. dollars at the prevailing
exchange rate as determined by the Manager on that day. When market quotations
for futures and options on futures held by the Fund are readily available, those
positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Company's Board of Directors. The valuation procedures applied
in any specific instance are likely to vary from case to case. However,
consideration generally is given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors also generally are considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Fund's net assets is so determined, that
value is then divided by the total number of shares outstanding (excluding
treasury shares), and the result, rounded to the nearer cent, is the net asset
value per share.
Any assets or liabilities initially denominated in terms of foreign currencies
are translated into U.S. dollars at the official exchange rate or at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors in good faith will
establish a conversion rate for such currency.
Securities trading in emerging markets may not take place on all days on which
the NYSE is open. Further, trading takes place in Japanese markets on certain
Saturdays and in various foreign markets on days on which the NYSE is not open.
Consequently, the calculation of the Fund's net asset values therefore may not
take place contemporaneously with the determination of the prices of securities
held by the Fund. Events affecting the values of portfolio securities that occur
between the time their prices are determined and the close of regular trading on
the NYSE will not be reflected in the Fund's net asset value unless the Manager,
under the supervision of the Company's Board of Directors, determines that the
particular event would materially affect net asset value. As a result, the
Fund's net asset value may be significantly affected by such trading on days
when a shareholder cannot provide or redeem the Fund.
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment of Class A or Class B shares purchased should accompany the purchase
order, or funds should be wired to the Transfer Agent as described in the
Prospectus. Payment, other than by wire transfer, must be made by check or money
order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, because a check is returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law. Such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.
AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in the Fund's Automatic Investment Plan ("AIP"),
investors or their brokers should specify whether investment will be in Class A
shares or Class B shares and send the following documents to the Transfer Agent:
(1) an AIP Application; (2) a Bank Authorization Form; and (3) a voided personal
check from the pertinent bank account. The necessary forms are provided at the
back of the Fund's prospectus. Providing that an investor's bank accepts the
Bank Authorization Form, investment amounts will be drawn on the designated
dates (monthly on the 25th day or beginning quarterly on the 25th day of the
month the investor first selects) in order to purchase full and fractional
shares of a Fund at the public offering price determined on that day. In the
event that the 25th day falls on a Saturday, Sunday or holiday, shares will be
purchased on the next business day. If an investor's check is returned because
of insufficient funds, a stop payment order or the account is closed, the AIP
may be discontinued, and any share purchase made upon deposit of such check may
be cancelled. Furthermore, the shareholder will be liable for any loss incurred
by the Fund by reason of such cancellation. Investors should allow one month for
the establishment of an AIP. An AIP may be terminated by the Transfer Agent or
the Fund upon 30 days' written notice or by the participant, at any time,
without penalty, upon written notice to the Fund or the Transfer Agent.
LETTER OF INTENT -- CLASS A SHARES
The Letter of Intent ("LOI") is not a binding obligation to purchase the
indicated amount. During such time as Class A shares are held in escrow under an
LOI to assure payment of applicable sales charges if the indicated amount is not
met, all dividends and capital gain distributions on escrowed shares will be
reinvested in additional Class A shares or paid in cash, as specified by the
shareholder. If the intended investment is not completed within the specified
13-month period, the purchaser must remit to GT Global the difference between
the sales charge actually paid and the sales charge which would have been
applicable if the total Class A purchases had been made at a single time. If
this amount is not paid to GT Global within 20 days after written request, the
appropriate number of escrowed shares will be redeemed and the proceeds paid to
GT Global.
A registered investment adviser, trust company or trust department seeking to
execute an LOI as a single purchaser with respect to accounts over which it
exercises investment discretion is required to provide the Transfer Agent with
information establishing that it has discretionary authority with respect to the
money invested (E.G., by providing a copy of the
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
pertinent investment advisory agreement). Class A shares purchased in this
manner must be restrictively registered with the Transfer Agent so that only the
investment adviser, trust company or trust department, and not the beneficial
owner, will be able to place purchase, redemption and exchange orders.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Class A or Class B shares of the Fund also may be purchased as the underlying
investment for an IRA meeting the requirements of section 408(a) of the Code.
IRA applications are available from brokers or GT Global.
EXCHANGES BETWEEN FUNDS
Shares of the Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Class A shares may be
exchanged only for Class A shares of other GT Global Mutual Funds. Class B
shares may be exchanged only for Class B shares of other GT Global Mutual Funds.
The exchange privilege is not an option or right to purchase shares but is
permitted under the current policies of the respective GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the funds
upon 60 days prior notice to the shareholders of such fund and is available only
in states where the exchange may be legally made. Before purchasing shares
through the exercise of the exchange privilege, a shareholder should obtain and
read a copy of the prospectus of the fund to be purchased and should consider
the investment objective(s) of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by the Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days' written notice.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders owning Class A or Class B shares of the Fund with a value of
$10,000 or more may establish a Systematic Withdrawal Plan ("SWP"). Under a SWP,
a shareholder will receive monthly or quarterly payments, in amounts of not less
than $100 per payment, through the automatic redemption of the necessary number
of shares on the designated dates (monthly on the 25th day or beginning
quarterly on the 25th day of the month the investor first selects). In the event
that the 25th day falls on a Saturday, Sunday or holiday, the redemption will
take place on the prior business day. Certificates, if any, for the shares being
redeemed must be held by the Transfer Agent. Checks will be made payable to the
designated recipient and mailed within seven days. If the recipient is other
than the registered shareholder, the signature of each shareholder must be
guaranteed on the SWP application (see "How to Redeem Shares" in the
Prospectus). A corporation (or partnership) must also submit a "Corporation
Resolution" or "Certification of Partnership" indicating the names, titles, and
signatures of the individuals authorized to act on its behalf, and the SWP
application must be signed by a duly authorized officer(s) and the corporate
seal affixed.
With respect to a SWP, the maximum annual SWP withdrawal is 12% of the initial
account value. Withdrawals in excess of 12% of the initial account value
annually may result in assessment of a contingent deferred sales charge. See
"How to Invest" in the Prospectus.
Shareholders should be aware that such systematic withdrawals may deplete or use
up entirely the initial investment and result in realized long-term or
short-term capital gains or losses. The SWP may be terminated at any time by the
Transfer Agent or the Fund upon 30 days' written notice or by a shareholder upon
written notice to the Fund or its Transfer Agent. Applications and further
details regarding establishment of a SWP are provided at the back of the Fund's
Prospectus.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
exists, as defined by the SEC, which make it not reasonably practicable for the
Fund to dispose of its portfolio securities or fairly to determine the value of
its assets, or (3) as the SEC may otherwise permit.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the Fund's
net assets at the beginning of such period. This election is irrevocable so long
as Rule 18f-1 remains in effect, unless the SEC by order upon application
permits the withdrawal of such election.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
GENERAL
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Code, the Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income, net short-term capital gain and net gains
from certain foreign currency transactions) ("Distribution Requirement") and
must meet several additional requirements. These requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, Futures or Forward
Contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); (2) the Fund must derive less than 30%
of its gross income each taxable year from the sale or other disposition of
securities, or any of the following, that were held for less than three months
- -- options or Futures (other than those on foreign currencies), or foreign
currencies (or options, Futures or Forward Contracts thereon) that are not
directly related to the Fund's principal business of investing in securities (or
options and Futures with respect to securities) ("Short-Short Limitation"); (3)
at the close of each quarter of the Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
government securities, securities of other RICs and other securities, with these
other securities limited, in respect of any one issuer, to an amount that does
not exceed 5% of the value of the Fund's total assets and that does not
represent more than 10% of the issuer's outstanding voting securities; and (4)
at the close of each quarter of the Fund's taxable year, not more than 25% of
the value of its total assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer.
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
("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
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
taxes paid by it. Pursuant to the election, the 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 those taxes, (2)
treat his share of those taxes and of any dividend paid by the Fund that
represents income from foreign and U.S. possessions sources as his own income
from those sources, and (3) either deduct the taxes deemed paid by him in
computing his taxable income or, alternatively, use the foregoing information in
calculating the foreign tax credit against his federal income tax. The Fund will
report to its shareholders shortly after each taxable year their respective
shares of the Fund's income from sources within, and taxes paid to, foreign
countries and U.S. possessions if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund will be subject to
federal income tax on a portion of any "excess distribution" received on, or of
any gain from the disposition of, stock of a PFIC (collectively "PFIC income"),
plus interest thereon, even if the Fund distributed the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income will be included in
the Fund's investment company taxable income and, accordingly, will not be
taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and to avoid imposition of the Excise Tax -- even if those earnings
and gain were not received by the Fund from the QEF. In most instances it will
be very difficult, if not impossible, to make this election because of certain
requirements thereof.
Pursuant to proposed regulations, an open-end RICs such as the Fund, would be
entitled to elect to "mark-to-market" its stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. Distributions of net capital gain are not
subject to withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, those distributions ordinarily will be subject to
U.S. income tax at a rate of 30% (or lower treaty rate) if the individual is
physically present in the United States for more than 182 days during the
taxable year and the distributions are attributable to a fixed place of business
maintained by the individual in the United States.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gain from
options, Futures and Forward Contracts derived by the Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement. However, income from the
disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
on foreign currencies, that are not directly related to the Fund's principal
business of investing in securities (or options and Futures with respect
thereto) also will be subject to the Short-Short Limitation if they are held for
less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all those transactions. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts and/or foreign currency positions beyond the time
when it otherwise would be advantageous to do so, in order for the Fund to
continue to qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign currency-denominated debt securities and options, Futures and Forward
Contracts on foreign currencies ("Section 988" gains 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. The
Fund attempts to monitor section 988 transactions to minimize any adverse tax
impact.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL EMERGING MARKETS 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), in Tokyo; LGT Asset
Management Pte. Ltd., formerly G.T. Management (Singapore) PTE Ltd., in
Singapore; LGT Asset Management Ltd., formerly G.T. Management (Australia) Ltd.,
in Sydney; and LGT Asset Management GmbH, formerly BIL Asset Management GmbH, in
Frankfurt.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. will conduct an
annual audit of the Fund, assist in the preparation of the Fund's federal and
state income tax returns and consult with the Company and the Fund as to matters
of accounting, regulatory filings, and federal and state income taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of 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"
names and has reserved the right to withdraw its consent to the use of such
names by the Company and/or the Fund at any time, or to grant the use of such
names to any other company.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
STANDARDIZED RETURNS
The Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), are calculated
separately for Class A and Class B shares of the 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) reinvestment of dividends and other distributions at net asset value
on the reinvestment date determined by the Company's Board of Directors; and (4)
a complete redemption at the end of any period illustrated.
The Standardized Returns for the Class A and Class B shares of the Fund, stated
as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
EMERGING MARKETS EMERGING MARKETS
PERIOD FUND (CLASS A) FUND (CLASS B)
- ----------------------------------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
Fiscal year ended October 31, 1996................................................. -1.93% -2.51%
April 1, 1993 (commencement of operations) through October 31, 1996................ n/a 6.88%
May 18, 1992 (commencement of operations) through October 31, 1996................. 5.56% n/a
</TABLE>
NON-STANDARDIZED RETURNS
In addition to Standardized Returns, the Fund may also 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 and Class B shares of the 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 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.
Average annual Non-Standardized 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) no deduction
of sales charges; (2) reinvestment of dividends and other distributions at net
asset value on the reinvestment date determined by the Board; and (3) a complete
redemption at the end of any period illustrated.
The average annual Non-Standardized Returns for the Class A and Class B shares
of the Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
EMERGING MARKETS EMERGING MARKETS
PERIOD FUND (CLASS A) FUND (CLASS B)
- ----------------------------------------------------------------------------------- ------------------- -------------------
<S> <C> <C>
Fiscal year ended October 31, 1996................................................. 2.96% 2.49%
April 1, 1993 (commencement of operations) through October 31, 1996................ n/a 7.58%
May 18, 1992 (commencement of operations) through October 31, 1996................. 6.72% n/a
</TABLE>
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 and, as set
forth below, may or may not take sales charges into account.
The aggregate Non-Standardized Returns (not taking sales charges into account)
for the Class A and Class B shares of the Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
EMERGING MARKETS EMERGING MARKETS
PERIOD FUND (CLASS A) FUND (CLASS B)
- ----------------------------------------------------------------------------------- ------------------- -------------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through October 31, 1996................ n/a 26.92%
May 18, 1992 (commencement of operations) through October 31, 1996................. 33.63% n/a
</TABLE>
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
The aggregate Non-Standardized Returns (taking sales charges into account) for
the Class A and B shares of the Fund, stated as aggregate total returns for the
periods shown, were:
<TABLE>
<CAPTION>
EMERGING MARKETS EMERGING MARKETS
PERIOD FUND (CLASS A) FUND (CLASS B)
- ----------------------------------------------------------------------------------- ------------------- -------------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through October 31, 1996................ n/a 26.92
May 18, 1992 (commencement of operations) through October 31, 1996................. 27.28% n/a
</TABLE>
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO EMERGING EQUITY AND BOND MARKETS
Information relating to foreign market performance, diversification and market
capitalization is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or the Manager. The authors and publishers of such material are not to be
considered as "experts" under the Securities Act of 1933 on account of the
inclusion of such information herein. Stocks chosen by Morgan Stanley Capital
International or the IFC for inclusion in its various international market
indicies may not necessarily constitute a representative cross-section of the
particular markets.
GT Global believes that information relating to foreign market performance and
market capitalization may be useful to investors considering whether and to what
extent to diversify their investments through the purchase of mutual funds
investing in securities on a global basis. However, this data is not a
representation of the past performance of the Fund, nor is it a prediction of
such performance. The performance of the Fund will differ from the historical
performance of such indices. The performance of indices does not take expenses
into account, while the Fund incurs expenses in its operations which will reduce
performance. Moreover, the Fund is actively managed, i.e. the Manager as the
Fund's investment manager actively purchases and sells securities in seeking the
Fund's investment objective; this will cause the performance of the Fund to
differ from indices.
The Fund and GT Global may from time to time compare the Fund with, but not
limited to, the following:
(1) The Salomon Brothers Non-U.S. Dollars Indices, which are measures of
the total return performance of high quality non-U.S. dollar denominated
securities in major sectors of the worldwide bond markets.
(2) The Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's Investors Services,
Inc. ("Moody's") or BBB by Standard & 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) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (E.G.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Company Service ("CDA/Wiesenberger"), Morningstar Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard the Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger, Morningstar and/or other
firms as applicable, or to specific funds or groups of funds within or
without such peer group. Morningstar is a mutual fund rating service that
also rates mutual funds on the basis of risk-adjusted performance.
Morningstar ratings are calculated from a fund's three, five and ten year
average annual returns with appropriate fee adjustments and a risk factor
that reflects fund performance relative to the three-month U.S. Treasury
bill monthly returns. Ten percent of the funds in an investment category
receive five stars and 22.5% receive four stars. The ratings are subject to
change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and Gross National Product ("GNP")-weighted
index, beginning in 1975. The returns are broken down by local market and
currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
(8) Standard & Poor's "500" Index which is a widely recognized index
composed of the capitalization-weighted average of the price of 500 of the
largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-back
fixed income securities.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies in Europe, Australia and the Far East.
(13) International Finance Corporation ("IFC") Emerging Markets Data Base
which provides detailed statistics on stock markets in developing countries.
(14) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(15) The World Bank Publication of Trends in Developing Countries
("TIDE") provides brief reports on most of the World Bank's borrowing
members. The World Development Report is published annually and looks at
global and regional economic trends and their implications for the
developing economies.
(16) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(17) Datastream and Worldscope an on-line database retrieval service for
information including but not limited to international financial and
economic data.
(18) International Financial Statistics, which is produced by the
International Monetary Fund.
(19) Various publications and annual reports such as the World
Development Report, produced by the World Bank and its affiliates.
(20) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(21) Various publications including but not limited to ratings agencies
such as Moody's, S&P and Fitch.
(22) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(23) Various publications from the Organization for Economic Cooperation
and Development ("OECD").
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan
Stanley, Smith Barney, S.G. Warburg, Jardine Flemming, The Bank for
International Settlements, Asian Development Bank, Bloomberg, L.P. and Ibbottson
Associates may be used as well as information reported by the Federal Reserve
and the respective Central Banks of various nations. In addition, GT Global may
use performance rankings, ratings and commentary reported periodically in
national financial publications, included but not limited to, Money Magazine,
Mutual Fund Magazine, Smart Money, Global Finance, EuroMoney, Financial World,
Forbes, Fortune, Business Week, Latin Finance, the Wall Street Journal, Emerging
Markets Weekly, Kiplinger's Guide To Personal Finance, Barron's, The Financial
Times, USA Today, The New York Times, Far Eastern Economic Review, The Economist
and Investors Business Digest. Each Fund may compare its performance to that of
other compilations or indices of comparable quality to those listed above and
other indices which may be developed and made available.
GT Global believes the Fund is an appropriate investment for long-term
investment goals including but not limited to funding retirement, paying for
education or purchasing a house. The Fund does not represent a complete
investment program and investors should consider the Fund as appropriate for a
portion of their overall investment portfolio with regard to their long-term
investment goals.
GT Global believes that a growing number of consumer products, including but not
limited to home appliances, automobiles and clothing, purchased by Americans are
manufactured abroad. GT Global believes that investing globally in the companies
that produce products for U.S. consumers can help U.S. investors seek protection
of the value of their assets against the potentially increasing costs of foreign
manufactured goods. Of course, there can be no assurance that there will be any
correlation between global investing and the costs of such foreign goods unless
there is a corresponding change in value of the U.S. dollar to foreign
currencies. From time to time, GT Global may refer to or advertise the names
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
of such companies although there can be no assurance that any GT Global Mutual
Fund may own the securities of these companies.
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Savings, Inc. in advertising materials.
The Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above which may be developed and made
available in the future. The Fund may be compared in advertising to Certificates
of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan statistical areas, or other investments
issued by banks. The Fund differs from bank investments in several respects. The
Fund may offer greater liquidity or higher potential returns than CDs; but
unlike CDs, the Fund will have a fluctuating share price and return and is not
FDIC insured.
The Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
GT Global Mutual Funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the Fund. Ibbotson
calculates total returns in the same method as the Fund. The Fund may also
compare performance to that of other compilations or indices that may be
developed and made available in the future.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the Fund may quote Morningstar,Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, the Fund may quote financial or
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of GT Global Mutual Funds to one another in appropriate categories
over specific periods of time may also be quoted in advertising.
The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviation and R(2) in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns compared
to those of a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
are purchased at the same intervals. In evaluating such a plan, investors should
consider their ability to continue purchasing shares through periods of low
price levels.
Each Fund may be available for purchase through retirement plans of other
programs offering deferral of or exemption from income taxes, which may produce
superior after tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Mutual Funds through various retirement plans that
offer deferral of income taxes on investment earnings and may also enable you to
make pre-tax contributions. Because of their advantages, these retirement plans
may produce returns superior to comparable non-retirement investments. The Fund
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.
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" and "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh-type plans or 401(k) plans, but with fewer administrative requirements and
therefore lower annual administration expenses.
CODE SECTION 403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other not-for-profit corporations can make pre-tax salary reduction
contributions to these accounts.
PROFIT SHARING (INCLUDING 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 methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk, 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.
From time to time, the Fund and GT Global will quote information including but
not limited to data regarding: individual countries, regions, companies, world
stock exchanges, and economic and demographic statistics from sources GT Global
deems reliable, including 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, G.T. Guide to World Equity Markets,
Salomon Brothers, Inc., and S.G. Warburg.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, 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: Organization for Economic Cooperation
and Development 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, G.T. Guide to World
Equity Markets, Salomon Brothers Inc., and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
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.
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 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.
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1" "Prime-2" and "Prime-3" to indicate
commercial paper having the highest capacity for timely repayment. Issuers rated
Prime-1 have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protections; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2 have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Issuers rated Prime-3 have an acceptable ability for repayment of senior
short-term promissory obligations. The effect of industry characteristics and
market composition may be more pronounced. Variability in earnings and
profitability may result in changes in the level of debt protection measurements
and may require relatively high financial leverage. Adequate alternate liquidity
is maintained.
S & P ratings of commercial paper are graded into four categories ranging from
"A" for the highest quality obligations to "D" for the lowest. A -- Issues
assigned its highest rating are regarded as having the greatest capacity for
timely payment. Issues in this category are delineated with numbers 1, 2, and 3
to indicate the relative degree of safety. A-1 -- This designation indicates
that the degree of safety regarding timely payment is either overwhelming or
very strong. Those issues determined to possess overwhelming safety
characteristics will be denoted with a plus (++) sign designation. A-2 --
Capacity for timely payments on issues with this designation is strong. However,
the relative degree of safety is not as high as for issues designated "A-1." A-3
- -- issues carrying this designation have a satisfactory capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment grade ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large, or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may
be other elements present which make the long-term risk appear somewhat
greater.
A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and, in fact,
have speculative characteristics as well.
Speculative grade ratings are as follows:
Ba -- These Bonds are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate, and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
B -- These bonds generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa -- These bonds are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Ca -- These bonds represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C -- These bonds are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reason unrelated to the quality of the
issue.
Should no rating be assigned, the reasons may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the Company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the long-term securities debt of various entities in categories
ranging from "AAA" to "D" according to quality. Investment grade ratings are as
follows:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change
in circumstances and economic conditions, than debt in higher rated
categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
Speculative grade ratings are as follows:
BB -- Have less near-term vulnerability to default than other
speculative issues. However, these bonds face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
This rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied "BBB-" rating.
B -- Have greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. This rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
CCC -- Have currently identifiable vulnerability to default and are
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, these bonds are not
likely to have the capacity to pay interest and repay principal. The "CCC"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "B" or "B-" rating.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
CC -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
C -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC-" debt rating. This rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.
CI -- This rating is reserved for income bonds on which no interest is
being paid.
D -- Are in payment default. This rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. This rating also will be
used up on filing of a bankruptcy petition if debt service payments are
jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Fund as of October 31, 1996 and for the
fiscal year then ended appear on the following pages.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of GT Global Emerging Markets Fund and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of GT
Global Emerging Markets Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1996, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the four years in the period
then ended and for the period from May 18, 1992 (commencement of operations) to
October 31, 1992. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 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 GT
Global Emerging Markets Fund as of October 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the four years in the period then ended and for the period from May 18, 1992
(commencement of operations) to October 31, 1992, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 13, 1996
F1
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (28.2%)
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} .................................................. PAN 282,600 $ 14,765,850 3.3
OTHER FINANCIAL
HSBC Holdings PLC ......................................... HK 600,000 12,222,409 2.8
BANKS-MONEY CENTER
State Bank of India Ltd.-/- ............................... IND 1,455,650 9,451,474 2.1
BANKS-REGIONAL
Uniao Bancos Brasileiras "A" Preferred-/- ................. BRZL 331,440,000 9,195,016 2.1
BANKS-MONEY CENTER
Peregrine Investment Holdings Ltd. ........................ HK 5,000,000 8,051,269 1.8
INVESTMENT MANAGEMENT
National Mutual Asia-/- ................................... HK 9,500,000 7,986,601 1.8
INSURANCE-BROKER
Tai Cheug Holdings Co., Ltd. .............................. HK 9,000,000 7,333,445 1.7
REAL ESTATE
Alpha Credit Bank-/- ...................................... GREC 101,660 6,496,666 1.5
BANKS-REGIONAL
Ergo Bank S.A. ............................................ GREC 100,230 5,884,852 1.3
BANKS-REGIONAL
Banco Bradesco S.A. Preferred-/- .......................... BRZL 655,789,125 5,592,050 1.3
BANKS-MONEY CENTER
Bank Gdanski S.A. - GDR{\/} ............................... POL 337,600 5,148,400 1.2
BANKS-REGIONAL
Kookmin Bank-/- ........................................... KOR 249,835 4,982,753 1.1
BANKS-MONEY CENTER
Industrial Finance Corporation of Thailand - Foreign-/- ... THAI 1,435,200 4,222,832 1.0
BANKS-MONEY CENTER
Cho Hung Bank ............................................. KOR 378,660 4,113,102 0.9
BANKS-REGIONAL
Commercial Bank of Korea-/- ............................... KOR 403,350 3,475,467 0.8
BANKS-MONEY CENTER
Korea Exchange Bank ....................................... KOR 341,345 3,443,587 0.8
BANKS-MONEY CENTER
Banco Totta & Acores "B" - Registered-/- .................. PORT 168,400 3,058,716 0.7
BANKS-MONEY CENTER
Banco Ganadero S.A. - ADR{\/} ............................. COL 150,000 2,962,500 0.7
BANKS-REGIONAL
Ayala Land, Inc. "B" ...................................... PHIL 2,680,000 2,859,756 0.6
REAL ESTATE
PSIL Bangkok Bank Co., Ltd. (Entitlement
Certificates){\/} ........................................ THAI 236,000 1,767,640 0.4
OTHER FINANCIAL
Shinhan Bank .............................................. KOR 49,510 986,925 0.2
BANKS-REGIONAL
Finance One Co., Ltd. - Foreign ........................... THAI 126,100 356,187 0.1
SECURITIES BROKER
Housing Development Finance Corp.-/- ...................... IND 272 17,954 --
OTHER FINANCIAL
HDFC Bank Ltd. - Subscription Shares-/- ................... IND 500 532 --
BANKS-MONEY CENTER
------------
124,375,983
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (16.4%)
Companhia Energetica de Minas Gerais (CEMIG): ............. BRZL -- $ -- 3.1
ELECTRICAL & GAS UTILITIES
Preferred-/- ............................................ -- 235,000,000 7,480,288 --
ADR-/- {\/} ............................................. -- 199,300 6,228,125 --
Petroleo Brasileiro S.A. (Petrobras) Preferred-/- ......... BRZL 73,100,000 9,463,935 2.1
OIL
China Light & Power Co., Ltd. ............................. HK 1,700,000 7,893,478 1.8
ELECTRICAL & GAS UTILITIES
Benton Oil & Gas Co.-/- ................................... US 313,100 7,670,950 1.7
OIL
Czeske Energeticke Zavody (CEZ AS)-/- ..................... CZCH 204,860 7,313,436 1.6
ELECTRICAL & GAS UTILITIES
C.A. La Electricidad de Caracas-/- ........................ VENZ 6,318,778 6,936,554 1.6
ELECTRICAL & GAS UTILITIES
Sasol Ltd. ................................................ SAFR 557,700 6,809,197 1.5
ENERGY SOURCES
Empresa Nacional de Electricidad S.A. - ADR{\/} ........... CHLE 220,800 4,057,200 0.9
ELECTRICAL & GAS UTILITIES
LUKoil Holding - ADR-/- {\/} .............................. RUS 91,000 3,503,500 0.8
GAS PRODUCTION & DISTRIBUTION
Gazprom - 144A ADR{.} {\/} ................................ RUS 123,400 2,313,750 0.5
GAS PRODUCTION & DISTRIBUTION
Centrais Electricas Brasileiras S.A. (Electrobras)-/- ..... BRZL 6,000,000 1,863,136 0.4
ELECTRICAL & GAS UTILITIES
Electricidad de Argentina S.A.(.) -/- {\/} ................ ARG 100,000 1,360,000 0.3
ELECTRICAL & GAS UTILITIES
Pakistan State Oil Co., Ltd. .............................. PAK 42,400 366,029 0.1
OIL
Madras Refineries Ltd.-/- ................................. IND 199,500 189,665 --
OIL
------------
73,449,243
------------
Materials/Basic Industry (13.8%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 758,400 14,657,357 3.3
PAPER/PACKAGING
General Mining Union Corp. (Gencor) ....................... SAFR 4,161,900 14,467,683 3.3
METALS - NON-FERROUS
Industrias Penoles S.A. "CP"-/- ........................... MEX 2,217,000 8,818,242 2.0
METALS - NON-FERROUS
Pohang Iron & Steel Co., Ltd. ............................. KOR 98,529 6,344,000 1.4
METALS - STEEL
Eregli Demir Ve Lelik Fabrik T.A.S. ....................... TRKY 54,158,851 6,332,887 1.4
METALS - STEEL
PT Tambang Timah - Foreign ................................ INDO 1,846,000 2,774,986 0.6
METALS - STEEL
Cemex, S.A. de C.V. "B" ................................... MEX 720,125 2,590,475 0.6
CEMENT
Perlis Plantations ........................................ MAL 830,000 2,382,225 0.5
CHEMICALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Ashanti Goldfields Co., Ltd. - GDR{\/} ...................... GHNA 127,800 $ 2,092,725 0.5
GOLD
Associated Cement Cos., Ltd.-/- ........................... IND 13,536 583,097 0.1
CEMENT
Gujarat Ambuja Cements - GDR-/- {\/} ...................... IND 60,000 465,000 0.1
CEMENT
Engro Chemicals Pakistan Ltd. ............................. PAK 650 2,222 --
CHEMICALS
------------
61,510,899
------------
Consumer Non-Durables (9.1%)
Delta Corp.-/- ............................................ ZBBW 3,500,000 10,916,824 2.5
BEVERAGE-ALCOHOLIC
Companhia Cervejaria Brahma Preferred ..................... BRZL 17,254,543 10,665,468 2.4
BEVERAGES - ALCOHOLIC
Panamerican Beverages, Inc. "A"{\/} ....................... MEX 125,100 5,457,488 1.2
BEVERAGES - NON-ALCOHOLIC
Gruma S.A. "B"-/- ......................................... MEX 1,057,000 4,876,434 1.1
FOOD
Sun Brewing Ltd. - 144A GDR{.} -/- {\/} {::} .............. RUS 500,000 4,750,000 1.1
BEVERAGES - ALCOHOLIC
Hellenic Bottling Co. S.A. ................................ GREC 58,115 1,871,604 0.4
BEVERAGES - NON-ALCOHOLIC
Companhia Tecidos Norte de Mina Preferred ................. BRZL 3,210,000 1,078,020 0.2
TEXTILES & APPAREL
Guinness Malaysia ......................................... MAL 241,000 620,150 0.1
BEVERAGES - ALCOHOLIC
Dhan Fibres Ltd.-/- ....................................... PAK 4,805,000 485,536 0.1
TEXTILES & APPAREL
Mahavir Spinning Mills Ltd.-/- ............................ IND 30 46 --
TEXTILES & APPAREL
Dewan Salman Fibre Ltd.-/- ................................ PAK 4 3 --
TEXTILES & APPAREL
------------
40,721,573
------------
Services (5.0%)
Berjaya Sports Toto Bhd. .................................. MAL 2,610,000 9,815,914 2.2
CONSUMER SERVICES
SPT Telecom-/- ............................................ CZCH 58,510 6,264,188 1.4
TELEPHONE NETWORKS
Amway Asia Pacific Ltd.{\/} ............................... HK 107,900 3,870,913 0.9
WHOLESALE & INTERNATIONAL TRADE
Pakistan Telecommunications Co., Ltd. - GDR-/- {\/} ....... PAK 22,150 1,661,250 0.4
TELEPHONE NETWORKS
Gran Cadena de Almacenes Colombianos S.A. ................. COL 327,960 297,460 0.1
RETAILERS-OTHER
Keppel Philippine Holdings, Inc. "B"-/- ................... PHIL 488,491 81,912 --
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
TRANSPORTATION - SHIPPING
Indian Hotels Co., Ltd.-/- ................................ IND 3,000 $ 55,141 --
LEISURE & TOURISM
------------
22,046,778
------------
Multi-Industry/Miscellaneous (4.8%)
Jardine Strategic Holdings Ltd.{\/} ....................... HK 2,215,500 7,222,530 1.6
CONGLOMERATE
Koor Industries Ltd. - ADR{\/} ............................ ISRL 374,900 6,513,888 1.5
CONGLOMERATE
Banco Comercial Portgues "A", Convertible Preferred, 8%
till 6/30/03{\/} ......................................... PORT 99,900 5,082,912 1.1
MISCELLANEOUS
KEC International Ltd.-/- ................................. IND 481,500 922,310 0.2
MISCELLANEOUS
Alarko Holding A.S. ....................................... TRKY 4,357,000 769,868 0.2
MULTI-INDUSTRY
BPL Ltd.-/- ............................................... IND 624,200 641,783 0.1
MISCELLANEOUS
Nicholas Piramel India Ltd.-/- ............................ IND 80,000 250,704 0.1
MISCELLANEOUS
Grasim Industries Ltd. .................................... IND 6,500 76,764 --
MULTI-INDUSTRY
------------
21,480,759
------------
Capital Goods (4.1%)
ECI Telecommunications Ltd.{\/} ........................... ISRL 475,000 9,500,000 2.1
TELECOM EQUIPMENT
Tata Engineering and Locomotive Co., Ltd.-/- .............. IND 532,460 6,164,537 1.4
MACHINERY & ENGINEERING
Netas Telekomunik ......................................... TRKY 8,823,920 2,132,379 0.5
TELECOM EQUIPMENT
Gujarat Telephone Cables-/- ............................... IND 1,417,900 489,275 0.1
TELECOM EQUIPMENT
------------
18,286,191
------------
Health Care (3.5%)
Teva Pharmaceutical Industries Ltd. - ADR{\/} ............. ISRL 256,400 10,736,750 2.4
PHARMACEUTICALS
Ranbaxy Laboratories Ltd.-/- .............................. IND 225,200 3,931,485 0.9
MEDICAL TECHNOLOGY & SUPPLIES
EGIS RT-/- ................................................ HGRY 10,573 652,516 0.2
PHARMACEUTICALS
Core Healthcare-/- ........................................ IND 50 73 --
PHARMACEUTICALS
------------
15,320,824
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (0.1%)
Himachal Telematics Ltd.-/- ............................... IND 750,000 $ 401,408 0.1
total>TOTAL EQUITY INVESTMENTS (cost $359,658,653) .......... 377,593,658 85.0
------------ -----
TELECOM TECHNOLOGY
<CAPTION>
PRINCIPAL % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (0.7%)
Malaysia (0.4%)
Aokam Perdana Bhd., Convertible Bond, 3.5% due
6/13/04 ................................................ USD 2,650,000 1,848,375 0.4
Thailand (0.3%)
Bangkok Land Ltd., 3.125% due 3/31/01 ................... CHF 3,250,000 1,158,691 0.3
------------
Total Corporate Bonds (cost $3,095,275) ..................... 3,007,066
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $3,095,275) ............ 3,007,066 0.7
------------ -----
TOTAL INVESTMENTS (cost $362,753,928) * .................... 380,600,724 85.7
Other Assets and Liabilities ................................ 63,505,545 14.3
------------ -----
NET ASSETS .................................................. $444,106,269 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{::} See Note 5 of Notes to Financial Statements.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
(.) Restricted securities. At October 31, 1996, the Fund owned the
following restricted security constituting 0.3% of net assets which
may not be publicly sold without registration under the Securities
Act of 1933 (Note 1). Additional information on the restricted
security is as follows:
<TABLE>
<CAPTION>
MARKET
VALUE
PER
DESCRIPTION ACQUISITION DATE SHARES COST SHARE
----------------------------------------------- ----------------- ------ ----------- ------
<S> <C> <C> <C> <C>
Electricidad de Argentina S.A.................. 12/23/93 100,000 $ 1,750,000 $13.60
</TABLE>
* For Federal income tax purposes, cost is $362,948,481 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 46,560,858
Unrealized depreciation: (28,908,615)
-------------
Net unrealized appreciation: $ 17,652,243
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL EMERGING MARKETS 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) .................. 0.3 0.3
Brazil (BRZL/BRL) .................... 11.6 11.6
Chile (CHLE/CLP) ..................... 0.9 0.9
Colombia (COL/COP) ................... 0.8 0.8
Czech Republic (CZCH/CSK) ............ 3.0 3.0
Ghana (GHNA/GHC) ..................... 0.5 0.5
Greece (GREC/GRD) .................... 3.2 3.2
Hong Kong (HK/HKD) ................... 12.4 12.4
Hungary (HGRY/HUF) ................... 0.2 0.2
India (IND/INR) ...................... 5.2 5.2
Indonesia (INDO/IDR) ................. 0.6 0.6
Israel (ISRL/ILS) .................... 6.0 6.0
Korea (KOR/KRW) ...................... 5.2 5.2
Malaysia (MAL/MYR) ................... 2.8 0.4 3.2
Mexico (MEX/MXN) ..................... 8.2 8.2
Pakistan (PAK/PKR) ................... 0.6 0.6
Panama (PAN/PND) ..................... 3.3 3.3
Philippines (PHIL/PHP) ............... 0.6 0.6
Poland (POL/PLZ) ..................... 1.2 1.2
Portugal (PORT/PTE) .................. 1.8 1.8
Russia (RUS/SUR) ..................... 2.4 2.4
South Africa (SAFR/ZAR) .............. 4.8 4.8
Thailand (THAI/THB) .................. 1.5 0.3 1.8
Turkey (TRKY/TRL) .................... 2.1 2.1
United States & Other (US/USD) ....... 1.7 14.3 16.0
Venezuela (VENZ/VEB) ................. 1.6 1.6
Zimbabwe (ZBBW/ZWD) .................. 2.5 2.5
------ --- ----- -----
Total ............................... 85.0 0.7 14.3 100.0
------ --- ----- -----
------ --- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $444,106,269.
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $362,753,928) (Note 1).......................... $380,600,724
U.S. currency................................................................. $1,483,057
Foreign currencies (cost $21,506,397)......................................... 21,125,366 22,608,423
----------
Receivable for Fund shares sold........................................................... 30,516,050
Receivable for securities sold............................................................ 24,089,405
Dividends receivable...................................................................... 520,951
Interest receivable....................................................................... 46,642
Unamortized organizational costs (Note 1)................................................. 16,342
Miscellaneous receivable.................................................................. 239
Cash held as collateral for securities loaned (Note 1).................................... 18,390,625
-----------
Total assets............................................................................ 476,789,401
-----------
Liabilities:
Payable for securities purchased.......................................................... 10,019,556
Payable for Fund shares repurchased....................................................... 3,230,169
Payable for investment management and administration fees (Note 2)........................ 374,250
Payable for service and distribution expenses (Note 2).................................... 286,400
Payable for transfer agent fees (Note 2).................................................. 158,743
Payable for printing and postage expenses................................................. 122,207
Payable for professional fees............................................................. 41,737
Payable for custodian fees (Note 1)....................................................... 33,448
Payable for fund accounting fees (Note 2)................................................. 8,886
Payable for registration and filing fees.................................................. 4,773
Payable for Directors' fees and expenses (Note 2)......................................... 2,200
Other accrued expenses.................................................................... 10,138
Collateral for securities loaned (Note 1)................................................. 18,390,625
-----------
Total liabilities....................................................................... 32,683,132
-----------
Net assets.................................................................................. $444,106,269
-----------
-----------
Class A:
Net asset value and redemption price per share ($224,963,980 DIVIDED BY 15,772,254 shares
outstanding)............................................................................... $ 14.26
-----------
-----------
Maximum offering price per share (100/95.25 of $14.26) *.................................... $ 14.97
-----------
-----------
Class B:+
Net asset value and offering price per share ($216,003,768 DIVIDED BY 15,410,508 shares
outstanding)............................................................................... $ 14.02
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($3,138,521
DIVIDED BY 218,221 shares outstanding)..................................................... $ 14.38
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $466,990,479
Undistributed net investment income....................................................... 41,480
Accumulated net realized loss on investments and foreign currency transactions............ (40,434,003)
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies............................................................................... (338,483)
Net unrealized appreciation of investments................................................ 17,846,796
-----------
Total -- representing net assets applicable to capital shares outstanding................... $444,106,269
-----------
-----------
<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.
F8
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $410,700)............................... $10,681,651
Interest income............................................................................ 2,931,654
----------
Total investment income.................................................................. 13,613,305
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 4,883,626
Transfer agent fees (Note 2)............................................................... 1,930,507
Service and distribution expenses: (Note 2)
Class A...................................................................... $1,301,360
Class B...................................................................... 2,387,891 3,689,251
----------
Custodian fees (Note 1).................................................................... 504,841
Printing and postage expenses.............................................................. 232,032
Fund accounting fees (Note 2).............................................................. 125,349
Audit fees................................................................................. 80,560
Registration and filing fees............................................................... 65,825
Amortization of organization costs (Note 1)................................................ 30,067
Legal fees................................................................................. 19,222
Directors' fees and expenses (Note 2)...................................................... 11,712
Other expenses............................................................................. 45,337
----------
Total expenses before reductions......................................................... 11,618,329
----------
Expense reductions (Notes 1 & 6)....................................................... (633,461)
----------
Total net expenses....................................................................... 10,984,868
----------
Net investment income........................................................................ 2,628,437
----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized loss on investments............................................... (3,746,398)
Net realized loss on foreign currency transactions............................. (1,782,560)
----------
Net realized loss during the year........................................................ (5,528,958)
Net change in unrealized depreciation on translation of assets and liabilities
in foreign currencies......................................................... 31,246
Net change in unrealized appreciation of investments........................... 22,530,391
----------
Net unrealized appreciation during the year.............................................. 22,561,637
----------
Net realized and unrealized gain on investments and foreign currencies....................... 17,032,679
----------
Net increase in net assets resulting from operations......................................... $19,661,116
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
------------- ------------
Decrease in net assets
Operations:
Net investment income..................................................... $ 2,628,437 $ 3,715,528
Net realized loss on investments and foreign currency transactions........ (5,528,958) (39,959,384)
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................. 31,246 (337,162)
Net change in unrealized appreciation (depreciation) of investments....... 22,530,391 (117,020,037)
------------- ------------
Net increase (decrease) in net assets resulting from operations......... 19,661,116 (153,601,055)
------------- ------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (15,193,744)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (12,477,553)
------------- ------------
Total distributions..................................................... -- (27,671,297)
------------- ------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......................... 1,443,673,824 550,507,913
Decrease from capital shares repurchased.................................. (1,499,221,358) (597,853,943)
------------- ------------
Net decrease from capital share transactions............................ (55,547,534) (47,346,030)
------------- ------------
Total decrease in net assets................................................ (35,886,418) (228,618,382)
Net assets:
Beginning of year......................................................... 479,992,687 708,611,069
------------- ------------
End of year............................................................... $ 444,106,269* $479,992,687**
------------- ------------
------------- ------------
<FN>
- --------------
* Includes undistributed net investment income of $41,480.
** Includes undistributed net investment income of $40,513.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------------
MAY 18, 1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
---------------------------------------------- TO OCTOBER 31,
1996 (D) 1995 (D) 1994 1993 1992
---------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.85 $ 18.81 $ 14.42 $ 11.10 $ 11.43
---------- ---------- ---------- ---------- ---------------
Income from investment operations:
Net investment income (loss).......... 0.11 0.13 (0.02) 0.02* * 0.07* *
Net realized and unrealized gain
(loss) on investments................ 0.30 (4.32) 4.68 3.38 (0.40)
---------- ---------- ---------- ---------- ---------------
Net increase (decrease) from
investment operations.............. 0.41 (4.19) 4.66 3.40 (0.33)
---------- ---------- ---------- ---------- ---------------
Distributions to shareholders:
From net investment income............ -- -- (0.01) (0.08) --
From net realized gain on
investments.......................... -- (0.77) (0.26) -- --
---------- ---------- ---------- ---------- ---------------
Total distributions................. -- (0.77) (0.27) (0.08) --
---------- ---------- ---------- ---------- ---------------
Net asset value, end of period.......... $ 14.26 $ 13.85 $ 18.81 $ 14.42 $ 11.10
---------- ---------- ---------- ---------- ---------------
---------- ---------- ---------- ---------- ---------------
Total investment return (c)............. 2.96% (23.04)% 32.58% 30.9% (2.9)% (a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 224,964 $ 252,457 $ 417,322 $ 187,808 $ 84,558
Ratio of net investment income (loss) to
average net assets..................... 0.76% 0.89% (0.11)% 0.1%** 1.7% **(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 1.96% 2.12% 2.06% 2.4%** 2.4% **(b)
Without expense reductions............ 2.08% 2.14% --%* --%* --%
Portfolio turnover rate++++............. 104% 114% 100% 99% 32% (b)
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0040 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.
++ 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.
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
* * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02 for the year ended October 31, 1993,
and for the period from May 18, 1992, to October 31, 1992,
respectively. Without such reimbursements, the expense ratios would
have been 2.61% and 2.91% and the ratio of net investment income to
average not assets would have been 0.36% and 1.21% for the year ended
October 31, 1993, and for the period from May 18, 1992, to October 31,
1992, respectively (See Note 2).
* * * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02. Without such reimbursements, the
expense ratio would have been 3.63% and the ratio of net investment
income to average net assets would have been (0.76%) (See Note 2).
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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>
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 1993 1996 (D) 1995
-------------- ---------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.68 $ 18.68 $ 14.39 $ 11.47 $ 13.88 $ 14.71
-------------- ---------- ---------- ----------- ----------- ------------
Income from investment operations:
Net investment income (loss).......... 0.04 0.06 (0.12) 0.00 * * 0.18 0.08
Net realized and unrealized gain
(loss) on investments................ 0.30 (4.29) 4.67 2.92 0.32 (0.91)
-------------- ---------- ---------- ----------- ----------- ------------
Net increase (decrease) from
investment operations.............. 0.34 (4.23) 4.55 2.92 0.50 (0.83)
-------------- ---------- ---------- ----------- ----------- ------------
Distributions to shareholders:
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... -- (0.77) (0.26) -- -- --
-------------- ---------- ---------- ----------- ----------- ------------
Total distributions................. -- (0.77) (0.26) -- -- --
-------------- ---------- ---------- ----------- ----------- ------------
Net asset value, end of period.......... $ 14.02 $ 13.68 $ 18.68 $ 14.39 $ 14.38 $ 13.88
-------------- ---------- ---------- ----------- ----------- ------------
-------------- ---------- ---------- ----------- ----------- ------------
Total investment return (c)............. 2.49 % (23.37)% 31.77% 25.5%(a) 3.60% (5.71)%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 216,004 $ 225,861 $ 291,289 $ 32,318 $ 3,139 $ 1,675
Ratio of net investment income (loss) to
average net assets..................... 0.26 % 0.39% (0.61)% (0.4)%***(b) 1.26% 1.39 %(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 2.46 % 2.62% 2.56% 2.9%***(b) 1.46% 1.62 %(b)
Without expense reductions............ 2.58 % 2.64% --%* --%* 1.58% 1.64 %(b)
Portfolio turnover rate++++............. 104 % 114% 100% 99% 104% 114 %
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0040 N/A N/A N/A $ 0.0040 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
* * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02 for the year ended October 31, 1993,
and for the period from May 18, 1992, to October 31, 1992,
respectively. Without such reimbursements, the expense ratios would
have been 2.61% and 2.91% and the ratio of net investment income to
average not assets would have been 0.36% and 1.21% for the year ended
October 31, 1993, and for the period from May 18, 1992, to October 31,
1992, respectively (See Note 2).
* * * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02. Without such reimbursements, the
expense ratio would have been 3.63% and the ratio of net investment
income to average net assets would have been (0.76%) (See Note 2).
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Emerging Markets Fund ("Fund") is a separate series of GT Investment
Funds, Inc. ("Company"). The Company is organized as a Maryland corporation and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a diversified, open-end management investment company. The Company has twelve
series of shares in operation, each series corresponding to a distinct portfolio
of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective service and distribution expenses, and
may differ in its transfer agent, registration, and certain other class-specific
fees and expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
the financial statements may include certain estimates made by management.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or in the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued , or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (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.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records are maintained in U.S. dollars. The market values of
foreign securities, currency holdings, and other assets and liabilities are
recorded in the books and records of the Fund after translation to U.S. dollars
based on the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are translated at
prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss
F13
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
equal to the difference between the value at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of the contract or if the value of the
currency changes unfavorably. The Fund may enter into Forwards Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. If an option expires on its
stipulated expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Fund can write options only on a covered
basis, which, for a call, requires that the Fund hold the underlying securities
and, for a put, requires the Fund to set aside cash, U.S. government securities,
or other liquid, high grade debt securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund may use options to manage its exposure to the
stock market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund would realize a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund would
realize a gain or loss, depending on whether proceeds from the closing sale
transaction are greater or less than the cost of the option. If the Fund
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund exercises a
put option, it realizes a gain or loss from the sale of the underlying security,
and the proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1996, stocks with an aggregate value of approximately $17,458,140
were on loan to brokers. The loans were secured by cash collateral of
$18,390,625 received by the Fund. For international securities, cash collateral
is received by the Fund against loaned securities in an amount at least equal to
105% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 103% of the market value of
the loaned securities during the period of the loan. For domestic securities,
cash collateral is received by the Fund against loaned securities in the amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the year ended October 31, 1996, the Fund received fees of $114,161 which were
used to reduce the Fund's custodian fees.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any
F14
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
excise tax under Section 4982 of the Code. Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held, and excise tax on income and capital gains. The Fund currently
has a capital loss carryforward of $40,222,829, of which $35,800,955 expires in
2003 and $4,421,874 expires in 2004.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $150,006. These
expenses are being amortized on a straightline basis over a five-year period.
(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's 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. The Fund 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 the Fund's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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 $118,254
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $17,532 for the year ended October 31, 1996. 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 Fund's current
prospectus. For the year ended October 31, 1996, GT Global collected CDSCs in
the amount of $1,269,740. 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 Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for 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, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for 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
F15
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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 the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40% 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of 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 Fund. 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 Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the 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.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1996, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$543,620,761 and $644,841,661, respectively. There were no purchases or sales of
U.S. government obligations by the Fund for the year ended October 31, 1996.
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, 200,000,000 were
classified as shares of the 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; 400,000,000 were classified as shares of GT Global
Telecommunications 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 Fund were as follows:
F16
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
CAPITAL SHARE TRANSACTIONS
<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............................. 75,574,030 $1,106,260,084 26,517,243 $ 389,593,563
Shares issued in connection with
reinvestment of distributions......... -- -- 788,804 13,204,560
----------- ------------- ----------- -------------
75,574,030 1,106,260,084 27,306,047 402,798,123
Share repurchased....................... (78,034,654) (1,146,692,253) (31,260,135) (469,990,809)
----------- ------------- ----------- -------------
Net decrease............................ (2,460,624) $ (40,432,169) (3,954,088) $ (67,192,686)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 22,439,885 $ 323,192,109 9,004,842 $ 135,163,005
Shares issued in connection with
reinvestment of distributions......... -- -- 637,782 10,599,912
----------- ------------- ----------- -------------
22,439,885 323,192,109 9,642,624 145,762,917
Share repurchased....................... (23,539,619) (339,644,019) (8,726,345) (127,721,360)
----------- ------------- ----------- -------------
Net increase (decrease)................. (1,099,734) $ (16,451,910) 916,279 $ 18,041,557
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
YEAR ENDED SHARES) TO OCTOBER 31,
OCTOBER 31, 1996 1995
-------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 966,362 $ 14,221,631 130,495 $ 1,946,873
Share repurchased....................... (868,859) (12,885,086) (9,777) (141,774)
----------- ------------- ----------- -------------
Net increase............................ 97,503 $ 1,336,545 120,718 $ 1,805,099
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1996, amounted to $4,750,000,
at value.
Transactions with affiliated companies are as follows:
<TABLE>
<CAPTION>
PURCHASES NET REALIZED DIVIDEND
AFFILIATES COST SALES COST GAIN INCOME
- ---------------------------------------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Compania Boliviana de Energia
Electrica............................. $ -- $7,000,800 $4,166,500 $ 113,771
Sun Brewing Ltd. - 144A GDR............. -- -- -- --
</TABLE>
6. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1996, the Fund's expenses
were reduced by $519,300 under these arrangements.
F17
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL 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 for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on large cap equity securities of U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Invests in global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in a portfolio of emerging market debt securities
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
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NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL EMERGING MARKETS FUND, G.T. INVESTMENT FUNDS, INC., CHANCELLOR LGT
ASSET MANAGEMENT, INC. OR GT GLOBAL, INC. THIS STATEMENT OF ADDITIONAL
INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
EMESA703 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
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This Statement of Additional Information relates to the Advisor Class shares of
GT Global Financial Services Fund ("Financial Services Fund"), GT Global
Infrastructure Fund ("Infrastructure Fund"), GT Global Natural Resources Fund
("Natural Resources Fund"), GT Global Consumer Products and Services Fund
("Consumer Products and Services Fund"), GT Global Health Care Fund ("Health
Care Fund") and GT Global Telecommunications Fund ("Telecommunications Fund")
(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").
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TABLE OF CONTENTS
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Page No.
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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
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Statement of Additional Information Page 1
<PAGE>
GT GLOBAL THEME FUNDS
INVESTMENT OBJECTIVES
AND POLICIES
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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
Statement of Additional Information Page 4
<PAGE>
GT GLOBAL THEME FUNDS
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.
Statement of Additional Information Page 5
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GT GLOBAL THEME FUNDS
OPTIONS, FUTURES AND CURRENCY
STRATEGIES
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SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon 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.
Statement of Additional Information Page 6
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GT GLOBAL THEME FUNDS
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Theme Portfolio's investment objective. When writing a call option, a Theme
Portfolio, in return for the premium, gives up the opportunity for profit from a
price increase in the underlying security or currency above the exercise price,
and retains the risk of loss should the price of the security or currency
decline. Unlike one who owns securities or currencies not subject to an option,
a Theme Portfolio has no control over when it may be required to sell the
underlying securities or currencies, since most options may be exercised at any
time prior to the option's expiration. If a call option that a Theme Portfolio
has written expires, the Theme Portfolio will realize a gain in the amount of
the premium; however, such gain may be offset by a decline in the market value
of the underlying security or currency during the option period. If the call
option is exercised, the Theme Portfolio will realize a gain or loss from the
sale of the underlying security or currency, which will be increased or offset
by the premium received. Each Theme Portfolio does not consider a security or
currency covered by a call option to be "pledged" as that term is used in that
Theme Portfolio's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Theme Portfolio will be
obligated to sell the security or currency at less than its market value.
The premium that a Theme Portfolio receives for writing a call option is deemed
to constitute the market value of an option. The premium the Theme Portfolio
will receive from writing a call option will reflect, among other things, the
current market price of the underlying investment, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying investment, and the length of the option period. In determining
whether a particular call option should be written, 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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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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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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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
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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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INVESTMENT LIMITATIONS
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FEEDER FUNDS
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund each has the following fundamental
investment policy to enable it to invest in the Financial Services Portfolio,
Infrastructure Portfolio, Natural Resources Portfolio and Consumer Products and
Services Portfolio, respectively:
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
All other fundamental investment policies, and the non-fundamental policies, of
each Feeder Fund and its corresponding Portfolio are identical. Therefore,
although the following discusses the investment policies of each Portfolio and
its Board of Trustees, it applies equally to each Feeder Fund and its Board of
Directors.
Each Portfolio has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the affirmative vote of the lesser of (i) 67% of that Portfolio's shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (ii) more than 50% of the outstanding shares. Whenever a Feeder
Fund is requested to vote on a change in the investment limitations of its
corresponding Portfolio, that Fund will hold a meeting of its shareholders and
will cast its votes as instructed by its shareholders.
Each Portfolio may not:
(1) Buy or sell real estate (including real estate limited
partnerships); however, each Portfolio may invest in debt securities secured
by real estate or interests therein or issued by companies which invest in
real estate or interests therein, including real estate investment trusts;
(2) Buy or sell commodities or commodity contracts, except that each
Portfolio may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in other transactions
in foreign currencies;
(3) Underwrite securities of other issuers, except to the extent that
the disposition of an investment position may technically cause it to be
considered an underwriter as that term is defined under the 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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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;
Statement of Additional Information Page 21
<PAGE>
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
<PAGE>
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.
- --------------------------------------------------------------------------------
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
<PAGE>
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) since 1995; President, GT Global since 1995;
50 California Street President and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice President
San Francisco, CA 94111 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 transfer agency and
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 $1,481,877 and $1,555,664; $7,389,836
and $7,139,417; $53,523 and $57,347; $398,968 and $344,920; $149,111 and
$227,522; and $30,047 and $249,464, 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
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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
- ---------------------------------------- -------------- --------- -------- ------------
Deutsche Marks.......................... 1,720,879 1.46900 11/29/96 $49,033
<S> <C> <C> <C> <C>
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, 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
<PAGE>
GT GLOBAL INCOME FUNDS:
ADVISOR CLASS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
March 1, 1997
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This Statement of Additional Information relates to the Advisor Class shares of
the GT Global Government Income Fund ("Government Income Fund"), GT Global
Strategic Income Fund ("Strategic Income Fund") and GT Global High Income Fund
("High Income Fund") (each, a "Fund," and, collectively, "Funds"). Each Fund is
a non-diversified series of G.T. Investment Funds, Inc. (the "Company"), a
registered open-end management investment company. This Statement of Additional
Information, which is not a Prospectus, supplements and should be read in
conjunction with the Funds' current Advisor Class Prospectus dated March 1,
1997, a copy of which is available without charge by writing to the above
address or by calling the Funds at the toll-free telephone number listed above.
Chancellor LGT Asset Management, Inc. (the "Manager") serves as the investment
manager and administrator for the Government Income Fund, the Strategic Income
Fund and the Global High Income Portfolio (the "Portfolio") and also serves as
the administrator of the High Income Fund. The distributor of the shares of each
Fund is GT Global, Inc. ("GT Global"). The Funds' transfer agent is GT Global
Investor Services, Inc. ("GT Services" or the "Transfer Agent").
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TABLE OF CONTENTS
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Page No.
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<S> <C>
Investment Objectives and Policies....................................................................................... 2
Options, Futures and Currency Strategies................................................................................. 6
Risk Factors............................................................................................................. 15
Investment Limitations................................................................................................... 19
Execution of Portfolio Transactions...................................................................................... 24
Directors, Trustees and Executive Officers............................................................................... 26
Management............................................................................................................... 28
Valuation of Fund Shares................................................................................................. 30
Information Relating to Sales and Redemptions............................................................................ 31
Taxes.................................................................................................................... 32
Additional Information................................................................................................... 35
Investment Results....................................................................................................... 36
Description of Debt Ratings.............................................................................................. 44
Financial Statements..................................................................................................... 46
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Statement of Additional Information Page 1
<PAGE>
GT GLOBAL INCOME FUNDS
INVESTMENT OBJECTIVES AND POLICIES
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INVESTMENT OBJECTIVES
The Government Income Fund primarily seeks high current income and secondarily
seeks capital appreciation and protection of principal through active management
of the maturity structure and currency exposure of its portfolio. The Strategic
Income Fund and the High Income Fund primarily seek high current income and
secondarily seek capital appreciation. The High Income Fund seeks to achieve its
investment objectives by investing all of its investable assets in the
Portfolio, which is a non-diversified open-end management investment company
with investment objectives identical to those of the Fund. Whenever the phrase
"all of the Fund's investable assets" is used herein and in the Prospectus, it
means that the only investment securities held by the High Income Fund will be
its interest in the Portfolio. The High Income Fund may withdraw its investment
in the Portfolio at any time, if the Board of Directors of the Company
determines that it is in the best interests of the Fund and its shareholders to
do so. Upon any such withdrawal, the High Income Fund's assets would be invested
in accordance with the investment policies of the Portfolio described below and
in the Prospectus.
INVESTMENT IN EMERGING MARKETS
The Portfolio seeks its objectives by investing, under normal circumstances, at
least 65% of its total assets in debt securities of issuers in emerging markets.
The Strategic Income Fund may invest up to 50% of its assets in debt securities
of issuers in emerging markets. The Strategic Income Fund and the Portfolio do
not consider the following countries to be emerging markets: Australia, Austria,
Belgium, Canada, Denmark, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, United Kingdom,
and United States.
In addition to the factors set forth in the Prospectus, the Manager will also
consider, when determining what countries constitute emerging markets, data,
analysis, and classification of countries published or disseminated by the
International Bank for Reconstruction and Development (commonly known as the
World Bank) and the International Finance Corporation.
SELECTION OF DEBT INVESTMENTS
In determining the appropriate distribution of investments among various
countries and geographic regions for the Government Income Fund, the Strategic
Income Fund and the Portfolio, the Manager ordinarily considers the following
factors: prospects for relative economic growth among the different countries in
which the Government Income Fund, the Strategic Income Fund and the Portfolio
may invest; expected levels of inflation; government policies influencing
business conditions; the outlook for currency relationships; and the range of
the individual investment opportunities available to international investors.
The Government Income Fund, the Strategic Income Fund and the Portfolio may
invest in the following types of money market instruments (i.e., debt
instruments with less than 12 months remaining until maturity) denominated in
U.S. dollars or other currencies: (a) obligations issued or guaranteed by the
U.S. or foreign governments, their agencies, instrumentalities or
municipalities; (b) obligations of international organizations designed or
supported by multiple foreign governmental entities to promote economic
reconstruction or development; (c) finance company obligations, corporate
commercial paper and other short-term commercial obligations; (d) bank
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances), subject to the restriction that the Government Income
Fund, the Strategic Income Fund and the Portfolio may not invest more than 25%
of their respective total assets in bank securities; (e) repurchase agreements
with respect to the foregoing; and (f) other substantially similar short-term
debt securities with comparable characteristics.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by the Government Income Fund,
the Strategic Income Fund and the Portfolio presently may be made only by
acquiring shares of other investment companies with local governmental approval
to invest in those countries. At such time as direct investment in these
countries is allowed, the Government Income Fund, the Strategic Income Fund and
the Portfolio anticipate investing directly in these markets. The Government
Income Fund, the Strategic Income Fund and the Portfolio may also invest in the
securities of closed-end investment
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL INCOME FUNDS
companies within the limits of the Investment Company Act of 1940, as amended
("1940 Act"). These limitations currently provide that, in part, a Fund or the
Portfolio may purchase shares of another investment company unless (a) such a
purchase would cause the Government Income Fund, the Strategic Income Fund or
the Portfolio to own in the aggregate more than 3% of the total outstanding
voting securities of the investment company or (b) such a purchase would cause
the Government Income Fund, the Strategic Income Fund or the Portfolio to have
more than 5% of its total assets invested in the investment company or more than
10% of its aggregate assets invested in an aggregate of all such investment
companies. The foregoing limitations do not apply to the investment by the High
Income Fund in the Portfolio. Investment in investment companies may involve the
payment of substantial premiums above the value of such companies' portfolio
securities. The Government Income Fund, the Strategic Income Fund and the
Portfolio do not intend to invest in such investment companies unless, in the
judgment of 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.
SAMURAI AND YANKEE BONDS
The Government Income Fund, the Strategic Income Fund and the Portfolio may
invest in yen-denominated bonds sold in Japan by non-Japanese issuers ("Samurai
bonds"), and may invest in dollar-denominated bonds sold in the United States by
non-U.S. issuers ("Yankee bonds"). It is the policy of the Government Income
Fund, the Strategic Income Fund and the Portfolio to invest in Samurai or Yankee
bond issues only after taking into account considerations of quality and
liquidity, as well as yield.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Government Income Fund, the Strategic
Income Fund or the Portfolio in connection with other securities or separately
and provide a Fund or the Portfolio with the right to purchase at a later date
other securities of the issuer.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Strategic Income Fund or the
Portfolio may make secured loans of portfolio securities amounting to not more
than 30% of its total assets. Securities loans are made to broker/dealers or
institutional investors pursuant to agreements requiring that the loans
continuously be secured by collateral at least equal at all times to the value
of the securities lent plus any accrued interest, "marked to market" on a daily
basis. The Fund may pay reasonable administrative and custodial fees in
connection with loans of its securities. While the securities loan is
outstanding, the Strategic Income Fund and the Portfolio will continue to
receive the equivalent of the interest or dividends paid by the issuer on the
securities, as well as interest on the investment of the collateral or a fee
from the borrower. The Strategic Income Fund and the Portfolio each will have a
right to call each loan and obtain the securities on five business days' notice.
The Government Income Fund, the Strategic Income Fund and the Portfolio will not
have the right to vote equity securities while they are lent, but each may call
in a loan in anticipation of any important vote. Loans will be made only 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 the Strategic Income Fund's and the Portfolio's investment
policies with respect to bank obligations, obligations of foreign branches of
U.S. banks and of foreign banks are obligations of the issuing bank and may be
general obligations of the parent bank. Such obligations, however, may be
limited by the terms of a specific obligation and by government regulation. As
with investment in non-U.S. securities in general, investments in the
obligations of foreign branches of U.S. banks and of foreign banks may subject
the the Strategic Income Fund and the Portfolio to investment risks that are
different in some respects from those of investments in obligations of domestic
issuers. Although the Strategic Income Fund and the Portfolio typically will
acquire obligations issued and supported by the credit of U.S. or foreign banks
having total assets at the time of purchase in excess of $1 billion, this $1
billion figure is not an investment policy or restriction of either Fund or the
Portfolio. For the purposes of calculation with respect to the $1 billion
figure, the assets of a bank will be deemed to include the assets of its U.S.
and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which the Fund or Portfolio buys a
security from a bank or recognized securities dealer and simultaneously commits
to resell that security to the bank or dealer at an agreed upon price, date and
market rate of interest unrelated to the coupon rate or maturity of the
purchased security. Although repurchase agreements carry certain risks not
associated with direct investments in securities, including possible decline in
the market value of the underlying securities and delays and costs to the Funds
or Portfolio if the other party to the repurchase agreement becomes bankrupt,
the Government Income Fund, the Strategic Income Fund and the Portfolio intend
to enter into
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL INCOME FUNDS
repurchase agreements only with banks and broker/dealers believed by the Manager
to present minimal credit risks in accordance with guidelines approved by the
Company's Board of Directors. The Manager reviews and monitors the
creditworthiness of such institutions under the Board's general supervision.
The Government Income Fund, the Strategic Income Fund and the Portfolio will
invest only in repurchase agreements collateralized at all times in an amount at
least equal to the repurchase price plus accrued interest. To the extent that
the proceeds from any sale of such collateral upon a default in the obligation
to repurchase were less than the repurchase price, the Government Income Fund,
the Strategic Income Fund or the Portfolio would suffer a loss. If the financial
institution which is party to the repurchase agreement petitions for bankruptcy
or otherwise becomes subject to bankruptcy or other liquidation proceedings
there may be restrictions on the Government Income Fund, the Strategic Income
Fund's or the Portfolio's ability to sell the collateral and the Government
Income Fund, the Strategic Income Fund or the Portfolio could suffer a loss.
However, with respect to financial institutions whose bankruptcy or liquidation
proceedings are subject to the U.S. Bankruptcy Code, the Government Income Fund,
the Strategic Income Fund and the Portfolio intend to comply with provisions
under such Code that would allow the immediate resale of such collateral. The
Government Income Fund will not enter into a repurchase agreement with a
maturity of more than seven days if, as a result, more than 10% of the value of
its total assets would be invested in such repurchase agreements and other
illiquid investments and securities for which no readily available market
exists.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Government Income Fund's borrowings will not exceed 30% of the Fund's total
assets, i.e., the Fund's total assets at all times will equal at least 300% of
the amount of outstanding borrowings. If market fluctuations in the value of the
Fund's portfolio holdings or other factors cause the ratio of the Fund's total
assets to outstanding borrowings to fall below 300%, within three days
(excluding Sundays and holidays) of such event the Fund may be required to sell
portfolio securities to restore the 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. The Strategic Income
Fund's and the Portfolio's borrowings will not exceed 33 1/3% of the Strategic
Income Fund's or the Portfolio's, respective total assets. The Government Income
Fund, the Strategic Income Fund and the Portfolio each may borrow up to 5% of
its respective total assets for temporary or emergency purposes other than to
meet redemptions. Any borrowing by a Fund or the Portfolio may cause greater
fluctuation in the value of its shares than would be the case if the Fund or the
Portfolio did not borrow.
The Government Income Fund's, the Strategic Income Fund's and the Portfolio's
fundamental investment limitations permit it to borrow money for leveraging
purposes. The Government Income Fund, however, currently is prohibited, pursuant
to a non-fundamental investment policy, from borrowing money in order to
purchase securities. Nevertheless, this policy may be changed in the future by a
vote of a majority of the Company's Board of Directors. The Strategic Income
Fund and Portfolio may borrow for leveraging purposes. In the event that the
Strategic Income Fund or the Portfolio employs leverage, it would be subject to
certain additional risks. Use of leverage creates an opportunity for greater
growth of capital but would exaggerate any increases or decreases in the Fund's
or the Portfolio's net asset value. When the income and gains on securities
purchased with the proceeds of borrowings exceed the costs of such borrowings,
the Government Income Fund's, the Strategic Income Fund's or the Portfolio's
earnings or net asset value will increase faster than otherwise would be the
case; conversely, if such income and gains fail to exceed such costs, the Fund's
or the Portfolio's earnings or net asset value would decline faster than would
otherwise be the case.
The Government Income Fund, the Strategic Income Fund and the Portfolio may
enter into reverse repurchase agreements. A reverse repurchase agreement is a
borrowing transaction in which a Fund or the Portfolio transfers possession of a
security to another party, such as a bank or broker/dealer, in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. The Government Income Fund, the Strategic
Income Fund and the Portfolio also may engage in "roll" borrowing transactions
which involve a Fund's or the Portfolio's sale of Government National Mortgage
Association certificates or other securities together with a commitment (for
which a Fund or the Portfolio may receive a fee) to purchase similar, but not
identical, securities at a future date. The Government Income Fund, the
Strategic Income Fund and the Portfolio will maintain, in a segregated account
with a custodian, cash 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
The Government Income Fund, the Strategic Income Fund and the Portfolio are
authorized to make short sales of securities, although they have no current
intention of doing so. A short sale is a transaction in which a Fund or the
Portfolio sells a security in anticipation that the market price of that
security will decline. The Government Income Fund, the Strategic Income Fund and
the Portfolio may make short sales as a form of hedging to offset potential
declines in long
Statement of Additional Information Page 4
<PAGE>
GT GLOBAL INCOME FUNDS
positions in securities it owns, or anticipates acquiring, and in order to
maintain portfolio flexibility. The Government Income Fund, the Strategic Income
Fund and the Portfolio only may make short sales "against the box." In this type
of short sale, at the time of the sale, the Fund or the Portfolio owns the
security it has sold short or has the immediate and unconditional right to
acquire the identical security at no additional cost.
In a short sale, the seller does not immediately deliver the securities sold and
does not receive the proceeds from the sale. To make delivery to the purchaser,
the executing broker borrows the securities being sold short on behalf of the
seller. The seller is said to have a short position in the securities sold until
it delivers the securities sold, at which time it receives the proceeds of the
sale. To secure its obligation to deliver securities sold short, the Government
Income Fund, the Strategic Income Fund or the Portfolio will deposit in a
separate account with its custodian an equal amount of the securities sold short
or securities convertible into or exchangeable for such securities at no cost.
The Government Income Fund, the Strategic Income Fund or the Portfolio could
close out a short position by purchasing and delivering an equal amount of the
securities sold short, rather than by delivering securities already held by the
Fund or the Portfolio, because the Fund or the Portfolio might want to continue
to receive interest and dividend payments on securities in its portfolio that
are convertible into the securities sold short.
The Government Income Fund, the Strategic Income Fund and the Portfolio might
make a short sale "against the box" in order to hedge against market risks when
the Manager believes that the price of a security may decline, causing a decline
in the value of a security owned by the Government Income Fund, the Strategic
Income Fund or the Portfolio or a security convertible into or exchangeable for
such security, or when the Manager wants to sell the security the Fund or the
Portfolio owns at a current attractive price, but also wishes to defer
recognition of gain or loss for federal income tax purposes and for purposes of
satisfying certain tests applicable to regulated investment companies under the
Internal Revenue Code of 1986, as amended (the "Code"). In such case, any future
losses in the Government Income Fund's, the Strategic Income Fund's Fund or the
Portfolio's long position should be reduced by a gain in the short position.
Conversely, any gain in the long position should be reduced by a loss in the
short position. The extent to which such gains or losses in the long position
are reduced will depend upon the amount of the securities sold short relative to
the amount of the securities the Fund or the Portfolio owns, either directly or
indirectly, and, in the case where a Fund or the Portfolio owns convertible
securities, changes in the investment values or conversion premiums of such
securities. There will be certain additional transaction costs associated with
short sales "against the box," but a Fund or the Portfolio will endeavor to
offset these costs with income from the investment of the cash proceeds of short
sales.
Statement of Additional Information Page 5
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GT GLOBAL INCOME FUNDS
OPTIONS, FUTURES AND CURRENCY STRATEGIES
- --------------------------------------------------------------------------------
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 Fund or the Portfolio
entered into a short hedge because the Manager projected a decline in the
price of a security in the Fund's or the Portfolio's portfolio, and the
price of that security increased instead, the gain from that increase might
be wholly or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined by
more than the increase in the price of the security, the Fund or the
Portfolio could suffer a loss. In either such case, the Fund or the
Portfolio would have been in a better position had it not hedged at all.
(4) As described below, a Fund or the Portfolio might be required to
maintain assets as "cover," maintain segregated accounts or make margin
payments when it takes positions in instruments involving obligations to
third parties (I.E., instruments other than purchased options). If a Fund or
the Portfolio were unable to close out its positions in such instruments, it
might be required to continue to maintain such assets or accounts or make
such payments until the position expired or matured. The requirements might
impair the Fund's ability or the Portfolio's ability to sell a portfolio
security or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund or the Portfolio sell a
portfolio security at a disadvantageous time. The Fund's or the Portfolio's
ability to close out a position in an instrument prior to expiration or
maturity depends on the existence of a liquid secondary market or, in the
absence of such a market, the ability and willingness of the other party to
the transaction ("contra party") to enter into a transaction closing out the
position. Therefore, there is no assurance that any position can be closed
out at a time and price that is favorable to the Fund or the Portfolio.
WRITING CALL OPTIONS
The Government Income Fund, the Strategic Income Fund and the Portfolio may
write (sell) call options on securities, indices and currencies. Call options
generally will be written on securities and currencies that, in the opinion of
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
Government Income Fund, the Strategic Income Fund and the Portfolio.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such
Statement of Additional Information Page 6
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GT GLOBAL INCOME FUNDS
earlier time at which the writer effects a closing purchase transaction by
purchasing an option identical to that previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with a
Fund's or the Portfolio's investment objectives. When writing a call option, the
Government Income Fund, the Strategic Income Fund or the Portfolio, in return
for the premium, gives up the opportunity for profit from a price increase in
the underlying security or currency above the exercise price, and retains the
risk of loss should the price of the security or currency decline. Unlike one
who owns securities or currencies not subject to an option, a Fund or the
Portfolio has no control over when it may be required to sell the underlying
securities or currencies, since most options may be exercised at any time prior
to the option's expiration. If a call option that a Fund or the Portfolio has
written expires, the Fund or the Portfolio will realize a gain in the amount of
the premium; however, such gain may be offset by a decline in the market value
of the underlying security or currency during the option period. If the call
option is exercised, the Fund or the Portfolio will realize a gain or loss from
the sale of the underlying security or currency, which will be increased or
offset by the premium received. The Government Income Fund, the Strategic Income
Fund and the Portfolio do not consider a security or currency covered by a call
option to be "pledged" as that term is used in the Government Income Fund's, the
Strategic Income Fund's and the Portfolio's fundamental investment policy that
limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund or the Portfolio will
be obligated to sell the security or currency at less than its market value.
The premium that the Government Income Fund, the Strategic Income Fund or the
Portfolio receives for writing a call option is deemed to constitute the market
value of an option. The premium a Fund or the Portfolio will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, 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 the Government Income
Fund, the Strategic Income Fund or the Portfolio to write another call option on
the underlying security or currency with either a different exercise price,
expiration date or both.
The Government Income Fund, the Strategic Income Fund and the Portfolio will pay
transaction costs in connection with the writing of options and in entering into
closing purchase contracts. Transaction costs relating to options activity
normally are higher than those applicable to purchases and sales of portfolio
securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, a Fund or the Portfolio may purchase an
underlying security or currency for delivery in accordance with the exercise of
an option, rather than delivering such security or currency from its portfolio.
In such cases, additional costs will be incurred.
A Fund or the Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more, respectively, than
the premium received from writing the option. Because increases in the market
price of a call option generally will reflect increases in the market price of
the underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by a Fund or the Portfolio.
WRITING PUT OPTIONS
The Government Income Fund, the Strategic Income Fund and the Portfolio may
write put options on securities, indices and currencies. A put option gives the
purchaser of the option the right to sell, and the writer (seller) the
obligation to buy, the underlying security or currency at the exercise price at
any time until (American style) or on (European style) the expiration date. The
operation of put options in other respects, including their related risks and
rewards, is substantially identical to that of call options.
A Fund or the Portfolio generally would write put options in circumstances where
the Manager wishes to purchase the underlying security or currency for the
Fund's or the Portfolio's portfolio at a price lower than the current market
price of
Statement of Additional Information Page 7
<PAGE>
GT GLOBAL INCOME FUNDS
the security or currency. In such event, the Fund or the Portfolio would write a
put option at an exercise price that, reduced by the premium received on the
option, reflects the lower price it is willing to pay. Since the Fund or the
Portfolio also would receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premiums received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Fund or the Portfolio
will be obligated to purchase the security or currency at greater than its
market value.
PURCHASING PUT OPTIONS
The Government Income Fund, the Strategic Income Fund and the Portfolio may
purchase put options on securities, indices and currencies. As the holder of a
put option, the Government Income Fund, the Strategic Income Fund or the
Portfolio would have the right to sell the underlying security or currency at
the exercise price at any time until (American style) or on (European style) the
expiration date. The Government Income Fund, the Strategic Income Fund or the
Portfolio may enter into closing sale transactions with respect to such options,
exercise them or permit them to expire.
A Fund or the Portfolio may purchase a put option on an underlying security or
currency ("protective put") owned by the Fund or the Portfolio as a hedging
technique in order to protect against an anticipated decline in the value of the
security or currency. Such hedge protection is provided only during the life of
the put option when the Fund or the Portfolio, as the holder of the put option,
is able to sell the underlying security or currency at the put exercise price
regardless of any decline in the underlying security's market price or
currency's exchange value. For example, a put option may be purchased in order
to protect unrealized appreciation of a security or currency when 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 eventually is sold.
The Government Income Fund, the Strategic Income Fund and the Portfolio also may
purchase put options at a time when that Fund or the Portfolio does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, a Fund or the Portfolio seeks to benefit from a
decline in the market price of the underlying security or currency. If the put
option is not sold when it has remaining value, and if the market price of the
underlying security or currency remains equal to or greater than the exercise
price during the life of the put option, the Fund or the Portfolio will lose its
entire investment in the put option. In order for the purchase of a put option
to be profitable, the market price of the underlying security or currency must
decline sufficiently below the exercise price to cover the premium and
transaction costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
The Government Income Fund, the Strategic Income Fund or the Portfolio may
purchase call options on securities, indices and currencies. As the holder of a
call option, a Fund or the Portfolio would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. A Fund or the
Portfolio may enter into closing sale transactions with respect to such options,
exercise them or permit them to expire.
Call options may be purchased by a Fund or the Portfolio for the purpose of
acquiring the underlying security or currency for its portfolio. Utilized in
this fashion, the purchase of call options would enable the Fund or the
Portfolio to acquire the security or currency at the exercise price of the call
option plus the premium paid. At times, the net cost of acquiring the security
or currency in this manner may be less than the cost of acquiring the security
or currency directly. This technique also may be useful to a Fund or the
Portfolio in purchasing a large block of securities that would be more difficult
to acquire by direct market purchases. So long as it holds such a call option,
rather than the underlying security or currency itself, a Fund or the Portfolio
is partially protected from any unexpected decline in the market price of the
underlying security or currency and, in such event, could allow the call option
to expire, incurring a loss only to the extent of the premium paid for the
option.
The Government Income Fund, the Strategic Income Fund and the Portfolio also may
purchase call options on underlying securities or currencies it owns in order to
protect unrealized gains on call options previously written by it. A call option
could be purchased for this purpose where tax considerations make it inadvisable
to realize such gains through a closing purchase transaction. Call options also
may be purchased at times to avoid realizing losses that would result in a
reduction of a Fund's or the Portfolio's current return. For example, where a
Fund or the Portfolio has written a call option on an
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underlying security or currency having a current market value below the price at
which such security or currency was purchased by the Fund or the Portfolio, an
increase in the market price could result in the exercise of the call option
written by the Fund or the Portfolio and the realization of a loss on the
underlying security or currency. Accordingly, the Fund or the Portfolio could
purchase a call option on the same underlying security or currency, which could
be exercised to fulfill the Fund's or the Portfolio's delivery obligations under
its written call (if it is exercised). This strategy could allow the Fund or the
Portfolio to avoid selling the portfolio security or currency at a time when it
has an unrealized loss; however, the Fund or the Portfolio would have to pay a
premium to purchase the call option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of a Fund's
or the Portfolio's total assets at the time of purchase.
The Government Income Fund, the Strategic Income Fund or the Portfolio may
attempt to accomplish objectives similar to those involved in using Forward
Contracts by purchasing put or call options on currencies. A put option gives a
Fund or the Portfolio as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration of the option. A call option gives
a Fund or the Portfolio as purchaser the right (but not the obligation) to
purchase a specified amount of currency at the exercise price at any time until
(American style) or on (European style) the expiration of the option. A Fund or
the Portfolio might purchase a currency put option, for example, to protect
itself against a decline in the dollar value of a currency in which it holds or
anticipates holding securities. If the currency's value should decline against
the dollar, the loss in currency value should be offset, in whole or in part, by
an increase in the value of the put. If the value of the currency instead should
rise against the dollar, any gain to the Fund or the Portfolio would be reduced
by the premium it had paid for the put option. A currency call option might be
purchased, for example, in anticipation of, or to protect against, a rise in the
value against the dollar of a currency in which the Fund or the Portfolio
anticipates purchasing securities.
Options may be either listed on an exchange or traded 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. The Funds and the Portfolio will not purchase an OTC option unless the
Fund or the Portfolio believes that daily valuations for such options are
readily obtainable. OTC options differ from exchange-traded options in that OTC
options are transacted with dealers directly and not through a clearing
corporation (which guarantees performance). Consequently, there is a risk of
non-performance by the dealer. Since no exchange is involved, OTC options are
valued on the basis of an average of the last bid prices obtained from dealers,
unless a quotation from only one dealer is available, in which case only that
dealer's price will be used. In the case of OTC options, there can be no
assurance that a liquid secondary market will exist for any particular option at
any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. A Fund or the Portfolio may also sell OTC
options and, in connection therewith, segregate assets or cover its obligations
with respect to OTC options written by the Fund or the Portfolio. The assets
used as cover for OTC options written by a Fund or the Portfolio will be
considered illiquid unless the OTC options are sold to qualified dealers who
agree that the Fund or the Portfolio may repurchase any OTC option it writes at
a maximum price to be calculated by a formula set forth in the option agreement.
The cover for an OTC option written subject to this procedure would be
considered illiquid only to the extent that the maximum repurchase price under
the formula exceeds the intrinsic value of the option.
A Fund's or the Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. Each Fund
and the Portfolio intends to purchase or write only those exchange-traded
options for which there appears to be a liquid secondary market. However, there
can be no assurance that such a market will exist at any particular time.
Closing transactions can be made for OTC options only by negotiating directly
with the contra party or by a transaction in the secondary market if any such
market exists. Although each Fund and the Portfolio will enter into OTC options
only with contra parties that are expected to be capable of entering into
closing transactions with the Fund or the Portfolio, there is no assurance that
the Fund or the Portfolio will in fact be able to close out an OTC option
position at a favorable price prior to expiration. In the event of insolvency of
the contra party, the Fund or the Portfolio might be unable to close out an OTC
option position at any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Fund or the Portfolio
writes a call on an index, it receives a premium and agrees that, prior to the
expiration date, the purchaser of the call, upon exercise of the call, will
receive from the Fund or the Portfolio an amount of cash if the closing
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level of the index upon which the call is based is greater than the exercise
price of the call. The amount of cash is equal to the difference between the
closing price of the index and the exercise price of the call times a specified
multiple (the "multiplier"), which determines the total dollar value for each
point of such difference. When a Fund or the Portfolio buys a call on an index,
it pays a premium and has the same rights as to such calls as are indicated
above. When a Fund or the Portfolio buys a put on an index, it pays a premium
and has the right, prior to the expiration date, to require the seller of the
put, upon the Fund's or the Portfolio's exercise of the put, to deliver to the
Fund or the Portfolio an amount of cash if the closing level of the index upon
which the put is based is less than the exercise price of the put, which amount
of cash is determined by the multiplier, as described above for calls. When a
Fund or the Portfolio writes a put on an index, it receives a premium and the
purchaser has the right, prior to the expiration date, to require the Fund or
the Portfolio to deliver to it an amount of cash equal to the difference between
the closing level of the index and the exercise price times the multiplier, if
the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund or the
Portfolio writes a call on an index it cannot provide in advance for its
potential settlement obligations by acquiring and holding the underlying
securities. A Fund or the Portfolio can offset some of the risk of writing a
call index option position by holding a diversified portfolio of securities
similar to those on which the underlying index is based. However, a Fund or the
Portfolio cannot, as a practical matter, acquire and hold a portfolio containing
exactly the same securities as underlie the index and, as a result, bears a risk
that the value of the securities held will vary from the value of the index.
Even if a Fund or the Portfolio could assemble a securities portfolio that
exactly reproduced the composition of the underlying index, it still would not
be fully covered from a risk standpoint because of the "timing risk" inherent in
writing index options. When an index option is exercised, the amount of cash
that the holder is entitled to receive is determined by the difference between
the exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Fund or the Portfolio, as the
call writer, will not know that it has been assigned until the next business day
at the earliest. The time lag between exercise and notice of assignment poses no
risk for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Fund or the Portfolio has purchased an index option and exercises it before
the closing index value for that day is available, it runs the risk that the
level of the underlying index may subsequently change. If such a change causes
the exercised option to fall out-of-the-money, the Fund or the Portfolio will be
required to pay the difference between the closing index value and the exercise
price of the option (times the applicable multiplier) to the assigned writer.
INTEREST RATE AND CURRENCY FUTURES CONTRACTS
The Government Income Fund, the Strategic Income Fund or the Portfolio may enter
into interest rate or currency futures contracts, including futures contracts on
indices of debt securities, ("Futures" or "Futures Contracts"), as a hedge
against changes in prevailing levels of interest rates or currency exchange
rates in order to establish more definitely the effective return on securities
or currencies held or intended to be acquired by the Fund or the Portfolio. The
Government Income Fund, the Strategic Income Fund's or the Portfolio's hedging
may include sales of Futures as an offset against the effect of expected
increases in interest rates or decreases in currency exchange rates, and
purchases of Futures as an offset against the effect of expected declines in
interest rates or increases in currency exchange rates.
The Government Income Fund's, the Strategic Income Fund and the Portfolio only
will enter into Futures Contracts which are traded on futures exchanges and are
standardized as to maturity date and underlying financial instrument. Futures
exchanges and trading thereon in the United States are regulated under the
Commodity Exchange Act by the Commodity Futures Trading Commission ("CFTC").
Futures are exchanged in London at the London International Financial Futures
Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce a Fund's or the Portfolio's exposure to interest rate and
currency exchange rate fluctuations, a Fund or the Portfolio may be able to
hedge exposure more effectively and at a lower cost through using Futures
Contracts.
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A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (debt
security or currency) for a specified price at a designated date, time and
place. An index Futures Contract provides for the delivery, at a designated
date, time and place, of an amount of cash equal to a specified dollar amount
times the difference between the index value at the close of trading on the
contract and the price at which the Futures Contract is originally struck; no
physical delivery of the securities comprising the index is made. Brokerage fees
are incurred when a Futures Contract is bought or sold, and margin deposits must
be maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Government Income Fund, the
Strategic Income Fund or the Portfolio realizes a gain; if it is more, the
Government Income Fund, the Strategic Income Fund or the Portfolio realizes a
loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Government Income Fund, the Strategic Income Fund or the
Portfolio realizes a gain; if it is less, the Government Income Fund, the
Strategic Income Fund or the Portfolio realizes a loss. The transaction costs
also must be included in these calculations. There can be no assurance, however,
that a Fund or the Portfolio will be able to enter into an offsetting
transaction with respect to a particular Futures Contract at a particular time.
If a Fund or the Portfolio is not able to enter into an offsetting transaction,
the Fund or the Portfolio will continue to be required to maintain the margin
deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Government
Income Fund, the Strategic Income Fund or the Portfolio.
The Government Income Fund, the Strategic Income Fund's and the Portfolio's
Futures transactions will be entered into for hedging purposes; that is, Futures
Contracts will be sold to protect against a decline in the price of securities
or currencies that the Fund or the Portfolio owns, or Futures Contracts will be
purchased to protect the Fund or the Portfolio against an increase in the price
of securities or currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Government Income Fund, the Strategic Income Fund or the
Portfolio in order to initiate Futures trading and to maintain the Fund's or the
Portfolio's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure a
Fund's or the Portfolio's performance under the Futures Contract. The margin
required for a particular Futures Contract is set by the exchange on which the
Futures Contract is traded, and may be modified significantly from time to time
by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund or the Portfolio entered into the
Futures Contract will be made on a daily basis as the price of the underlying
security, currency or index fluctuates making the Futures Contract more or less
valuable, a process known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest and currency rates, which in turn are affected by fiscal and
monetary policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in a Fund's or the
Portfolio's portfolio being hedged. The degree of imperfection of correlation
depends upon circumstances such as: variations in speculative market demand for
Futures and for securities or currencies, including technical influences in
Futures trading; and differences between the financial instruments being hedged
and the instruments underlying the standard Futures Contracts available for
trading. A decision of whether, when, and how to hedge involves skill and
judgment, and even a well-conceived hedge may be unsuccessful to some degree
because of unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any
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deduction for the transaction costs, if the account were then closed out. A 15%
decrease would result in a loss equal to 150% of the original margin deposit, if
the Futures Contract were closed out. Thus, a purchase or sale of a Futures
Contract may result in losses in excess of the amount invested in the Futures
Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Fund or the Portfolio were unable to liquidate a Futures or option on
Futures position due to the absence of a liquid secondary market or the
imposition of price limits, it could incur substantial losses. The Fund or the
Portfolio would continue to be subject to market risk with respect to the
position. In addition, except in the case of purchased options, the Fund or the
Portfolio would continue to be required to make daily variation margin payments
and might be required to maintain the position being hedged by the Future or
option or to maintain cash or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Fund or the Portfolio writes an option on a Futures Contract, it will be
required to deposit initial and variation margin pursuant to requirements
similar to those applicable to Futures Contracts. Premiums received from the
writing of an option on a Futures Contract are included in the initial margin
deposit.
A Fund or the Portfolio may seek to close out an option position by selling an
option covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Fund or the Portfolio enters into Futures Contracts,
options on Futures Contracts, and options on foreign currencies traded on a
CFTC-regulated exchange, in each case other than for BONA FIDE hedging purposes
(as defined by the CFTC), the aggregate initial margin and premiums required to
establish those positions (excluding the
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amount by which options are "in-the-money") will not exceed 5% of the
liquidation value of the Fund's or the Portfolio's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund or
the Portfolio has entered into. In general, a call option on a Futures Contract
is "in-the-money" if the value of the underlying Futures Contract exceeds the
strike, I.E., exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors or the Portfolio's Board of Trustees, as applicable, without
a shareholder vote. This limitation does not limit the percentage of the Fund's
or the Portfolio's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, generally arranged with a commercial bank
or other currency dealer, to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. The
Government Income Fund, the Strategic Income Fund and the Portfolio either may
accept or make delivery of the currency at the maturity of the Forward Contract.
A Fund or the Portfolio may also, if its contra party agrees, prior to maturity,
enter into a closing transaction involving the purchase or sale of an offsetting
contract.
A Fund or the Portfolio engages in forward currency transactions in anticipation
of, or to protect itself against, fluctuations in exchange rates. A Fund or the
Portfolio might sell a particular foreign currency forward, for example, when it
holds bonds denominated in a foreign currency but anticipates, and seeks to be
protected against, a decline in the currency against the U.S. dollar. Similarly,
a Fund or the Portfolio might sell the U.S. dollar forward when it holds bonds
denominated in U.S. dollars but anticipates, and seeks to be protected against,
a decline in the U.S. dollar relative to other currencies. Further, the Funds or
the Portfolio might purchase a currency forward to "lock in" the price of
securities denominated in that currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Government Income Fund, the Strategic Income Fund or
the Portfolio will enter into such Forward Contracts with major U.S. or foreign
banks and securities or currency dealers in accordance with guidelines approved
by the Company's Board of Directors or the Portfolio's Board of Trustees, as
applicable.
The Government Income Fund, the Strategic Income Fund or the Portfolio may enter
into Forward Contracts either with respect to specific transactions or with
respect to the overall investment of the Fund or the Portfolio. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund or the
Portfolio to purchase additional foreign currency on the spot (I.E., cash)
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Fund or the Portfolio
is obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency. Conversely, it may be necessary to sell on the
spot market some of the foreign currency the Fund or the Portfolio is obligated
to deliver. The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Forward Contracts involve the risk that anticipated currency
movements will not be predicted accurately, causing the Fund or the Portfolio to
sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund or the
Portfolio to sell a currency, the Fund or the Portfolio either may sell a
portfolio security and use the sale proceeds to make delivery of the currency or
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract pursuant to which the Fund or the
Portfolio will obtain, on the same maturity date, the same amount of the
currency that it is obligated to deliver. Similarly, the Fund or the Portfolio
may close out a Forward Contract requiring it to purchase a specified currency
by, if its contra party agrees, entering into a second contract entitling it to
sell the same amount of the same currency on the maturity date of the first
contract. The Fund or the Portfolio would realize a gain or loss as a result of
entering into such an offsetting Forward Contract under either circumstance to
the extent the exchange rate or rates between the currencies involved moved
between the execution dates of the first contract and the offsetting contract.
The cost to a Fund or the Portfolio of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because Forward Contracts usually are
entered into on a principal basis, no fees or commissions are involved. The use
of Forward Contracts does not eliminate fluctuations in the prices of the
underlying securities the Fund or the Portfolio owns or intends to acquire, but
it does establish a rate of exchange in advance. In addition, while Forward
Contracts limit the risk of loss due to a decline in the value of the hedged
currencies, they also limit any potential gain that might result should the
value of the currencies increase.
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FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Fund or the Portfolio may use options on foreign currencies, Futures on
foreign currencies, options on Futures on foreign currencies and Forward
Contracts to hedge against movements in the values of the foreign currencies in
which the Fund's or the Portfolio's securities are denominated. Such currency
hedges can protect against price movements in a security that a Fund or the
Portfolio owns or intends to acquire that are attributable to changes in the
value of the currency in which it is denominated. Such hedges do not, however,
protect against price movements in the securities that are attributable to other
causes.
A Fund or the Portfolio might seek to hedge against changes in the value of a
particular currency when no Futures Contract, Forward Contract or option
involving that currency is available or one of such contracts is more expensive
than certain other contracts. In such cases, the Fund or the Portfolio may hedge
against price movements in that currency by entering into a contract on another
currency or basket of currencies, the values of which the Manager believes will
have a positive correlation to the value of the currency being hedged. The risk
that movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Fund or the Portfolio could be disadvantaged by dealing in the odd
lot market (generally consisting of transactions of less than $1 million) for
the underlying foreign currencies at prices that are less favorable than for
round lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, a Fund or the Portfolio might be required to accept
or make delivery of the underlying foreign currency in accordance with any U.S.
or foreign regulations regarding the maintenance of foreign banking arrangements
by U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that a Fund or the Portfolio has purchased) expose the Fund or the
Portfolio to an obligation to another party. A Fund or the Portfolio will not
enter into any such transactions unless it owns either (1) an offsetting
("covered ") position in securities, currencies, or other options, Forward
Contracts or Futures Contracts, or (2) cash, receivables and short-term debt
securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. Each Fund and the Portfolio
will comply with SEC guidelines regarding cover for these instruments and, if
the guidelines so require, set aside cash 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 Fund's or the Portfolio's assets are used for cover or segregated accounts,
it could affect portfolio management or the Fund's or the Portfolio's ability to
meet redemption requests or other current obligations.
INTEREST RATE AND CURRENCY SWAPS
The Strategic Income Fund and the Portfolio usually will enter into interest
rate swaps on a net basis, that is, the two payment streams are netted out in a
cash settlement on the payment date or dates specified in the instrument, with
the Strategic Income Fund or the Portfolio receiving or paying, as the case may
be, only the net amount of the two payments. The net amount of the excess, if
any, of each of the Strategic Income Fund's and the Portfolio's obligations over
its entitlements with respect to each swap will be accrued on a daily basis and
an amount of cash or liquid securities having an aggregate net asset value at
least equal to the accrued excess will be maintained in an account by a
custodian that satisfies the requirements of the 1940 Act. The Strategic Income
Fund and the Portfolio will also establish and maintain such segregated accounts
with respect to its total obligations under any swaps that are not entered into
on a net basis and with respect to any caps or floors that are written by that
Fund or the Portfolio. The Manager, the Strategic Income Fund and
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GT GLOBAL INCOME FUNDS
the Portfolio believe that swaps, caps and floors do not constitute senior
securities under the 1940 Act and, accordingly, will not treat them as being
subject to the Fund's and the Portfolio's borrowing restrictions. The Strategic
Income Fund and the Portfolio will not enter into any swap, cap, floor, collar
or other derivative transaction unless, at the time of entering into the
transaction, the unsecured long-term debt rating of the counterparty combined
with any credit enhancements is rated at least A by Moody's Investors Service,
Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P"), or has an
equivalent rating from a nationally recognized statistical rating organization
or is determined to be of equivalent credit quality by the Manager. If a
counterparty defaults, the Strategic Income Fund or the Portfolio may have
contractual remedies pursuant to the agreements related to the transactions. The
swap market has grown substantially in recent years, with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swap market has
become relatively liquid. Caps, floors and collars are more recent innovations
for which standardized documentation has not yet been fully developed and, for
that reason, they are less liquid than swaps.
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RISK FACTORS
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ILLIQUID SECURITIES
The Government Income Fund may invest up to 10% of its total assets in
securities the disposition of which may be subject to legal or contractual
restrictions or the markets for which may be illiquid. The Strategic Income Fund
and the Portfolio each may invest up to 15% of net assets in illiquid
securities. Securities may be considered illiquid if a Fund or the Portfolio
cannot reasonably expect within seven days to sell the security for
approximately the amount at which the Fund or the Portfolio values such
securities. The sale of illiquid securities, if they can be sold at all,
generally will require more time and result in higher brokerage charges or
dealer discounts and other selling expenses than will the sale of liquid
securities, such as securities eligible for trading on U.S. securities exchanges
or in the over-the-counter markets. Moreover, restricted securities, which may
be illiquid for purposes of this limitation, often sell, if at all, at a price
lower than similar securities that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, each Fund and the Portfolio may be obligated to pay
all or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time a Fund or the Portfolio
may be permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, a Fund or
the Portfolio might obtain a less favorable price than prevailed when it decided
to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchsaing Rule 144A-eligible restricted securities held by
a Fund or the Portfolio, however, could affect adversely the marketability of
such portfolio securities and a Fund or the Portfolio might be unable to dispose
of such securities promptly or at favorable prices.
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GT GLOBAL INCOME FUNDS
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities eligible for resale to qualified
institutional buyers pursuant to Rule 144A under the 1933 Act, are liquid or
illiquid. The Board has delegated the function of making day-to-day
determinations of liquidity to the Manager in accordance with procedures
approved by the Board. The Manager takes into account a number of factors in
reaching liquidity decisions, including: (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
will monitor the liquidity of securities held by each Fund and the Portfolio and
report periodically on such decisions to the Board of Directors. Moreover, as
noted in the Prospectus, certain securities, such as those subject to
registration restrictions of more than seven days, will generally be treated as
illiquid.
FOREIGN 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, either a Fund or the Portfolio could lose its
entire investment in any such country.
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which a
Fund or the Portfolio may invest may have groups that advocate radical religious
or revolutionary philosophies or support ethnic independence. Any disturbance on
the part of such individuals could carry the potential for widespread
destruction or confiscation of property owned by individuals and entities
foreign to such country and could cause the loss of a Fund's or the Portfolio's
investment in those countries. Instability may also result from, among other
things: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which a Fund or the
Portfolio invests and adversely affect the value of the Fund's or the
Portfolio's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Government Income Fund,
the Strategic Income Fund or the Portfolio. These restrictions or controls may
at times limit or preclude investment in certain securities and may increase the
cost and expenses of a Fund or the Portfolio. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or may limit the investment by foreign persons to only a specific class
of securities of a company that may have less advantageous terms than securities
of the company available for purchase by nationals. Moreover, the national
policies of certain countries may restrict investment opportunities in issuers
or industries deemed sensitive to national interests. In addition, some
countries require governmental approval for the repatriation of investment
income, capital or the proceeds of securities sales by foreign investors. In
addition, if there is a deterioration in a country's balance of payments or for
other reasons, a country may impose restrictions on foreign capital remittances
abroad. The Government Income Fund, the Strategic Income Fund or the Portfolio
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Government
Income Fund, the Strategic Income Fund or the Portfolio will not be registered
with the SEC or regulators of any foreign country, nor will the issuers thereof
be subject to the SEC's reporting requirements. Thus, there will be less
available information concerning most foreign issuers of securities held by the
Government Income Fund, the Strategic Income Fund and the Portfolio than is
available concerning U.S. issuers. In instances where the financial statements
of an issuer are not deemed to reflect accurately the financial situation of the
issuer, 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
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GT GLOBAL INCOME FUNDS
addition, where public information is available, it may be less reliable than
such information regarding U.S. issuers. Issuers of securities in foreign
jurisdictions are generally not subject to the same degree of regulation as are
U.S. issuers with respect to such matters as restrictions on market
manipulation, insider trading rules, shareholder proxy requirements and timely
disclosure of information.
CURRENCY FLUCTUATIONS. Because the Funds and the Portfolio, under normal
circumstances, will invest substantial portions of their total assets in the
securities of foreign issuers which are denominated in foreign currencies, the
strength or weakness of the U.S. dollar against such foreign currencies will
account for part of each Fund's and the Portfolio's investment performance. A
decline in the value of any particular currency against the U.S. dollar will
cause a decline in the U.S. dollar value of each Fund's and the Portfolio's
holdings of securities and cash denominated in such currency and, therefore,
will cause an overall decline in their respective net asset values and any net
investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Funds. Moreover, if the value
of the foreign currencies in which a Fund or the Portfolio receives its income
declines relative to the U.S. dollar between the receipt of the income and the
making of Fund distributions, the Fund or the Portfolio may be required to
liquidate securities in order to make distributions if the Fund or the Portfolio
has insufficient cash in U.S. dollars to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although the Funds and the Portfolio value their assets daily in terms of U.S.
dollars, they do not intend to convert holdings of foreign currencies into U.S.
dollars on a daily basis. The Funds and the 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 are buying and selling various currencies. Thus, a dealer may offer to sell
a foreign currency to a Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the U.S., and
foreign securities transactions usually are subject to fixed commissions, which
generally are higher than negotiated commissions on U.S. transactions. In
addition, foreign securities transactions may be subject to difficulties
associated with the settlement of such transactions. Delays in settlement could
result in temporary periods when assets of a Fund or the Portfolio are
uninvested and no return is earned thereon. The inability of a Fund or the
Portfolio to make intended security purchases due to settlement problems could
cause it to miss attractive opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to a Fund or
the Portfolio due to subsequent declines in value of the portfolio security or,
if the Fund or the Portfolio has entered into a contract to sell the security,
could result in possible liability to the purchaser. The Manager will consider
such difficulties when determining the allocation of each Fund's or the
Portfolio's assets, although the Manager does not believe that such difficulties
will have a material adverse effect on the Funds' or the Portfolio's portfolio
trading activities.
The Funds and the Portfolio may use foreign custodians, which may involve risks
in addition to those related to the use of U.S. custodians. Such risks include
uncertainties relating to: (i) determining and monitoring the financial
strength, reputation and standing of the foreign custodian; (ii) maintaining
appropriate safeguards to protect the Funds' and the Portfolio's investments;
and (iii) possible difficulties in obtaining and enforcing judgments against
such custodians.
WITHHOLDING TAXES. Each Fund's and the Portfolio's net investment income
from foreign issuers may be subject to withholding taxes by the foreign issuer's
country, thereby reducing the Fund's and the Portfolio's net investment income
or delaying the receipt of income where those taxes may be recaptured. See
"Taxes."
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
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GT GLOBAL INCOME FUNDS
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 Fund.
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
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 Funds 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 Fund
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
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GT GLOBAL INCOME FUNDS
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. The Strategic Income Fund
and the Portfolio may invest in debt securities in emerging markets. Investing
in securities in emerging countries may entail greater risks than investing in
debt securities in developed countries. These risks include (i) less social,
political and economic stability; (ii) the small current size of the markets for
such securities and the currently low or nonexistent volume of trading, which
result in a lack of liquidity and in greater price volatility; (iii) certain
national policies which may restrict the Strategic Income Fund's and the
Portfolio's investment opportunities, including restrictions on investment in
issuers or industries deemed sensitive to national interests; (iv) foreign
taxation; and (v) the absence of developed structures governing private or
foreign investment or allowing for judicial redress for injury to private
property.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
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 economies and securities
markets of certain emerging market countries.
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INVESTMENT LIMITATIONS
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Each Fund and the Portfolio has adopted the following investment limitations as
fundamental policies which may not be changed without approval by the holders of
the lesser of (i) 67% of that Fund's shares or the total beneficial interests of
the Portfolio represented at a meeting at which more than 50% of the outstanding
shares of the Fund or the total beneficial interests of the Portfolio are
represented, or (ii) more than 50% of the outstanding shares of the Fund or the
total beneficial interests of the Portfolio. Whenever the High Income Fund is
requested to vote on a change in the investment limitations of the Portfolio,
the Fund will hold a meeting of its shareholders and will cast its votes as
instructed by its shareholders.
GOVERNMENT INCOME FUND
The Government Income Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts ("REITs"), and may purchase or sell currencies
(including forward currency exchange contracts), futures contracts and
related options generally as described in the Prospectus and this Statement
of Additional Information and subject to (14) below;
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GT GLOBAL INCOME FUNDS
(4) Acquire securities subject to restrictions on disposition or
securities for which there is no readily available market, or enter into
repurchase agreements or purchase time deposits maturing in more than seven
days, or purchase OTC options or hold assets set aside to cover OTC options
written by a Fund, if, immediately after and as a result, the value of such
securities would exceed, in the aggregate, 10% of the Fund's total assets;
(5) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act;
(6) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(7) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(8) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts subject to (14) below;
(9) Borrow money, except from banks for temporary or emergency purposes
not in excess of 30% of the value of the Fund's total assets. The Fund will
not purchase securities while such borrowings are outstanding. This
restriction shall not prevent the Fund from entering into reverse repurchase
agreements and engaging in "roll" transactions, provided that reverse
repurchase agreements, "roll" transactions and any other transactions
constituting borrowing by the Fund may not exceed one-third of the Fund's
total assets. In the event that the asset coverage for the Fund's borrowings
falls below 300%, the Fund will reduce, within three days (excluding Sundays
and holidays), the amount of its borrowings in order to provide for the 300%
asset coverage;
(10) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing;
(11) Invest in interests in oil, gas, or other mineral exploration or
development programs;
(12) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation;
(13) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Fund's investment adviser, or
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer;
or
(14) Enter into a futures contract, if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract) would be committed to margin on such futures contracts.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff positions that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following investment policies of the Government Income Fund are not
fundamental policies and may be changed by vote of a majority of the Company's
Board of Directors without shareholder approval. The Fund may not: (i) borrow
money to purchase securities; and (ii) invest in securities of an issuer if the
investment would cause the Fund to own more than 10% of any class of securities
of any one issuer.
STRATEGIC INCOME FUND
The Strategic Income Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives, policies and limitations as
the Fund) except that this limitation shall not apply to securities issued
or guaranteed as to principal and interest by the U.S. Government or any of
its agencies or instrumentalities;
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL INCOME FUNDS
(2) Invest in companies for the purpose of exercising control or
management (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives, policies and limitations as
the Fund);
(3) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts (REITs), and may purchase or sell currencies
(including forward currency exchange contracts), futures contracts and
related options generally as described in the Prospectus and this Statement
of Additional Information and subject to (13) below;
(4) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act;
(5) Make loans, except that the Fund may invest in loans and
participations, purchase debt securities and enter into repurchase
agreements and make loans of portfolio securities;
(6) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(7) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts subject to (13) below;
(8) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). This restriction shall not prevent the Fund from
entering into reverse repurchase agreements and engaging in "roll"
transactions, provided that reverse repurchase agreements, "roll"
transactions and any other transactions constituting borrowing by the Fund
may not exceed one-third of the Fund's total assets. In the event that the
asset coverage for the Fund's borrowings falls below 300%, the Fund will
reduce, within three days (excluding Sundays and holidays), the amount of
its borrowings in order to provide for 300% asset coverage. Transactions
involving options, futures contracts, options on futures contracts and
forward currency contracts, and collateral arrangements relating thereto
will not be deemed to be borrowings;
(9) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing;
(10) Invest in interests in oil, gas, or other mineral exploration or
development programs;
(11) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation (provided, however, that the Fund may invest all of
its investable assets in an open-end management investment company with
substantially the same investment objectives, policies, and limitations as
the Fund);
(12) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Fund's investment adviser, or
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer;
or
(13) Enter into a futures contract, if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract) would be committed to margin on such futures contracts.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff positions that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following investment policies of the Strategic Income Fund are not
fundamental policies and may be changed by vote of a majority of the Company's
Board of Directors without shareholder approval. The Fund may not:
(1) Invest more than 15% of its total assets in illiquid securities;
(2) Borrow money to purchase securities and will not invest in
securities of an issuer if the investment would cause the Fund to own more
than 10% of any class of securities of any one issuer (provided, however,
that the Fund may invest all of its investable assets in an open-end
management investment company with substantially the same investment
objectives, policies, and limitations as the Fund.); and
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL INCOME FUNDS
(3) Invest more than 10% of its total assets in shares of other
investment companies and invest more than 5% of its total assets in any one
investment company or acquire more than 3% of the outstanding voting
securities of any one investment company (provided, however, that the Fund
may invest all of its investable assets in an open-end management investment
company with substantially the same investment objectives, policies, and
limitations as the Fund).
HIGH INCOME FUND AND THE PORTFOLIO
The High Income Fund and the Portfolio each may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund) except that this
limitation shall not apply to securities issued or guaranteed as to
principal and interest by the U.S. Government or any of its agencies or
instrumentalities;
(2) Purchase or sell real estate, including real estate limited
partnerships, provided that the Fund and the Portfolio may invest in
securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell commodities or commodity contracts, except that the
Fund and the Portfolio may purchase and sell financial and currency futures
contracts and options thereon, and may purchase and sell currency forward
contracts, options on foreign currencies and may otherwise engage in
transactions in foreign currencies;
(4) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund and the
Portfolio may be deemed an underwriter under federal or state securities
laws;
(5) Make loans, except that the Fund and the Portfolio may invest in
loans and participations, purchase debt securities and enter into repurchase
agreements and make loans of portfolio securities;
(6) Purchase securities on margin, provided that the Fund and the
Portfolio may obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities; except that it may make
margin deposits in connection with the use of options, futures contracts,
options thereon or forward currency contracts. The Fund and the Portfolio
may make deposits of margin in connection with futures and forward contracts
and options thereon;
(7) Borrow money in excess of 33 1/3% of the Fund's or the Portfolio's
total assets (including the amount borrowed), less all liabilities and
indebtedness (other than borrowing). This restriction shall not prevent the
Fund or the Portfolio from entering into reverse repurchase agreements and
engaging in "roll" transactions, provided that reverse repurchase
agreements, "roll" transactions and any other transactions constituting
borrowing by the Fund or the Portfolio may not exceed one-third of the
Fund's or the Portfolio's respective total assets. In the event that the
asset coverage for the Fund's or the Portfolio's borrowings falls below
300%, the Fund or the Portfolio will reduce, within three days (excluding
Sundays and holidays), the amount of its borrowings in order to provide for
300% asset coverage. Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(8) Mortgage, pledge, or in any other manner transfer as security for
any indebtedness any of its assets, except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of the Fund's or the
Portfolio's assets;
(9) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs, however, the Fund or the Portfolio may
invest in securities of companies that engage in these activities; or
(10) With respect to 50% of its total assets, invest more than 5% of its
assets in the securities of any one issuer or purchase more than 10% of the
outstanding voting securities of any one issuer (provided, however, that the
Fund may invest all of its investable assets in an open-end management
investment company with substantially the same investment objectives as the
Fund).
For purposes of the Fund's and the Portfolio's concentration policy contained in
limitation (1) above, they intend to comply with the SEC staff positions that
securities issued or guaranteed as to principal and interest by any single
foreign government or any supranational organizations in the aggregate are
considered to be securities of issuers in the same industry.
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL INCOME FUNDS
The following investment policies of the High Income Fund and the Portfolio are
not fundamental policies and may be changed by vote of a majority of the
Company's Board of Directors or the Portfolio's Board of Trustees without
shareholder approval. The Fund and the Portfolio may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund or the Portfolio to own more than 10% of any class of securities of any
one issuer (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund);
(2) Invest in companies for the purpose of exercising control or
management (provided, however, that the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund);
(3) Purchase or retain the securities of any issuer, if, to the Fund's
or the Portfolio's knowledge, one or more of the officers or Directors of
the Company, the Fund's or the Portfolio's investment adviser, or
distributor, each own beneficially more than 1/2 of 1% of the securities of
such issuer and together own beneficially more than 5% of the securities of
such issuer;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's or the Portfolio's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts the Fund or the Portfolio has entered into;
(5) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation (provided, however, that the Fund may invest all of
its investable assets in an open-end management investment company with
substantially the same investment objectives as the Fund); or
(6) Invest more than 10% of its total assets in shares of other
investment companies and invest more than 5% of its total assets in any one
investment company or acquire more than 3% of the outstanding voting
securities of any one investment company (provided, however, that the Fund
may invest all of its investable assets in an open-end management investment
company with substantially the same investment objectives as the Fund).
Investors should refer to the Prospectus for further information with respect to
each Fund's investment objectives, which may not be changed without the approval
of shareholders, and the Portfolio's investment objectives, which may be changed
without the approval of investors in the Portfolio, and other investment
policies and techniques, which may be changed without shareholder approval.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL INCOME FUNDS
EXECUTION OF PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, the Manager
is responsible for the execution of the Government Income and Strategic Income
Funds' and the Portfolio's portfolio transactions and the selection of broker/
dealers that execute such transactions on behalf of these Funds and the
Portfolio. In executing portfolio transactions, the Manager seeks the best net
results for the Government Income and Strategic Income Funds and the Portfolio,
taking into account such factors as the price (including the applicable
brokerage commission or dealer spread), size of the order, difficulty of
execution and operational facilities of the firm involved. Although 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 the Funds and the Portfolio may engage in soft dollar
arrangements for research services, as described below, neither the Funds nor
the Portfolio has any obligation to deal with any broker/dealer or group of
broker/ dealers in the execution of portfolio transactions.
Debt securities generally are traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price of
the security usually includes a profit to the dealer. U.S. and foreign
government securities and money market instruments generally are traded in the
OTC markets. In underwritten offerings, securities usually are purchased at a
fixed price which includes an amount of compensation to the underwriter. On
occasion, securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Broker/dealers may receive commissions on
futures, currency and options transactions.
Consistent with the interests of the Funds and the Portfolio, the Manager may
select brokers to execute the Funds' and the Portfolio's portfolio transactions
on the basis of the research and brokerage services they provide to the Manager
for its use in managing the Funds and the Portfolio and its other advisory
accounts. Such services may include furnishing analyses, reports and information
concerning issuers, industries, securities, geographic regions, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such as
clearance and settlement). Research and brokerage services received from such
brokers are in addition to, and not in lieu of, the services required to be
performed by the Manager under the Management Contract (defined below). A
commission paid to such brokers may be higher than that which another qualified
broker would have charged for effecting the same transaction, provided that 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 the Funds and the Portfolio and its other clients and that the total
commissions paid by the Funds and the Portfolio will be reasonable in relation
to the benefits received by the Funds and the Portfolio over the long term.
Research services may also be received from dealers who execute Fund
transactions in 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 the Funds or the Portfolio toward payment of the Funds'
or the Portfolio's expenses, such as transfer agent and custodian fees.
Investment decisions for each Fund and the Portfolio and for other investment
accounts managed by 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 one or both Funds and the
Portfolio. In such cases, simultaneous transactions may occur. Purchases or
sales are then allocated as to price or amount in a manner deemed fair and
equitable to all accounts involved. While in some cases this practice could have
a detrimental effect upon the price or value of the security as far as the Funds
and the Portfolio are concerned, in other cases the Manager believes that
coordination and the ability to participate in volume transactions will be
beneficial to the Funds and the Portfolio.
Under a policy adopted by the Company's Board of Directors and the Portfolio's
Board of Trustees, and subject to the policy of obtaining the best net results,
the Manager may consider a broker/dealer's sale of the shares of the Funds and
the other funds for which the Manager serves as investment manager in selecting
brokers and dealers for the execution of portfolio transactions. This policy
does not imply a commitment to execute portfolio transactions through all
broker/ dealers that sell shares of the Funds and such other funds.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL INCOME FUNDS
Each Fund and the Portfolio contemplates purchasing most foreign equity
securities in over-the-counter markets or stock exchanges located in the
countries in which the respective principal offices of the issuers of the
various securities are located, if that is the best available market. The fixed
commissions paid in connection with most such foreign stock transactions
generally are higher than negotiated commissions on United States transactions.
There generally is less government supervision and regulation of foreign stock
exchanges and brokers than in the United States. Foreign security settlements
may in some instances be subject to delays and related administrative
uncertainties.
Foreign equity securities may be held by a Fund and the Portfolio in the form of
American Depository Receipts ("ADRs"), American Depository Shares ("ADSs"),
Continental Depository Receipts ("CDRs") or European Depository Receipts
("EDRs") or securities convertible into foreign equity securities. ADRs, ADSs,
CDRs and EDRs may be listed on stock exchanges, or traded in the 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 the
Funds and the Portfolio may invest generally are traded in the OTC markets.
The Funds and the Portfolio contemplate that, consistent with the policy of
obtaining the best net results, brokerage transactions may be conducted through
certain companies that are members of the Liechtenstein Global Trust. The
Company's Board of Directors has adopted procedures in conformity with Rule
17e-1 under the 1940 Act to ensure that all brokerage commissions paid to such
affiliates are reasonable and fair in the context of the market in which they
are operating. Any such transactions will be effected and related compensation
paid only in accordance with applicable SEC regulations. For the fiscal years
ended October 31, 1996, 1995 and 1994, the Portfolio paid aggregate brokerage
commissions of $86,600, $0 and $24,000, respectively. For the fiscal years ended
October 31, 1996, 1995 and 1994, the Government Income Fund paid aggregate
brokerage commissions of $24,663, $0 and $92,397, respectively. For the fiscal
years ended October 31, 1996, 1995 and 1994, the Strategic Income Fund paid
aggregate brokerage commissions of $85,404, $0 and $134,876, respectively.
PORTFOLIO TRADING AND TURNOVER
Each Fund and the Portfolio engages in portfolio trading when the Manager
concludes that the sale of a security owned by a Fund and the Portfolio and/or
the purchase of another security of better value can enhance principal and/or
increase income. A security may be sold to avoid any prospective decline in
market value, or a security may be purchased in anticipation of a market rise.
Consistent with each Fund's and the Portfolio's investment objectives, a
security also may be sold and a comparable security purchased coincidentally in
order to take advantage of what is believed to be a disparity in the normal
yield and price relationship between the two securities. Although the Funds and
the Portfolio generally do not intend to trade for short-term profits, the
securities in each Fund's and the Portfolio's portfolio will be sold whenever
the Manager believes it is appropriate to do so, without regard to the length of
time a particular security may have been held. Portfolio turnover is calculated
by dividing the lesser of sales or purchases of portfolio securities by each
Fund's or the Portfolio's average month-end portfolio value, excluding
short-term investments. Higher portfolio turnover involves correspondingly
greater brokerage commissions and other transaction costs that a Fund or the
Portfolio will bear directly, and may result in the realization of net capital
gains that are taxable when distributed to each Fund's shareholders. The
portfolio turnover rates for the Government Income Fund, Strategic Income Fund
and the Portfolio the last two fiscal years were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------- -----------------
<S> <C> <C>
Government Income Fund............................................................... 268% 385%
Strategic Income Fund................................................................ 177% 238%
High Income Portfolio................................................................ 290% 213%
</TABLE>
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL INCOME FUNDS
DIRECTORS, TRUSTEES AND
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The term "Directors" as used below refers to the Company's Directors and the
Portfolio's Trustees collectively. The Company's Directors and executive
officers and the Portfolio's Trustees and executive officers are listed below.
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY/PORTFOLIO AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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) since 1995; President, GT Global since 1995;
50 California Street President and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice President
San Francisco, CA 94111 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 26
<PAGE>
GT GLOBAL INCOME FUNDS
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY/PORTFOLIO AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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 has a Nominating and Audit Committee, composed of Miss Quigley and
Messrs. Anderson, Bayley and Patterson, which is responsible for nominating
persons to serve as Directors, reviewing audits of the Company and its funds and
recommending firms to serve as independent auditors of the Company. Each of the
Directors and officers of the Company is also a Director and officer of G.T.
Investment Portfolios, Inc., 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 and Growth
Portfolio, which also are registered investment companies managed by the
Manager. Each of the individuals listed above serves as a Director or officer of
the Company as well as a Trustee or officer of the Portfolio. Each Director and
Officer serves in total as a Director and or Trustee and Officer, respectively,
of 11 registered investment companies with 41 series managed or administered by
the Manager. Each Director or Trustee who is not a director, officer or employee
of the Manager or any affiliated company is paid aggregate fees of $5,000 per
annum, plus $300 per Fund for each meeting of the Board attended, and reimburses
travel and other expenses incurred in connection with attendance at such
meetings. Other Directors and officers receive no compensation or expense
reimbursement from the Company. For the fiscal year October 31, 1996, Mr.
Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not directors,
officers, or employees of the Manager or any affiliated companies, received
total compensation of $30,200, $30,200, $26,600 and $30,200, respectively, from
the Company's series Funds for their services as Directors. For the fiscal year
ended October 31, 1996, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley
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 accrued 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 the Funds or of all the Company's Funds in the aggregate.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL INCOME FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
The Manager serves as the Government Income Fund's and the Strategic Income
Fund's investment manager and administrator under an Investment Management and
Administration Contract between the Company and the Manager ("Company Management
Contract") and as the Portfolio's investment manager and administrator under an
Investment Management and Administration Contract between the Portfolio and the
Manager ("Portfolio Management Contract") (collectively, "Management
Contracts"). The Manager serves as the High Income Fund's administrator under an
Administration Contract ("Administration Contract") between the Company and the
Manager. 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 the Government Income Fund, the Strategic
Income Fund and the Portfolio and as administrator, the Manager administers each
Fund's and the Portfolio'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, the Funds, and the Portfolio and provides suitable office space,
necessary small office equipment and utilities. For these services, the
Government Income Fund and the Strategic Income Fund each pay the Manager
investment management and administration fees, based on the Funds' average daily
net assets computed daily and paid monthly, at the annualized rate of .725% on
the first $500 million, .70% on the next 1 billion, .675% on the next $1
billion, and .65% on amounts thereafter. The High Income Fund pays
administration fees, computed daily and paid monthly, to the Manager at the
annualized rate of 0.25% of the Fund's average daily net assets. In addition,
the High Income Fund bears a pro rata portion of the investment management and
administration fee paid by the Portfolio to the Manager. The Portfolio pays such
fees also computed daily and paid monthly at the annualized rate of .475% on the
first $500 million, .45% on the next $1 billion, .425% on the next $1 billion,
and .40% on amounts thereafter of its average daily net assets, plus 2% of the
Portfolio's total investment income as stated in the Portfolio's Statement of
Operations, calculated in accordance with generally accepted accounting
principles, adjusted daily for currency revaluations, on a marked to market
basis, of the Portfolio's assets; provided, however, that during any fiscal year
this amount shall not exceed 2% of the Portfolio's total investment income
calculated in accordance with generally accepted accounting principles.
The Management Contracts may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors or the Portfolio's Board of Trustees, as
applicable, or by the vote of a majority of the Fund's or the Portfolio's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors or Trustees who are not parties to the Management Contract or the
Administration Contract, as applicable or "interested persons" of any such party
(as defined in the 1940 Act), cast in person at a meeting called for the
specific purpose of voting on such approval. The Management Contracts provide
that with respect to the Government Income Fund, the Strategic Income Fund and
the Portfolio and the Administration Contract provides that with respect to the
High Income Fund either the Company, the Portfolio or the Manager may terminate
the Contract without penalty upon sixty days' written notice to the other party.
The Management Contracts and the Administration Contract terminate automatically
in the event of their assignment (as defined in the 1940 Act).
In each of the last three fiscal years the Government Income Fund paid
investment management and administration fees to the Manager in the following
amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1996....................................................................................................... $ 3,672,503
1995....................................................................................................... 4,946,971
1994....................................................................................................... 6,390,750
</TABLE>
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL INCOME FUNDS
In each of the last three fiscal years the Strategic Income Fund paid investment
management and administration fees to the Manager in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1996....................................................................................................... $ 3,807,689
1995....................................................................................................... 4,293,053
1994....................................................................................................... 5,392,542
</TABLE>
In each of the last three fiscal years, the Portfolio paid investment management
and administration fees to the Manager in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1996....................................................................................................... $ 3,014,924
1995....................................................................................................... 2,411,786
1994....................................................................................................... 2,266,420
</TABLE>
In each of the last three fiscal years, the High Income Fund paid investment
management and administration fees to the Manager in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1996....................................................................................................... $ 1,015,220
1995....................................................................................................... 860,884
1994....................................................................................................... 886,795
</TABLE>
DISTRIBUTION SERVICES
Each Fund's Advisor Class shares are offered continuously through each Fund's
principal underwriter and distributor, GT Global on a "best efforts" basis
without a sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING 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, a new account fee of $4.00 per account, a per transaction fee of $1.75
for all transactions other than exchanges and a per exchange fee of $2.25. The
Transfer Agent also is reimbursed by each Fund for its out-of-pocket expenses
for such items as postage, forms, telephone charges, stationery and office
supplies. The Manager serves as each Fund's pricing and accounting agent. For
the fiscal years ended October 31, 1996 and October 31, 1995, the Fund paid
transfer agency and accounting services fees to the Manager of Government Income
Fund, Strategic Income Fund, and High Income Fund were $1,026,383 and
$1,134,651; $1,159,230 and $1,253,480; and $746,349 and $679,763, respectively.
EXPENSES OF THE FUNDS AND THE PORTFOLIO
Each Fund and the Portfolio pays all expenses not assumed by the Manager, GT
Global and other agents. These expenses include, in addition to the advisory,
distribution, transfer agency, pricing and accounting agent and brokerage fees
discussed above, legal and audit expenses, custodian fees, directors' fees,
organizational fees, fidelity bond and other insurance premiums, taxes,
extraordinary expenses and the expenses of reports and prospectuses sent to
existing investors. The allocation of general Company expenses and expenses
shared by the Funds and other funds organized as series of the Company are
allocated on a basis deemed fair and equitable, which may be based on the
relative net assets of the Funds or the nature of the services performed and
relative applicability to each Fund. Expenditures, including costs incurred in
connection with the purchase or sale of portfolio securities, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses. The ratio of each Fund's and the Portfolio's expenses to its
relative net assets can be expected to be higher than the expense ratios of
funds investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
each Fund and the Portfolio generally are higher than the comparable expenses of
such other funds.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL INCOME FUNDS
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, each Fund's net asset value per share for each
class of shares is determined at the close of regular trading on the New York
Stock Exchange ("NYSE") (currently, 4:00 P.M. Eastern time, unless weather,
equipment failure or other factors contribute to an earlier closing business
time) on each business day the NYSE is open for business. Currently, the NYSE is
closed on weekends and on certain days relating to the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
Each Fund's and the Portfolio's portfolio securities and other assets are valued
as follows:
Equity securities, including ADRs, ADSs and EDRs, which are traded on stock
exchanges are valued at the last sale price on the exchange or in the principal
over-the-counter market in which such securities are traded, as of the close of
business on the day the securities are being valued or, lacking any sales, at
the last available bid price. In cases where securities are traded on more than
one exchange, the securities are valued on the exchange determined by the
Manager to be the primary market.
Long-term debt obligations are valued at the mean of representative quoted bid
or asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
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,
provided such valuations represent fair value.
Options on indices, securities and currencies purchased by a Fund or the
Portfolio are valued at their last bid price in the case of listed options or,
in the case of OTC options at the average of the last bid prices obtained from
dealers, unless a quotation from only one dealer is available, in which case
only that dealer's price will be used. When market quotations for futures and
options on futures held by a Fund or the Portfolio are readily available, those
positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available (including restricted securities which are subject to limitations as
to their sale) are valued at fair value as determined in good faith by or under
the direction of the Company's Board of Directors. The valuation procedures
applied in any specific instance are likely to vary from case to case. However,
consideration is generally given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors also are generally considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of a Fund's or the Portfolio's total assets.
The Fund's or the Portfolio's liabilities, including accruals for expenses, are
deducted from its total assets. Once the total value of a Fund's or the
Portfolio's net assets is so determined, that value is then divided by the total
number of shares outstanding (excluding treasury shares), and the result,
rounded to the nearest cent, is the net asset value per share.
Any assets or liabilities initially denominated in terms of foreign currencies
are translated into U.S. dollars at the official exchange rate or at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors, in good faith, will
establish a conversion rate for such currency.
European, Far Eastern or Latin American securities trading may not take place on
all days on which the NYSE is open. Further, trading takes place in Japanese
markets on certain Saturdays and in various foreign markets on days on which the
NYSE is not open. Consequently, the calculation of the Funds' respective net
asset values therefore may not take place
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL INCOME FUNDS
contemporaneously with the determination of the prices of securities held by the
Funds. Events affecting the values of portfolio securities that occur between
the time their prices are determined and the close of regular trading on the
NYSE will not be reflected in the Funds' net asset values unless the Manager,
under the supervision of the Company's Board of Directors, determines that the
particular event would materially affect net asset value. As a result, a Fund's
net asset value may be significantly affected by such trading on days when a
shareholder cannot purchase or redeem shares of the Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES AND
REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Advisor Class shares purchased should accompany the purchase order,
or funds should be wired to the Transfer Agent as described in the Prospectus.
Payment, other than by wire transfer, must be made by check or money order drawn
on a U.S. bank. Checks or money orders must be payable in U.S. dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, on account of a check returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by a Fund by reason of such cancellation, and if such
purchaser is a shareholder, that Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse that Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Funds reserve the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on a Fund
until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Funds reserve the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law.
EXCHANGES BETWEEN FUNDS
Shares of each Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Advisor Class shares
of a Fund may be exchanged only for Advisor Class shares of other GT Global
Mutual Funds. The exchange privilege is not an option or right to purchase
shares but is permitted under the current policies of the respective GT Global
Mutual Funds. The privilege may be discontinued or changed at any time by any of
the funds upon 60 days' prior notice to the shareholders of such fund and is
available only in states where the exchange may be made legally. Before
purchasing shares through the exercise of the exchange privilege, a shareholder
should obtain and read a copy of the prospectus of the fund to be purchased and
should consider the investment objective(s) of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone, telex or telegram
redemption services must submit a "Corporate Resolution" or "Certificate of
Partnership" indicating the names, titles and the required number of signatures
of persons authorized to act on its behalf. The certificate must be signed by a
duly authorized officer(s) and, in the case of a corporation, the corporate seal
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire directly to the shareholder's predesignated account at a domestic bank
or savings institution, if the proceeds are at least $1,000. Costs in connection
with the administration of this service, including wire charges, currently are
borne by the appropriate Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Funds and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days written notice.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL INCOME FUNDS
SUSPENSION OF REDEMPTION PRIVILEGES
The Funds may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
exists, as defined by the SEC, which would prohibit the Funds from disposing of
their portfolio securities or in fairly determining the value of their assets,
or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for a Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of a Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that each Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the net
assets of the Fund at the beginning of such period. This election is irrevocable
so long as Rule 18f-1 remains in effect, unless the SEC by order upon
application permits the withdrawal of such election.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the 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. The
High Income Fund, as an investor in the Portfolio, is deemed to own a
proportionate share of the Portfolio's assets, and to earn a proportionate share
of the Portfolio's income, for purposes of determining whether that Fund
satisfies all the requirements described above to qualify as a RIC.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
See "Taxation of Certain Investment Activities" below for a discussion of the
tax consequences to the High Income Fund of hedging transactions engaged in, and
investments in passive foreign investment companies ("PFICS") and other foreign
securities by, the Portfolio.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL INCOME FUNDS
TAXATION OF THE PORTFOLIO -- GENERAL
The Portfolio is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership." As a result, the Portfolio is not subject
to federal income tax; instead, the High Income Fund, as an investor in the
Portfolio, is required to take into account in determining its federal income
tax liability its share of the Portfolio's income, gains, losses, deductions and
credits, without regard to whether it has received any cash distributions from
the Portfolio. The Portfolio also is not subject to New York income or franchise
tax.
Because, as noted above, the High Income Fund will be deemed to own a
proportionate share of the Portfolio's assets, and to earn a proportionate share
of the Portfolio's income, for purposes of determining whether that Fund
satisfies the requirements to qualify as a RIC, the Portfolio intends to
continue to conduct its operations so that the High Income Fund will be able to
continue to satisfy all those requirements.
Distributions to the High Income Fund from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in that Fund's
recognition of any gain or loss for federal income tax purposes, except that (1)
gain will be recognized to the extent any cash that is distributed exceeds that
Fund's basis for its interest in the Portfolio before the distribution, (2)
income or gain will be recognized if the distribution is in liquidation of that
Fund's entire interest in the Portfolio and includes a disproportionate share of
any unrealized receivables held by the Portfolio, and (3) loss will be
recognized if a liquidation distribution consists solely of cash and/or
unrealized receivables. The High Income Fund's basis for its interest in the
Portfolio generally will equal the amount of cash and the basis of any property
that Fund invests in the Portfolio, increased by that Fund's share of the
Portfolio's net income and gains and decreased by (1) the amount of cash and the
basis of any property the Portfolio distributes to that Fund and (2) that Fund's
share of the Portfolio's losses.
TAXATION OF CERTAIN INVESTMENT ACTIVITIES
For purposes of the following discussion, "Investor Fund" means the Government
Income Fund, the Strategic Income Fund or the Portfolio.
FOREIGN TAXES. Dividends and interest received by an Investor Fund may be
subject to income, withholding, or other taxes imposed by foreign countries and
U.S. possessions ("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 the High Income Fund, its proportionate share of the Portfolio's assets)
at the close of its taxable year consists of securities of foreign corporations,
the Fund will be eligible to, and may, file an election with the Internal
Revenue Service that will enable its shareholders, in effect, to receive the
benefit of the foreign tax credit with respect to any foreign taxes paid by it
(taking into account, in the case of the High Income Fund, its proportionate
share of any foreign taxes paid by the 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 proportionate 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 High Income Fund, its proportionate share of the
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 (or, in the case of the High Income Fund, its proportionate
share of the Portfolio's income) from sources within foreign countries and U.S.
possessions if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES. Each Investor Fund may invest in the
stock of PFICs part. A PFIC is a foreign corporation that, in general, meets
either of the following tests: (1) at least 75% of its gross income is passive
or (2) an average of at least 50% of its assets produce, or are held for the
production of, passive income. Under certain circumstances, a Fund will be
subject to federal income tax on a part (or, in the case of the High Income
Fund, its proportionate share of a part) of any "excess distribution" received
by it (or, in the case of the High Income Fund, by the Portfolio) on the stock
of a PFIC or of any gain from its (or, in the case of the High Income Fund, by
the Portfolio's) disposition of the stock (collectively "PFIC income"), plus
interest thereon, even if the Fund distributes the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income will be included in
the Fund's investment company taxable income and, accordingly, will not be
taxable to the Fund to the extent that income is distributed to its
shareholders.
If an Investor Fund invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Investor Fund (or, in the case of the Portfolio, the
High Income Fund) would be required to include in income each taxable year its
pro rata share (taking into account, in the case of High Income Fund, its
proportionate share of the Portfolio's pro rata share) of the QEF's ordinary
earnings and net capital gain (the excess of
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL INCOME FUNDS
net long-term capital gain over net short-term capital loss) -- which most
likely would have to be distributed by the Investor Fund (or, in the case of the
Portfolio, the High Income 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.
Pursuant to proposed regulations, open-end RICs such as the Fund would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. The Investor Fund's use
of hedging transactions, such as selling (writing) and purchasing options and
Futures Contracts and entering into Forward Contracts, involves complex rules
that will determine, for federal income tax purposes, the character and timing
of recognition of the gains and losses an Investor Fund realizes in connection
therewith. Gains from the disposition of foreign currencies (except certain
gains that may be excluded by future regulations), and gains from options,
Futures and Forward Contracts derived by an Investor Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement for that Investor Fund (or, in
the case of the Portfolio, the High Income Fund). However, income from the
disposition by an Investor Fund of options and Futures (other than those on
foreign currencies) will be subject to the Short-Short Limitation for that
Investor Fund (or, in the case of the Portfolio, the High Income Fund) if they
are held for less than three months. Income from the disposition by an Investor
Fund of foreign currencies, and options, Futures and Forward Contracts on
foreign currencies, that are not directly related to its principal business of
investing in securities (or options and Futures with respect thereto) also will
be subject to the Short-Short Limitation for that Investor Fund (or, in the case
of the Portfolio, the High Income Fund) if they are held for less than three
months.
If an Investor Fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether the Investor Fund (or,
in the case of the Portfolio, the High Income Fund) satisfies the Short-Short
Limitation. Thus, only the net gain (if any) from the designated hedge will be
included in gross income for purposes of that limitation. Each Investor Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all those transactions listed. To the extent this treatment is
not available, an Investor Fund may be forced to defer the closing out of
certain options, Futures, Forward Contracts and/or foreign currency positions
beyond the time when it otherwise would be advantageous to do so, in order for
that Investor Fund (or, in the case of the Portfolio, the High Income Fund) to
continue to qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by an Investor Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, Futures and Forward
Contracts on foreign currencies ("Section 988" gains and losses). Section 988
gain or loss generally is computed separately and treated as ordinary income or
loss. In the case of overlap between sections 1256 and 988, special provisions
determine the character and timing of any income, gain or loss. Each Investor
Fund attempts to monitor section 988 transactions to minimize any adverse tax
impact.
The Strategic Income Fund and the Portfolio each may acquire zero coupon or
other securities issued with original issue discount ("OID"). As a holder of
those securities, that Fund and the Portfolio (and, through it, the High Income
Fund) each must include in its income the portion of the OID that accrues on the
securities during the taxable year, even if no corresponding payment on them is
received during the year. Similarly, the Strategic Income Fund and the Portfolio
each must include in its gross income securities it receives as "interest" on
payment-in-kind securities. Because each Fund annually must distribute
substantially all of its investment company taxable income, including any OID
and other non-cash income, to satisfy the Distribution Requirement and avoid
imposition of the Excise Tax, either of them may be required in a particular
year to distribute as a dividend an amount that is greater than the total amount
of cash it actually receives (or, in the case of the High Income Fund, its share
of the total amount of cash the Portfolio actually receives). Those
distributions will be made from the Fund's (or, in the case of the High Income
Fund, its, or its share of the Portfolio's) cash assets or, if necessary, from
the proceeds of sales of portfolio securities. A Fund may (directly or through
the Portfolio) realize capital gains or losses from those sales, which would
increase or decrease its investment company
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL INCOME FUNDS
taxable income and/or net capital gain. In addition, any such gains may be
realized on the disposition of securities held for less than three months.
Because of the Short-Short Limitation, any such gains would reduce the ability
of the Strategic Income Fund or the Portfolio, as the case may be, to sell other
securities, or certain options, Futures, Forward Contracts or foreign currency
positions, held for less than three months that it might wish to sell in the
ordinary course of its portfolio management.
TAXATION OF THE FUND'S SHAREHOLDERS
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from a Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by a Fund (directly or through
the Portfolio) from U.S. corporations. However, dividends received by a
corporate shareholder and deducted by it pursuant to the dividends-received
deduction are subject indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation, or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by a Fund to a foreign shareholder
is "effectively connected with the conduct of a U.S. trade or business," in
which case the reporting and withholding requirements applicable to domestic
taxpayers will apply. Distributions of net capital gain are not subject to
withholding, but in the case of a foreign shareholder who is a nonresident alien
individual, those distributions ordinarily will be subject to U.S. income tax at
a rate of 30% (or lower treaty rate) if the individual is physically present in
the United States for more than 182 days during the taxable year and the
distributions are attributable to a fixed place of business maintained by the
individual in the United States.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund's, their shareholders and the Portfolio.
Investors are urged to consult their own tax advisers for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from the Fund.
- --------------------------------------------------------------------------------
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.
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL INCOME FUNDS
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of each Fund's and the
Portfolio's assets. State Street is authorized to establish and has established
separate accounts in foreign currencies and to cause securities of the Funds and
the Portfolio to be held in separate accounts outside the United States in the
custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' and the Portfolio's independent accountants are Coopers & Lybrand
L.L.P., One Post Office Square, Boston Massachusetts 02109. Coopers & Lybrand
L.L.P., conducts audits of each Fund's and the Portfolio's financial statements,
assists in the preparation of the Funds' and the Portfolio's federal and state
income tax returns and consults with the Company, the Funds and the Portfolio as
to matters of accounting, regulatory filings, and federal and state income
taxation.
The audited financial statements of the Funds and the Portfolio included in this
Statement of Additional Information have been examined by Coopers & Lybrand
L.L.P., as stated in their opinion appearing herein and are included in reliance
upon such opinion given upon the authority of that firm as experts in accounting
and auditing.
USE OF NAME
The Manager has granted the Funds and the Portfolio the right to use the "GT"
name and "GT Global" and has reserved the right to withdraw its consent to the
use of such names by the Company, the Funds and/or the Portfolio at any time, or
to grant the use of such names to any other company.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
STANDARDIZED RETURNS
Each Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), are 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) reinvestment of dividends and other distributions at net
asset value on the reinvestment date determined by the Company's Board of
Directors; and (4) 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 Strategic Income Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
STRATEGIC STRATEGIC STRATEGIC
INCOME INCOME INCOME
FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- ----------------------------------------------------------------------------------- ----------- ----------- ---------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996................................................. 17.15% 17.15% 23.39%
October 31, 1991 through October 31, 1996.......................................... 10.48% n/a n/a
May 31, 1995 (commencement of operations) through October 31, 1996................. n/a n/a 18.99 %
October 22, 1992 (commencement of operations) through October 31, 1996............. n/a 10.27 % n/a
March 29, 1988 (commencement of operations) through October 31, 1996............... 8.96 % n/a n/a
</TABLE>
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL INCOME FUNDS
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the Government Income Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
GOVERNMENT GOVERNMENT GOVERNMENT
INCOME INCOME INCOME
FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- ----------------------------------------------------------------------------- ------------- ------------- -----------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996........................................... 2.03% 1.57% 7.49%
October 31, 1991 through October 31, 1996.................................... 5.64% n/a n/a
May 31, 1995 (commencement of operations) through October 31, 1996........... n/a n/a 5.84 %
October 22, 1992 (commencement of operations) through October 31, 1996....... n/a 5.57 % n/a
March 29, 1988 (commencement of operations) through October 31, 1996......... 6.73 % n/a n/a
</TABLE>
The Standardized Returns for the Class A, Class B and Advisor Class shares of
the High Income Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
HIGH
HIGH HIGH INCOME
INCOME INCOME FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- ----------------------------------------------------------------------------------- ---------- ---------- --------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996................................................. 32.44% 33.16% 39.38%
May 31, 1995 (commencement of operations) through October 31, 1996................. n/a n/a 32.13 %
October 22, 1992 (commencement of operations) through October 31, 1996............. 16.20 % 16.52 % 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 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 are not subject to sales 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 Strategic Income Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
STRATEGIC
STRATEGIC STRATEGIC INCOME
INCOME INCOME FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- ----------------------------------------------------------------------------------- ---------- ---------- --------------
<S> <C> <C> <C>
May 31, 1995 (commencement of operations) through October 31, 1996................. n/a n/a 27.98 %
October 22, 1992 (commencement of operations) through October 31, 1996............. n/a 50.21 % n/a
March 29, 1988 (commencement of operations) through October 31, 1996............... 119.43 % 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 Government Income Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
GOVERNMENT
GOVERNMENT GOVERNMENT INCOME
INCOME INCOME FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- ----------------------------------------------------------------------------- ------------ ------------ --------------
<S> <C> <C> <C>
May 31, 1995 (commencement of operations) through October 31, 1996........... n/a n/a 8.38 %
October 22, 1992 (commencement of operations) through October 31, 1996....... n/a 26.14 % n/a
March 29, 1988 (commencement of operations) through October 31, 1996......... 83.72 % 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 High Income Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
HIGH
HIGH HIGH INCOME
INCOME INCOME FUND
FUND FUND (ADVISOR
PERIOD (CLASS A) (CLASS B) CLASS)
- ----------------------------------------------------------------------------------- ---------- ---------- --------------
<S> <C> <C> <C>
May 31, 1995 (commencement of operations) through October 31, 1996................. n/a n/a 48.49 %
October 22, 1992 (commencement of operations) through October 31, 1996............. 92.10 % 87.02 % n/a
</TABLE>
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL INCOME FUNDS
YIELD
Each Fund may also include its current yield ("Yield") in advertisements, sales
literature and shareholder reports. Yield, which is calculated separately for
Class A, Class B and Advisor Class shares of each Fund, is computed by dividing
the difference between dividends and interest earned during a one-month period
("a") and expenses accrued for the period (net of reimbursements) ("b") by the
product of the average daily number of shares outstanding during the period that
were entitled to receive dividends ("c") and the maximum offering price per
share on the last day of the period ("d") according to the following formula as
required by the SEC:
<TABLE>
<S> <C> <C> <C> <C> <C>
a-b
YIELD = 2 [( -- + 1 ) (6)-1]
cd
</TABLE>
The Yields of the Class A shares of the Strategic Income Fund, Government Income
Fund and High Income Fund for the one-month period ended October 31, 1996 were
6.58%, 6.23% and 7.29%, respectively. The Yields of the Class B shares of the
Strategic Income Fund, Government Income Fund and High Income Fund for the
one-month period ended October 31, 1996 were 6.23%, 5.87% and 7.00%,
respectively. The Yields of the Advisor Class shares of the Strategic Income
Fund, Government Income Fund and High Income Fund for the one-month period ended
October 31, 1996 were 7.27%, 6.74% and 8.04%, respectively.
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the Securities Act of 1933, as amended, on account
of the inclusion of such information herein.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of any of these Funds, nor is it a
prediction of such performance. The performance of the Funds will differ from
the historical performance of relevant indices. The performance of indices does
not take expenses into account, while each Fund incurs expenses in its
operations, which will reduce performance. Each Fund is actively managed, I.E.,
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 relevant indices.
Each Fund and GT Global, from time to time, may compare the Funds with the
following:
(1) Various Salomon Brothers World Bond Indices, which measure the total
return performance of high quality non-U.S. dollar denominated securities in
major sectors of the worldwide bond markets including the Salomon Brothers
World Government Bond Index, which is a widely used index of ten year
government bonds with remaining maturities greater than one year.
(2) The Shearson Lehman Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's or BBB by S&P, or, in
the case of nonrated bonds, BBB by Fitch Investors Service, Inc. ("Fitch")
(excluding Collateralized Mortgage Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings and comparisons published or prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Company Services ("CDA/Wiesenberger"), Morningstar, Inc.
("Morningstar") and/or other companies that rank or compare mutual funds by
overall performance, investment objectives, assets, expense levels, periods
of existence and/or other factors. In this regard, each Fund may be
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL INCOME FUNDS
compared to the Fund's "peer group" as defined by Lipper, CDA/Wiesenberger,
Morningstar and/or other firms, as applicable or to specific funds or groups
of funds within or without such peer group. Morningstar is a mutual fund
rating service that also rates mutual funds on the basis of risk-adjusted
performance. Morningstar ratings are calculated from a fund's three, five
and ten year average annual returns with appropriate fee adjustments and a
risk factor that reflects fund performance relative to the three-month U.S.
Treasury bill monthly returns. Ten percent of the funds in an investment
category receive five stars and 22.5% receive four stars. The ratings are
subject to change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and Gross National Product ("GNP") weighted
index, beginning in 1975. The returns are broken down by local market and
currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized index composed of the capitalization-weighted average of the
price of 500 of the largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-backed
fixed income securities and the Salomon Brothers Brady Bond Index which
measures the total return performance of Brady Bonds issued since March,
1990, and are issued in U.S. dollar denominated instruments.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies in Europe, Australia and the Far East.
(13) International Finance Corporation ("IFC") Emerging Markets Data Base
which provides detailed statistics on bond and stock markets in developing
countries
(14) J.P. Morgan & Co. Bond Indices, including, among others, the J.P.
Morgan Traded Government Bond Index which is an index composed of liquid
non-U.S. fixed income securities based on market weightings and currency
since 1986.
(15) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(16) The World Bank Publication of Trends in Developing Countries
("TIDE") provides brief reports on most of the World Bank's borrowing
members. The World Development Report is published annually and looks at
global and regional economic trends and their implications for the
developing economies.
(17) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(18) Datastream and Worldscope, each is an on-line database retrieval
service for information including but not limited to international financial
and economic data.
(19) International Financial Statistics, which is produced by the
International Monetary Fund.
(20) Various publications and reports produced by the World Bank and its
affiliates.
(21) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(22) Various publications including but not limited to ratings agencies
such as Moody's, S&P and Fitch.
(23) Various publications from the Organization for Economic Cooperation
and Development ("OECD").
(24) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan
Stanley,
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL INCOME FUNDS
Smith Barney, S.G. Warburg, Jardine Flemming, The Bank for International
Settlements, Asian Development Bank, Bloomberg, L.P. and Ibbottson Associates
may be used as well as information reported by the Federal Reserve and the
respective Central Banks of various nations. In addition, performance rankings,
ratings and commentary reported periodically in national financial publications,
included but not limited to Money Magazine, Smart Money, Global Finance,
EuroMoney, Financial World, Forbes, Fortune, Business Week, Latin Finance, the
Wall Street Journal, Emerging Markets Weekly, Kiplinger's Guide To Personal
Finance, Barron's, The Financial Times, USA Today, The New York Times and
Investors Business Digest. Each Fund may compare its performance to that of
other compilations or indices of comparable quality to those listed above and
other indices which may be developed and made available.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management in
advertising materials.
GT Global believes the GT Global Income Funds can be an appropriate investment
for long-term investment goals including but not limited to funding retirement,
paying for education or purchasing a house. The GT Global Income Funds do not
represent a complete investment program and the investors should consider the
Funds as appropriate for a portion of their overall investment portfolio with
regard to their long-term investment goals.
GT Global believes that a growing number of consumer products, including but not
limited to home appliances, automobiles and clothing, purchased by Americans are
manufactured abroad. GT Global believes that investing globally in the companies
that produce products for U.S. consumers can help U.S. investors seek protection
of the value of their assets against the potentially increasing costs of foreign
manufactured goods. Of course, there can be no assurance that there will be any
correlation between global investing and the costs of such foreign goods unless
there is a corresponding change in value of the U.S. dollar to foreign
currencies. From time to time, GT Global may refer to or advertise the names of
such companies although there can be no assurance that any GT Global Mutual Fund
may own the securities of these companies.
The Funds may compare their performance to that of other compilations or indices
of comparable quality to those listed above which may be developed and made
available in the future. The Funds may be compared in advertising to
Certificates of Deposit (CDs), the Bank Rate Monitor National Index, an average
of the quoted rates for 100 leading banks and thrifts in ten U.S. cities chosen
to represent the ten largest Consumer Metropolitan statistical areas, or other
investments issued by banks. The Funds differ from bank investments in several
respects. The Funds may offer greater liquidity or higher potential returns than
CDs; but unlike CDs, the Funds will have a fluctuating share price and return
and is not FDIC insured.
The Funds' performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, each Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
GT Global Funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the Funds.
Ibbotson calculates total returns in the same method as the Funds. The Fund may
also compare performance to that of other compilations or indices that may be
developed and made available in the future.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL INCOME FUNDS
or business publications and periodicals, including model portfolios or
allocations, as they relate to fund management, investment philosophy, and
investment techniques.
Each Fund may discuss its Quotron number, CUSIP number, and its current
portfolio management team.
From time to time, each Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, each Fund may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, each Fund may quote financial
or business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of GT Global Funds to one another in appropriate categories over
specific periods of time may also be quoted in advertising.
Each Fund may quote various measures of volatility and benchmark correlation,
such as beta, standard deviation and R2 in advertising. In addition, each Fund
may compare these measures to those of other funds. Measures of volatility seek
to compare each Fund's historical share price fluctuations or total returns
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
Each Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a Fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after-tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
Each Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Mutual Funds through various retirement plans that
offer deferral of income taxes on investment earnings and may also enable an
investor to make pre-tax contributions. Because of their advantages, these
retirement plans may produce returns superior to comparable non-retirement
investments. The Funds may also discuss these plans, which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): 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 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 corporations 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
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL INCOME FUNDS
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 methods and advertising discuss the
risks inherent in investing. Risk represents the possibility that you may lose
some or all of your investment over a period of time. A basic tenet of investing
is the greater the potential reward, the greater the risk.
The major types of investment risk are market risk, industry risk, credit risk,
interest rate risk, liquidity risk and inflation risk. Market risk entails a
change in value of a security due to market uncertainty. Industry risk can be
described as the market risk associated with companies engaged in a similar
business.
The next two risks, credit and interest rate risk, more often are associated
with fixed income investing. Credit risk refers to the creditworthiness of an
issuer of debt securities and its ability to pay interest and repay the
principal value of the bond. Interest rate risk has two components. When
interest rates rise or fall the value of the security generally will move
correspondingly in the opposite direction. Further, the longer the maturity the
greater the impact on the bond's value.
Finally, there is inflation risk which does not affect a security's value but
its purchasing power i.e. the risk of changing price levels in the economy that
affects security prices or the price of goods and services.
From time to time, the Funds and GT Global will quote data regarding industries,
individual countries, regions, world stock exchanges, and economic and
demographic statistics from sources GT Global deems reliable, including 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 Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, 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: Organization for Economic Cooperation
and Development 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).
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL INCOME FUNDS
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 advertisements 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 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.
ECONOMIC DEVELOPMENT IN EMERGING MARKETS
The Manager has identified six phases to track the progress of developing
economies.
In addition, the Manager focuses on the transitions between each phase:
BETWEEN PHASES 1 & 2, STABILIZATION: Developing nations recognize the need
for economic reform and launch initiatives to stabilize their economies. Typical
measures might include initiating monetary reforms to contain inflation,
controlling government spending, and addressing external trade imbalances.
BETWEEN PHASES 2 & 3, RENOVATION: Economic development gathers momentum as
the governments of developing nations take further steps to increase
productivity and external competitiveness. Typical reforms include easing market
regulations, privatizing state-owned industries, lowering trade barriers and
reforming the national tax structure.
BETWEEN PHASES 3 & 4, NEW CONSTRUCTION: As economic reforms take hold,
infrastructure improvements are needed to facilitate and support long-term
growth. The construction and upgrading of highways and airports, communications
and utility systems generally require financing in the form of public debt.
Similarly, as the private sector develops, bolstered by new privatizations,
corporate debt securities typically are issued to finance business expansion.
EMERGING MARKET TRADING VOLUME
The annual trading volume of debt securities from developing economies according
to Salomon Brothers, Inc. has grown from $90 billion in 1990 to $150 billion in
1991, to $400 billion in 1992 and was estimated to be $1,200 billion at the end
of 1993 and $1.5 trillion at the end of 1994, respectively.
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL INCOME FUNDS
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
Moody's rates the debt securities issued by various entities from "Aaa" to "C".
Investment grade ratings are the first four categories:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude, or there
may be other elements present which make the long-term risks appear somewhat
greater.
A -- Upper-medium-grade-obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium-grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba -- Have speculative elements and their future cannot be considered as
well assured. Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B -- Generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small.
Caa -- Poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca -- Speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
C -- Lowest rated class of bonds. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities that are not
rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic ratings
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the company ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL INCOME 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 -- High grade. Very strong capacity to pay interest and repay
principal and differ from AAA issues only in a small degree.
A -- Have a strong capacity to pay interest and repay principal although
they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" are
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of this
obligation. "BB" indicates the lowest degree of speculation and "C" the
highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
BB -- Has less near-term vulnerability to default than other speculative
issues; however, it faces major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The "BB" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "BBB-" rating.
B -- Has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
CCC -- Has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The "CCC" rating category
is also used for debt subordinated to senior debt that is assigned an actual
or implied "B" or "B-" rating.
CC -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC" rating.
C -- Typically applied to debt subordinated to senior debt which is
assigned an actual or implied "CCC-" debt rating. The "C" rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" rating is used when interest payments
are not made on the date due even if the applicable grace period has not
expired, unless S&P believes that such payments will be made during such
grace period. The "D" rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1" and "Prime-2" to indicate commercial
paper having the highest capacity for timely repayment. Issuers (or supporting
institutions) rated Prime-1 have a superior ability to repay senior short-term
debt obligations. Prime-1 repayment ability generally will be evidenced by many
of the following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structure with moderate reliance on debt and ample asset protections; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2 have a strong
ability to repay senior short-term debt obligations. This normally will be
evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL INCOME FUNDS
and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging from
"A-1" for the highest quality obligations to "D" for the lowest. A-1 -- This
highest rating indicates that the degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics will be denoted with a plus sign (+) designation. A-2 --
Capacity for timely payments on issues with this designation is strong; however,
the relative degree of safety is not as high as for issues designated "A-1." A-3
- -- Issues carrying this designation have adequate capacity for timely payment.
They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations. B -- Issues
rated "B" are regarded as having only speculative capacity for timely payment. C
- -- This rating is assigned to short-term debt obligations with a doubtful
capacity for payment. D -- Debt rated "D" is in payment default. The "D" rating
category is used when interest payments or principal payments are not made on
the date due, even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Funds as of October 31, 1996 and for the
year then ended appear on the following pages.
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL INCOME 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 Government Income Fund, GT Global High Income Fund - Consolidated, and GT
Global Strategic Income Fund, including the portfolios of investments, as of
October 31, 1996, the related statements of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods indicated
herein. These financial statements and the 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 positions of GT
Global Government Income Fund, GT Global High Income Fund - Consolidated, and GT
Global Strategic Income Fund as of October 31, 1996, the results of their
operations for the year then ended, the changes in their net assets for each of
the two years in the period then ended, and the financial highlights for each of
periods indicated herein, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 13, 1996
F1
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (89.0%)
Australia (4.8%)
Commonwealth of Australia, 9.5% due 8/15/03 .......... AUD 21,800,000 $ 19,335,562 4.8
Canada (11.8%)
Canadian Government:
7% due 12/1/06 ..................................... CAD 40,000,000 31,138,957 7.6
8.75% due 12/1/05 .................................. CAD 19,600,000 17,046,021 4.2
Colombia (1.1%)
Republic of Colombia, 7.25% due 2/23/04 .............. USD 4,875,000 4,635,638 1.1
Denmark (2.9%)
Kingdom of Denmark, 7% due 12/15/04 .................. DKK 67,000,000 11,834,313 2.9
Finland (2.0%)
Finnish Government, 9.5% due 3/15/04 ................. FIM 31,000,000 8,182,127 2.0
Germany (17.6%)
Deutschland Republic, 6% due 1/5/06 .................. DEM 108,650,000 71,726,974 17.6
Ireland (1.9%)
Irish Gilts, 8% due 8/18/06 .......................... IEP 4,500,000 7,859,990 1.9
Italy (9.0%)
Italian Buoni Poliennali del Tesoro (BTPS):
9.5% due 2/1/99 .................................... ITL 22,600,000,000 15,650,408 3.8
10.5% due 11/1/00 .................................. ITL 17,000,000,000 12,393,065 3.1
9.5% due 2/1/01 .................................... ITL 12,110,000,000 8,593,403 2.1
Mexico (1.1%)
United Mexican States, 7.6875% due 8/6/01 - 144A+
{.} ................................................. USD 4,490,000 4,491,347 1.1
New Zealand (2.6%)
New Zealand Government, 8% due 11/15/06 .............. NZD 14,200,000 10,554,326 2.6
Poland (1.1%)
Republic of Poland, Past Due Interest, 4% due 10/27/14
- Registered++ ...................................... USD 5,605,000 4,631,131 1.1
South Africa (1.1%)
Republic of South Africa, 9.625% due 12/15/99 ........ USD 4,240,000 4,515,600 1.1
Spain (2.0%)
Kingdom of Spain, 10.1% due 2/28/01 .................. ESP 950,000,000 8,292,480 2.0
Sweden (4.8%)
Swedish Government, 13% due 6/15/01 .................. SEK 101,000,000 19,323,805 4.8
United Kingdom (10.5%)
United Kingdom Treasury:
7.5% due 12/7/06 ................................... GBP 16,000,000 25,821,527 6.3
7% due 11/6/01 ..................................... GBP 10,500,000 16,923,202 4.2
United States (14.7%)
United States Treasury Note:
7.875% due 11/15/04 ................................ USD 27,225,000 29,916,660 7.3
6.25% due 10/31/01 ................................. USD 20,000,000 20,150,000 5.0
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
United States Treasury Bond, 6.875% due 8/15/25 ...... USD 9,500,000 $ 9,726,738 2.4
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $351,306,081) ....... 362,743,274 89.0
------------ -----
<CAPTION>
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (4.4%)
New Zealand (2.2%)
New Zealand Treasury Bill, 9.23% due 1/15/97 ......... NZD 13,160,000 9,133,580 2.2
Philippines (2.2%)
Philippine Treasury Bill, 9.94% due 11/27/96 ......... PHP 233,300,000 8,832,945 2.2
------------
Total Treasury Bills (cost $17,878,115) .................. 17,966,525
------------
Commercial Paper - Discounted (3.1%)
Indonesia (1.2%)
PT Bank Tabungan Negara, effective yield 16.02%, due
9/12/97 ............................................. IDR 12,000,000,000 4,552,243 1.1
PT Bank Degang Negara, effective yield 16.02%, due
9/12/97 ............................................. IDR 750,000,000 284,515 0.1
Thailand (1.9%)
Bank of Ayudhya, 10.25% due 9/24/97 .................. THB 100,000,000 3,914,304 1.0
Siam City Bank Co., Ltd., 10.58% due 11/25/96 ........ THB 100,000,000 3,898,078 0.9
------------
Total Commercial Paper - Discounted (cost $12,670,668) ... 12,649,140
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $30,548,783) .......... 30,615,665 7.5
------------ -----
<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 $2,365,000 U.S. Treasury
Bonds, 7.125% due 2/15/23 (market value of collateral
is $2,497,903, including accrued interest). (cost
$2,446,377) ........................................... 2,446,377 0.6
------------ -----
TOTAL INVESTMENTS (cost $384,301,241) * .................. 395,805,316 97.1
Other Assets and Liabilities ............................. 11,803,202 2.9
------------ -----
NET ASSETS ............................................... $407,608,518 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{.} 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.
+ The coupon rate shown on floating rate note represents the rate at
period end.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
* For Federal income tax purposes, cost is $384,541,135 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 13,757,185
Unrealized depreciation: (2,493,004)
-------------
Net unrealized appreciation: $ 11,264,181
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1996
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- -------- -------- --------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 3,628,300 1.26651 11/12/96 $ 12,069
Canadian Dollars........................ 4,631,930 1.3427 11/29/96 14,368
Canadian Dollars........................ 3,436,593 1.34525 11/29/96 17,154
Canadian Dollars........................ 1,165,453 1.366 11/29/96 23,433
Canadian Dollars........................ 3,346,943 1.35055 11/29/96 29,776
Canadian Dollars........................ 3,735,427 1.3503 11/29/96 32,546
Danish Kroner........................... 8,920,056 5.7816 01/17/97 (9,227)
Deutsche Marks.......................... 14,902,129 1.51102 01/30/97 64,470
Deutsche Marks.......................... 21,428,571 1.45885 11/04/96 (801,268)
Deutsche Marks.......................... 4,661,689 1.5052 11/04/96 (25,396)
Deutsche Marks.......................... 198,229 1.5073 11/04/96 (802)
Deutsche Marks.......................... 7,433,593 1.5066 11/04/96 (33,552)
Irish Punts............................. 4,794,643 0.6252 01/02/97 76,118
Irish Punts............................. 13,246,732 0.62509 01/02/97 208,108
Italian Liras........................... 8,379,070 1,531.31 01/21/97 41,111
Italian Liras........................... 4,560,976 1,545.30 01/21/97 63,467
Japanese Yen............................ 12,352,371 109.85 01/13/97 (301,248)
Japanese Yen............................ 12,605,919 111.845 02/05/97 (36,577)
Japanese Yen............................ 13,804,625 105.3 11/05/96 (1,105,157)
Japanese Yen............................ 11,472,720 107.55 11/29/96 (614,681)
Japanese Yen............................ 6,001,115 109.3 11/29/96 (220,294)
-------------- --------------
Total Contracts to Buy (Payable amount
$167,272,666)........................ 164,707,084 (2,565,582)
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 40.41%.
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 4,115,507 1.29149 11/12/96 (93,019)
Australian Dollars...................... 1,485,385 1.27251 11/12/96 (11,916)
Australian Dollars...................... 582,271 1.26871 11/12/96 (2,944)
Canadian Dollars........................ 22,337,854 1.368 11/29/96 (481,129)
Canadian Dollars........................ 4,736,522 1.3644 11/29/96 (89,791)
Canadian Dollars........................ 7,172,020 1.3522 11/29/96 (72,479)
Canadian Dollars........................ 1,270,045 1.3574 11/29/96 (17,651)
Canadian Dollars........................ 687,319 1.35016 11/29/96 (5,918)
Canadian Dollars........................ 164,359 1.34715 11/29/96 (1,051)
Danish Kroner........................... 6,565,784 5.8727 01/17/97 (95,166)
Danish Kroner........................... 14,863,819 5.81074 01/17/97 (59,243)
Deutsche Marks.......................... 7,092,137 1.50452 01/30/97 (174)
Deutsche Marks.......................... 7,809,992 1.4983 01/30/97 32,229
Deutsche Marks.......................... 3,733,316 1.50859 11/04/96 11,903
Deutsche Marks.......................... 1,982,292 1.4746 11/04/96 52,158
Deutsche Marks.......................... 6,862,033 1.48714 11/04/96 121,170
Deutsche Marks.......................... 21,144,443 1.49762 11/04/96 222,793
Finnish Markkaa......................... 8,536,304 4.53 01/02/97 (35,200)
Irish Punts............................. 8,382,003 0.61708 01/02/97 (24,529)
Irish Punts............................. 764,407 0.52481 01/02/97 (11,665)
Irish Punts............................. 8,894,965 0.61081 01/02/97 65,027
Italian Liras........................... 19,326,725 1,546.70 01/21/97 (286,187)
Japanese Yen............................ 12,352,371 112.755 01/13/97 (24,758)
Japanese Yen............................ 1,846,479 107.883 11/05/96 100,074
Japanese Yen............................ 3,165,392 108.307 11/05/96 158,493
Japanese Yen............................ 8,792,755 105.3 11/05/96 703,921
Japanese Yen............................ 3,388,865 109.304 11/29/96 124,273
Japanese Yen............................ 4,377,284 109.354 11/29/96 158,444
Japanese Yen............................ 9,707,686 107.88 11/29/96 488,829
New Zealand Dollars..................... 19,930,083 1.42847 01/31/97 (118,668)
Swedish Kronor.......................... 13,732,602 6.6109 01/21/97 (118,722)
Swiss Francs............................ 6,300,745 1.24608 01/03/97 39,137
Swiss Francs............................ 4,346,716 1.24171 01/03/97 42,393
Swiss Francs............................ 6,157,184 1.24205 01/03/97 58,347
-------------- --------------
Total Contracts to Sell (Receivable
amount $253,436,645)................. 252,607,664 828,981
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 61.97%.
Total Open Forward Foreign Currency
Contracts, Net....................... $(1,736,601)
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (62.4%)
Argentina (10.9%)
Republic of Argentina:
Discount Bond, 6.4375% due 3/31/23+ ................. USD 26,305,000 $ 19,087,566 4.3
BOCON Pre 4, 5.4453% due 9/1/02[.] + ................ USD 15,293,000 15,346,526 3.5
Par Bond, 5.25% due 3/31/23++ ....................... USD 20,381,000 12,152,171 2.7
Floating Rate Bond, 6.625% due 3/31/05+ ............. USD 2,203,040 1,816,131 0.4
Brazil (9.6%)
Federal Republic of Brazil:
C Bond, 4.5% due 4/15/14 (Effective rate at period
end is 6.92813%, including "payment-in-kind"
bonds.)[.] ++ ...................................... USD 55,360,363 38,404,647 8.6
MYDFA Floating Rate Note, 6.6875% due 9/15/07 -
144A{.} + .......................................... USD 5,191,000 4,350,707 1.0
Bulgaria (2.9%)
Bulgaria, Discount Bond Series A, 6.6875% due 7/28/24 -
EURO+ ................................................ USD 25,780,000 13,067,238 2.9
Costa Rica (1.7%)
Banco Central de Costa Rica:
Interest Bond Series A, 6.34375% due 5/21/05
(Effective maturity date 8/23/03)+ ................. USD 6,036,880 5,825,589 1.3
Principal Bond Series A, 6.25% due 5/21/10 .......... USD 1,900,000 1,539,000 0.4
Ecuador (4.9%)
Ecuador:
Past Due Interest Bond, 3% due 2/27/15 - Euro
(Effective rate at period end is 4.96%, including
"payment-in-kind" bonds.)[.] + ..................... USD 28,818,107 16,138,140 3.6
Past Due Interest Bond, 3% due 2/27/15 - Registered
(Effective rate at period end is 4.96%, including
"payment-in-kind" bonds.)[.] + ..................... USD 6,079,992 3,404,796 0.8
Discount Bond, 6.5% due 2/28/25 - EURO+ ............. USD 3,210,000 2,104,556 0.5
Mexico (8.3%)
United Mexican States:
Global Bond, 11.5% due 5/15/26 ...................... USD 12,700,000 12,684,125 2.9
11.375% due 9/15/16 - 144A{.} ....................... USD 5,640,000 5,625,900 1.3
7.6875% due 8/6/01 - 144A+ {.} {j} .................. USD 4,619,000 4,620,386 1.0
Discount Bond Series C, 6.35156% due 12/31/19+
+/+ ................................................ USD 4,956,000 4,082,505 0.9
Banco Nacional de Comercio Exterior, S.N.C. (BNCE)
Trust Division, 11.25% due 5/30/06 - 144A{.} ......... USD 9,440,000 9,746,800 2.2
Nigeria (4.8%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20++ ........................................... USD 34,500,000 21,390,000 4.8
Panama (3.1%)
Panama, Interest Reduction Bond, 3.5% due 7/17/14 -
144A++ {.} ........................................... USD 21,105,000 13,955,681 3.1
Philippines (2.7%)
Republic of Philippines, 8.75% due 10/7/16 -
144A{.} .............................................. USD 7,000,000 6,855,625 1.5
Central Bank of the Philippines, Debt Conversion Bond
Series B, 6.4375% due 12/1/09+ ....................... USD 5,663,000 5,422,323 1.2
United States (2.7%)
United States Treasury Note, 7% due 7/15/06{j} ........ USD 11,660,000 12,194,037 2.7
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Uruguay (1.5%)
Banco Central del Uruguay:
New Money Bond, 6.875% due 2/18/06+ ................. USD 3,750,000 $ 3,628,125 0.8
Par Bond Series A, 6.75% due 2/19/21+/+ ............. USD 2,290,000 1,889,250 0.4
Par Bond Series B, 6.75% due 2/19/21+/+ ............. USD 1,500,000 1,237,500 0.3
Venezuela (9.3%)
Republic of Venezuela:
Debt Conversion Bond, 6.625% due 12/18/07+ .......... USD 20,750,000 17,066,875 3.8
Front Loaded Interest Reduction Bond Series A, 6.625%
due 3/31/07+ ....................................... USD 13,000,000 10,814,375 2.4
Par Bond Series A, 6.75% due 3/31/20+/+ ............. USD 13,500,000 9,610,313 2.2
Front Loaded Interest Reduction Bond Series B, 6.5%
due 3/31/07+ ....................................... USD 5,000,000 4,159,375 0.9
------------
Total Government & Government Agency Obligations (cost
$259,273,931) ............................................ 278,220,262
------------
Sovereign Debt (17.3%)
Morocco (4.5%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.4375%
due 1/1/09+ .......................................... USD 25,000,000 19,843,750 4.5
Peru (1.5%)
Peru Loan Agreement ** -/- ............................ USD 4,600,000 5,384,875 1.2
Peru Loan Agreement (Citibank Issued) ** -/- .......... USD 1,000,000 1,170,625 0.3
Russia (11.3%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement:
Assignment ** -/- ................................... USD 46,757,000 34,337,172 7.7
Participation ** -/- ................................ DEM 12,466,000 6,321,960 1.4
Assignment ** -/- ................................... DEM 9,819,000 4,979,571 1.1
Participation ** -/- ................................ USD 6,600,000 4,846,875 1.1
------------
Total Sovereign Debt (cost $54,521,525) ................... 76,884,828
------------
Corporate Bonds (10.8%)
Argentina (0.5%)
Industrias Metallurgicas Pescarmona S.A. (IMPSA),
11.75% due 3/27/98 - 144A{.} ......................... USD 1,950,000 1,989,000 0.5
Brazil (0.3%)
Net Sat Servicos LTDA, 12.75% due 8/5/04 - 144A{.} .... USD 1,134,000 1,190,700 0.3
Indonesia (5.1%)
Asia Pulp & Paper International Finance Co., Ltd.,
11.75% due 10/1/05 ................................... USD 6,077,000 6,335,273 1.4
Dharmala Sakti Sejahtera Promissory Note, effective
yield 20.00%, due 6/9/97 ............................. IDR 9,000,000,000 3,449,610 0.8
PT Polysindo EKA Perkasa:
effective yield 20.05%, due 7/27/97 ................. IDR 6,000,000,000 2,246,285 0.5
13% due 6/15/01 - DTC ............................... USD 613,000 680,430 0.2
13% due 6/15/01 - EURO .............................. USD 395,000 438,450 0.1
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (Continued)
PT Tjiwi Kimia, 13.25% due 8/1/01 ..................... USD 2,500,000 $ 2,812,500 0.6
Rapp International Finance, 13.25% due 12/15/05 -
Euro ................................................. USD 2,430,000 2,642,625 0.6
FSW International Finance Co., 12.5% due 11/1/06 -
144A{.} .............................................. USD 2,007,000 2,025,816 0.5
PT Indah Kiat International Finance Series B, 11.875%
due 6/15/02 .......................................... USD 1,510,000 1,615,700 0.4
Luxembourg (0.5%)
Millicom International Cellular, effective yield
13.07%, due 6/1/06 - 144A{.} ......................... USD 3,800,000 2,170,750 0.5
Malaysia (0.1%)
Aokam Perdana Bhd., Convertible Bond, 3.5% due
6/13/04 .............................................. USD 650,000 453,375 0.1
Mexico (2.8%)
Grupo Industrial Durango, S.A., 12.625% due 8/1/03 .... USD 4,758,000 4,960,215 1.1
Grupo Irsa, S.A. de C.V., 8.375% due 7/15/98 .......... USD 3,300,000 3,295,875 0.7
Cemex, S.A. de C.V. "B", 12.75% due 7/15/06 -
144A{.} .............................................. USD 2,420,000 2,622,675 0.6
Grupo Elektra, S.A. de C.V., 12.75% due 5/15/01 -
144A{.} .............................................. USD 1,500,000 1,573,125 0.4
People's Republic of China (0.7%)
Zhuhai Highway Co., Ltd., 11.5% due 7/1/08 -
144A{.} .............................................. USD 2,900,000 3,124,750 0.7
Philippines (0.8%)
Filinvest Capital, Convertible Bond, 3.75% due 2/1/02 -
Reg. S++ ............................................. USD 1,892,000 1,863,620 0.4
CE Casecnan Water & Energy, 11.45% due 11/15/05 - Reg.
S .................................................... USD 1,030,000 1,138,150 0.3
Subic Power Corp., 9.5% due 12/28/08 - 144A{.} ........ USD 448,276 463,966 0.1
------------
Total Corporate Bonds (cost $46,398,969) .................. 47,092,890
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $360,194,425) ........ 402,197,980 90.5
------------ -----
<CAPTION>
UNDERLYING VALUE % OF NET
OPTIONS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Republic of Argentina: .................................. USD -- -- 0.3
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Floating Rate Bond 3/31/05, Call Option, strike 77.875,
expires 11/29/96 ..................................... -- 19,800,000 890,050 --
Floating Rate Bond 3/31/05, Call Option, strike 80.625,
expires 12/9/96 ...................................... -- 19,800,000 512,365 --
Republic of Brazil C Bond 4/15/14, Call Option, strike
71.8125, expires 12/26/96 .............................. USD 99,670,154 1,108,531 0.3
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Republic of Venezuela: .................................. USD -- -- --
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Debt Conversion Bond 12/18/07, Call Option, strike
84.15, expires 1/2/97 ................................ -- 9,857,000 94,637 --
Debt Conversion Bond 12/18/07, Call Option, strike
84.44, expires 1/2/97 ................................ -- 9,857,000 85,894 --
------------ -----
TOTAL OPTIONS (cost $3,779,230) ........................... 2,691,477 0.6
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Commercial Paper - Discounted (3.8%)
Thailand (0.2%)
TPI Polene Public Co., Ltd., current yield 10.36% due
1/6/97 ............................................... THB 25,000,000 $ 962,735 0.2
United States (3.6%)
Merrill Lynch & Co., current yield 5.38% due
11/5/96 .............................................. USD 16,000,000 15,990,436 3.6
------------
Total Commercial Paper - Discounted (cost $16,958,338) .... 16,953,171
------------
Government & Government Agency Obligations (2.0%)
Mexico (2.0%)
Mexican Cetes, current yield 29.66% due 1/23/97 ....... MXN 4,567,238 5,351,413 1.2
Mexican Cetes, current yield 29.61% due 1/16/97 ....... MXN 1,340,951 1,578,527 0.4
Mexican Cetes, current yield 26.88% due 1/30/97 ....... MXN 1,225,706 1,436,292 0.3
Mexican Cetes, current yield 29.66% due 2/20/97 ....... MXN 325,125 372,690 0.1
Mexican Cetes, current yield 29.66% due 2/6/97 ........ MXN 135,468 156,927 --
------------
Total Government & Government Agency Obligations (cost
$8,891,671) .............................................. 8,895,849
------------
Commercial Paper - Indexed (1.4%)
Philippines (1.4%)
National Westminster Bank PLC, Currency-Linked CD,
12.3798% due 2/28/97 (cost $6,500,000) ............... USD 6,500,000 6,418,711 1.4
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $32,350,009) ........... 32,267,731 7.2
------------ -----
<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 $3,010,000 U.S. Treasury Bonds,
7.125% due 2/15/23 (market value of collateral is
$3,179,150, including accrued interest).
(cost $3,112,480) ..................................... 3,112,480 0.7
------------ -----
TOTAL INVESTMENTS (cost $399,436,144) * ................... 440,269,668 99.0
Other Assets and Liabilities .............................. 4,348,817 1.0
------------ -----
NET ASSETS ................................................ $444,618,485 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
** Underlying loan agreement currently in default.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
+ The coupon rate shown on floating rate note represents the rate at
period end.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) bonds.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
{j} Security is segregated as collateral for when-issued securities
held by the Fund. See Note 1 of Notes to Financial Statements.
* For Federal income tax purposes, cost is $401,018,014 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 42,322,854
Unrealized depreciation: (3,071,200)
-------------
Net unrealized appreciation: $ 39,251,654
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1996
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- -------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 6,587,811 1.47060 11/13/96 $ 191,735
-------------- --------------
Total Contracts to Sell (Receivable
amount $6,779,546)................... 6,587,811 191,735
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 1.48%.
Total Open Forward Foreign Currency
Contracts............................ $ 191,735
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (82.1%)
Argentina (6.4%)
Republic of Argentina:
Discount Bond, 6.4375% due 3/31/23+ ................ USD 16,365,000 $ 11,874,853 2.3
BOCON Pre 4, 5.4453% due 9/1/02[.] + ............... USD 9,290,000 9,322,515 1.8
Par Bond, 5.25% due 3/31/23++ ...................... USD 11,350,000 6,767,438 1.3
Floating Rate Bond, 6.625% due 3/31/05+ ............ USD 6,224,960 5,131,701 1.0
Australia (2.2%)
Commonwealth of Australia, 9.5% due 8/15/03 .......... AUD 13,000,000 11,530,381 2.2
Brazil (4.2%)
Federal Republic of Brazil:
C Bond, 4.5% due 4/15/14 (Effective rate at period
end is 6.928125%, including "payment-in-kind"
bonds.)[.] ++ ..................................... USD 27,866,864 19,332,637 3.7
MYDFA Floating Rate Note, 6.6875% due 9/15/07 -
144A+ {.} ......................................... USD 3,326,000 2,787,604 0.5
Bulgaria (1.6%)
Bulgaria, Discount Bond Series A, 6.6875% due 7/28/24
- EURO+ ............................................. USD 15,872,000 8,045,120 1.6
Canada (2.7%)
Canadian Government:
8.75% due 12/1/05 .................................. CAD 10,500,000 9,131,797 1.8
8% due 11/1/98 ..................................... CAD 6,000,000 4,785,187 0.9
Costa Rica (0.8%)
Banco Central de Costa Rica:
Interest Bond Series A, 6.34375% due 5/21/05
(Effective maturity date 8/23/03)+ ................ USD 2,711,480 2,616,578 0.5
Principal Bond Series A, 6.25% due 5/21/10 ......... USD 1,900,000 1,539,000 0.3
Denmark (2.8%)
Kingdom of Denmark, 7% due 12/15/04 .................. DKK 81,000,000 14,307,236 2.8
Ecuador (2.6%)
Ecuador:
Past Due Interest Bond, 3% due 2/27/15 - Euro
(Effective rate at period end is 4.96%, including
"payment-in-kind" bonds.)[.] + .................... USD 16,652,835 9,325,588 1.8
Discount Bond, 6.5% due 2/28/25 - Euro+ ............ USD 6,520,000 4,274,675 0.8
Past Due Interest Bond, 3% due 2/27/15 - 144A
(Effective rate at period end is 4.96%, including
"payment-in-kind" bonds.)[.] + {.} ................ USD 1,058 592 --
France (1.7%)
France O.A.T., 7.25% due 4/25/06 ..................... FRF 40,000,000 8,576,852 1.7
Germany (9.9%)
Deutschland Republic:
6% due 1/5/06 ...................................... DEM 45,000,000 29,707,608 5.7
8.25% due 9/20/01 .................................. DEM 14,500,000 10,885,060 2.1
Treuhandanstalt, 7.125% due 1/29/03 .................. DEM 15,000,000 10,746,994 2.1
Italy (3.9%)
Italian Buoni Poliennali del Tesoro (BTPS):
10.5% due 11/1/00 .................................. ITL 11,200,000,000 8,164,843 1.6
9.5% due 2/1/99 .................................... ITL 8,000,000,000 5,539,967 1.1
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Republic of Italy Series Y, .5625% due 7/26/99+ ...... JPY 700,000,000 $ 6,216,478 1.2
Mexico (7.0%)
United Mexican States:
Discount Bond Series C, 6.35156% due 12/31/19+
+/+ ............................................... USD 18,634,000 15,349,758 3.0
Global Bond, 11.5% due 5/15/26 ..................... USD 8,272,000 8,261,660 1.6
11.375% due 9/15/16 - 144A{.} ...................... USD 3,000,000 2,992,500 0.6
7.6875% due 8/6/01 - 144A+ {.} ..................... USD 2,953,000 2,953,886 0.6
Banco Nacional de Comercio Exterior, S.N.C. (BNCE)
Trust Division, 11.25% due 5/30/06 - 144A{.} ........ USD 6,152,000 6,351,940 1.2
New Zealand (1.1%)
New Zealand Government, 8% due 2/15/01 ............... NZD 8,000,000 5,822,342 1.1
Nigeria (2.0%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20++ .......................................... USD 16,500,000 10,230,000 2.0
Panama (2.0%)
Panama, Interest Reduction Bond, 3.5% due 7/17/14 -
144A++ {.} .......................................... USD 15,805,000 10,451,056 2.0
Philippines (0.2%)
Republic of Philippines, 8.75% due 10/7/16 -
144A{.} ............................................. USD 1,000,000 979,375 0.2
Spain (3.5%)
Kingdom of Spain, 10.1% due 2/28/01 .................. ESP 2,100,000,000 18,330,746 3.5
Supranational (1.6%)
International Bank of Reconstruction & Development,
4.75% due 12/20/04 .................................. JPY 800,000,000 8,227,205 1.6
Sweden (2.3%)
Swedish Government, 13% due 6/15/01 .................. SEK 63,000,000 12,053,463 2.3
Turkey (0.8%)
Sultan Ltd., 8.49874% due 6/11/99+ ................... USD 4,400,000 4,327,928 0.8
United Kingdom (6.6%)
United Kingdom Treasury:
7% due 11/6/01 ..................................... GBP 14,100,000 22,725,571 4.4
7.5% due 12/7/06 ................................... GBP 7,000,000 11,296,982 2.2
United States (10.7%)
United States Treasury Note, 6.875% due 3/31/00{j} ... USD 43,000,000 44,211,056 8.5
United States Treasury Bond, 6.875% due 8/15/25 ...... USD 11,000,000 11,262,539 2.2
Uruguay (0.2%)
Banco Central del Uruguay, Par Bond Series A, 6.75%
due 2/19/21+/ + ..................................... USD 1,370,000 1,130,250 0.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Venezuela (5.3%)
Republic of Venezuela:
Debt Conversion Bond, 6.625% due 12/18/07+ ......... USD 13,750,000 $ 11,309,375 2.2
Front Loaded Interest Reduction Bond Series B, 6.5%
due 3/31/07+ ...................................... USD 9,000,000 7,486,875 1.4
Par Bond Series A, 6.75% due 3/31/20+/+ ............ USD 7,500,000 5,339,063 1.0
Front Loaded Interest Reduction Bond Series A,
6.625% due 3/31/07+ ............................... USD 4,500,000 3,743,438 0.7
------------
Total Government & Government Agency Obligations (cost
$406,608,996) ........................................... 425,447,712
------------
Sovereign Debt (8.1%)
Morocco (1.8%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.4375%
due 1/1/09+ ......................................... USD 11,460,000 9,096,375 1.8
Russia (6.3%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement:
Assignment ** -/- .................................. USD 31,585,000 23,195,234 4.5
Participation ** -/- ............................... DEM 8,786,000 4,455,699 0.9
Participation ** -/- ............................... USD 3,440,000 2,526,250 0.5
Assignment ** -/- .................................. DEM 4,566,000 2,315,584 0.4
------------
Total Sovereign Debt (cost $27,803,682) .................. 41,589,142
------------
Corporate Bonds (3.4%)
Brazil (0.2%)
Net Sat Servicos LTDA, 12.75% due 8/5/04 - 144A{.} ... USD 738,000 774,900 0.2
Indonesia (0.9%)
PT Polysindo EKA Perkasa, 13% due 6/15/01:
EURO ............................................... USD 1,955,000 2,170,050 0.4
DTC ................................................ USD 395,000 438,450 0.1
FSW International Finance Co., 12.5% due 11/1/06 -
144A{.} ............................................. USD 1,090,000 1,100,219 0.2
Rapp International Finance, 13.25% due 12/15/05 -
Euro ................................................ USD 664,000 722,100 0.1
PT Indah Kiat International Finance Series B, 11.875%
due 6/15/02 ......................................... USD 664,000 710,480 0.1
Luxembourg (0.3%)
Millicom International Cellular, effective yield
13.07% due 6/1/06 - 144A{.} ......................... USD 2,300,000 1,313,875 0.3
Mexico (0.7%)
Grupo Industrial Durango, S.A., 12.625% due 8/1/03 ... USD 2,653,000 2,765,753 0.5
Grupo Elektra, S.A. de C.V., 12.75% due 5/15/01 -
144A{.} ............................................. USD 1,000,000 1,048,750 0.2
Philippines (0.3%)
Filinvest Capital, Convertible Bond, 3.75% due 2/1/02
- 144A{.} ........................................... USD 1,260,000 1,241,100 0.2
CE Casecnan Water & Energy, 11.45% due 11/15/05 - Reg.
S ................................................... USD 670,000 740,350 0.1
United States (1.0%)
Chase Manhattan Corp., 6.25% due 1/15/06 ............. USD 2,835,000 2,700,839 0.5
</TABLE>
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (Continued)
General Motors Acceptance Corp., 6.625% due
10/15/05 ............................................ USD 2,700,000 $ 2,641,580 0.5
------------
Total Corporate Bonds (cost $17,787,296) ................. 18,368,446
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $452,199,974) ....... 485,405,300 93.6
------------ -----
<CAPTION>
UNDERLYING % OF NET
OPTIONS CURRENCY AMOUNT ASSETS
- ---------------------------------------------------------- -------- -------------- -------------
<S> <C> <C> <C> <C>
Republic of Brazil C Bond 4/15/14, Call Option, strike
71.8125, expires 12/26/96 ............................. USD 59,364,791 660,255 0.2
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Republic of Venezuela: ................................. USD -- -- --
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Debt Conversion Bond 12/18/07, Call Option, strike
84.15, expires 1/2/97 ............................... -- 5,500,000 52,806 --
Debt Conversion Bond 12/18/07, Call Option, strike
84.44, expires 1/2/97 ............................... -- 5,500,000 47,927 --
------------ -----
TOTAL OPTIONS (cost $1,727,048) .......................... 760,988 0.2
------------ -----
<CAPTION>
PRINCIPAL % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT ASSETS
- ---------------------------------------------------------- -------- -------------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (0.9%)
Mexico (0.9%)
Mexican Cetes, current yield 29.66% due 1/23/97 ...... MXN 2,552,332 2,990,557 0.6
Mexican Cetes, current yield 29.61% due 1/16/97 ...... MXN 749,370 882,136 0.2
Mexican Cetes, current yield 26.88% due 1/30/97 ...... MXN 684,968 802,651 0.1
Mexican Cetes, current yield 29.66% due 2/20/97 ...... MXN 181,691 208,272 --
Mexican Cetes, current yield 29.66% due 2/6/97 ....... MXN 75,705 87,697 --
------------
Total Government & Government Agency Obligations (cost
$4,968,978) ............................................. 4,971,313
------------
Commercial Paper - Indexed (0.5%)
Philippines (0.5%)
National Westminster Bank PLC, Currency-Linked CD,
12.3798% due 2/28/97 (cost $2,500,000) .............. USD 2,500,000 2,468,735 0.5
------------
Commercial Paper - Discounted (0.2%)
Thailand (0.2%)
TPI Polene Public Co., Ltd., current yield 10.36% due
1/6/97
(cost $967,902) ..................................... THB 25,000,000 962,735 0.2
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $8,436,880) ........... 8,402,783 1.6
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
GT GLOBAL STRATEGIC INCOME 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 $16,135,000 U.S. Treasury
Bonds, 7.125% due 2/15/23 (market value of collateral
is $17,041,721, including accrued interest). (cost
$16,705,575) ......................................... $ 16,705,575 3.2
------------ -----
TOTAL INVESTMENTS (cost $479,069,477) * .................. 511,274,646 98.6
Other Assets and Liabilities ............................. 7,508,600 1.4
------------ -----
NET ASSETS ............................................... $518,783,246 100.0
------------ -----
------------ -----
</TABLE>
- --------------
+ The coupon rate shown on floating rate note represents the rate at
period end.
** Underlying loan agreement currently in default.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
-/- Non-income producing security.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) bonds.
{j} Security is segregated as collateral for when-issued securities
held by the Fund. See Note 1 of Notes to Financial Statements.
* For Federal income tax purposes, cost is $480,138,813 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 34,211,689
Unrealized depreciation: (3,075,856)
-------------
Net unrealized appreciation: $ 31,135,833
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F14
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1996
<TABLE>
<CAPTION>
MARKET VALUE UNREALIZED
(U.S. CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- ------------ ----------- -------- --------------
<S> <C> <C> <C> <C>
Canadian Dollars........................ 418,368 1.35055 11/29/96 $ 3,722
Deutsche Marks.......................... 330,382 1.48683 11/05/96 (5,905)
Deutsche Marks.......................... 175,102 1.52412 11/05/96 1,231
Deutsche Marks.......................... 35,067,522 1.47631 11/27/96 (832,700)
------------ --------------
Total Contracts to Buy (Payable amount
$36,825,026)......................... 35,991,374 (833,652)
------------ --------------
THE VALUE OF CONTRACTS TO BUY AS PERCENTAGE OF NET ASSETS IS 6.94%.
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
Canadian Dollars........................ 14,000,381 1.35715 11/29/96 (192,033)
Canadian Dollars........................ 537,902 1.35220 11/29/96 (5,436)
Deutsche Marks.......................... 8,259,548 1.47358 11/05/96 223,195
Deutsche Marks.......................... 5,011,894 1.46463 11/05/96 166,888
Deutsche Marks.......................... 22,849,488 1.50483 11/12/96 70,044
Deutsche Marks.......................... 12,928,667 1.50920 11/27/96 18,590
Deutsche Marks.......................... 10,748,606 1.52824 11/27/96 (118,653)
Deutsche Marks.......................... 3,969,908 1.50676 11/27/96 12,146
Deutsche Marks.......................... 717,812 1.52558 11/27/96 (6,686)
Deutsche Marks.......................... 635,185 1.52100 11/27/96 (4,021)
Deutsche Marks.......................... 330,826 1.47100 11/27/96 9,079
Italian Liras........................... 14,175,119 1546.70000 01/21/97 (209,903)
Swedish Kronor.......................... 9,887,474 6.61090 01/21/97 (85,480)
------------ --------------
Total Contracts to Sell (Receivable
amount $103,930,540)................. 104,052,810 (122,270)
------------ --------------
THE VALUE OF CONTRACTS TO SELL AS PERCENTAGE OF NET ASSETS IS 20.06%.
Total Open Forward Foreign Currency
Contracts, Net....................... $(955,922)
--------------
--------------
</TABLE>
- --------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F15
<PAGE>
GT GLOBAL INCOME FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------
GOVERNMENT HIGH INCOME- STRATEGIC
INCOME CONSOLIDATED INCOME
------------- ------------ -------------
<S> <C> <C> <C>
Assets:
Investments in securities, at value
(cost $384,301,241, $399,436,144, and
$479,069,477, respectively) (Note
1)................................... $ 395,805,316 $440,269,668 $ 511,274,646
U.S. currency......................... 688 747 764
Foreign currencies (cost $163,
$375,538, and $6,038,
respectively)........................ 165 363,584 5,983
Receivable for securities sold........ 25,721,936 19,276,936 7,533,831
Interest receivable................... 12,649,427 8,384,949 13,463,776
Receivable for Fund shares sold....... 288,358 5,276,241 2,864,788
Receivable for open forward foreign
currency contracts, net (Note 1)..... -- 191,735 --
Receivable for forward foreign
currency contracts -- closed (Note
1)................................... 674,249 -- --
Miscellaneous receivable.............. -- -- 90,538
Cash held as collateral for securities
loaned (Note 1)...................... 92,153,670 -- 47,372,677
Unamortized organizational costs...... -- 35,371 --
------------- ------------ -------------
Total assets........................ 527,293,809 473,799,231 582,607,003
------------- ------------ -------------
Liabilities:
Payable for securities purchased...... 16,533,723 21,061,541 12,311,147
Payable for Fund shares repurchased... 8,524,914 7,137,124 1,807,865
Payable for open forward foreign
currency contracts, net (Note 1)..... 1,736,601 -- 955,922
Payable for forward foreign currency
contracts -- closed.................. -- -- 404,268
Payable for investment management and
administration fees (Note 2)......... 256,521 381,409 324,636
Payable for service and distribution
expenses (Note 2).................... 216,795 283,839 344,647
Payable for printing and postage
expenses............................. 95,659 116,749 84,559
Payable for transfer agent fees (Note
2)................................... 63,830 62,864 85,559
Payable for professional fees......... 51,757 58,593 57,257
Payable for registration and filing
fees................................. 22,078 8,320 28,364
Payable for custodian fees (Note 1)... 9,679 23,927 29,251
Payable for fund accounting fees (Note
2)................................... 8,364 9,624 10,417
Payable for Directors' and Trustees'
fees and expenses (Note 2)........... 4,832 10,497 2,999
Other accrued expenses................ 6,868 26,159 4,189
Collateral for securities loaned (Note
1)................................... 92,153,670 -- 47,372,677
------------- ------------ -------------
Total liabilities................... 119,685,291 29,180,646 63,823,757
Minority interest (Notes 1 & 2)..... -- 100 --
------------- ------------ -------------
Net assets.............................. $ 407,608,518 $444,618,485 $ 518,783,246
------------- ------------ -------------
------------- ------------ -------------
Class A:
Net asset value and redemption price per
share ($240,944,963 DIVIDED BY
27,559,672, $178,317,938 DIVIDED BY
12,011,654, and $185,125,741 DIVIDED BY
15,748,198 shares outstanding,
respectively).......................... $ 8.74 $ 14.85 $ 11.76
------------- ------------ -------------
------------- ------------ -------------
Maximum offering price per share
(100/95.25 of $8.74, 100/95.25 of
$14.85, and 100/95.25 of $11.76,
respectively) *........................ $ 9.18 $ 15.59 $ 12.35
------------- ------------ -------------
------------- ------------ -------------
Class B:+
Net asset value and offering price per
share ($166,577,127 DIVIDED BY
19,059,341, $251,002,484 DIVIDED BY
16,920,131, and $333,178,201 DIVIDED BY
28,314,377 shares outstanding,
respectively).......................... $ 8.74 $ 14.83 $ 11.77
------------- ------------ -------------
------------- ------------ -------------
Advisor Class:
Net asset value, offering price per
share, and redemption price per share
($86,428 DIVIDED BY 9,897, $15,298,063
DIVIDED BY 1,031,529, and $479,304
DIVIDED BY 40,725 shares outstanding,
respectively).......................... $ 8.73 $ 14.83 $ 11.77
------------- ------------ -------------
------------- ------------ -------------
Net assets consist of:
Paid in capital (Note 4).............. $ 552,445,325 $398,450,836 $ 598,321,655
Undistributed net investment income... 364,918 -- --
Accumulated net realized gain (loss)
on investments and foreign currency
transactions......................... (155,061,909) 5,153,808 (110,861,534)
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (1,643,891) 180,317 (882,044)
Net unrealized appreciation of
investments.......................... 11,504,075 40,833,524 32,205,169
------------- ------------ -------------
Total -- representing net assets
applicable to capital shares
outstanding............................ $ 407,608,518 $444,618,485 $ 518,783,246
------------- ------------ -------------
------------- ------------ -------------
<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.
F16
<PAGE>
GT GLOBAL INCOME FUNDS
STATEMENTS OF OPERATIONS
Year ended October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
----------------------------------------
GOVERNMENT HIGH INCOME- STRATEGIC
INCOME CONSOLIDATED INCOME
------------ ------------ ------------
<S> <C> <C> <C>
Investment income: (Note 1)
Interest income....................... $ 39,935,517 $ 45,539,611 $ 49,794,868
------------ ------------ ------------
Total investment income............. 39,935,517 45,539,611 49,794,868
------------ ------------ ------------
Expenses:
Investment management and
administration fees (Note 2)......... 3,672,503 4,030,144 3,807,689
Transfer agent fees (Note 2).......... 899,178 644,652 1,027,713
Service and distribution expenses:
(Note 2)
Class A............................. 1,074,110 560,451 625,247
Class B............................. 2,006,881 2,405,007 3,468,104
Custodian fees (Note 1)............... 305,430 181,559 290,730
Fund accounting fees (Note 2)......... 127,205 101,697 131,517
Printing and postage expenses......... 88,931 101,142 94,439
Audit fees............................ 71,998 74,353 73,189
Legal fees............................ 26,352 39,821 25,230
Registration and filing fees.......... 52,704 51,240 47,004
Amortization of Organization Costs.... -- 34,894 --
Directors' and Trustees' fees and
expenses (Note 2).................... 17,712 24,607 11,712
Insurance Expenses.................... -- 2,987 --
Other expenses........................ 39,783 6,221 13,540
------------ ------------ ------------
Total expenses before reductions and
interest expense................... 8,382,787 8,258,775 9,616,114
Interest expense (Note 1)......... -- 163,819 --
Expense reductions (Note 1)....... (250,204) -- (108,002)
------------ ------------ ------------
Total net expenses.................. 8,132,583 8,422,594 9,508,112
------------ ------------ ------------
Net investment income................... 31,802,934 37,117,017 40,286,756
------------ ------------ ------------
Net realized and unrealized gain (loss)
on investments and foreign currencies:
(Note 1)
Net realized gain on investments...... 8,737,745 62,643,262 43,672,673
Net realized loss on foreign currency
transactions......................... (10,634,640) (125,790) (6,996,692)
------------ ------------ ------------
Net realized gain (loss) during the
year............................... (1,896,895) 62,517,472 36,675,981
Net change in unrealized appreciation
on translation of assets and
liabilities in foreign currencies.... 2,319,205 174,082 1,913,734
Net change in unrealized appreciation
(depreciation) of investments........ (1,121,083) 31,730,913 27,794,834
------------ ------------ ------------
Net unrealized appreciation during
the year........................... 1,198,122 31,904,995 29,708,568
------------ ------------ ------------
Net realized and unrealized gain (loss)
on investments and foreign
currencies............................. (698,773) 94,422,467 66,384,549
------------ ------------ ------------
Net increase in net assets resulting
from operations........................ $ 31,104,161 $131,539,484 $106,671,305
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F17
<PAGE>
GT GLOBAL INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
----------------------------------------------------------
GOVERNMENT INCOME HIGH INCOME-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................. $ 31,802,934 $ 46,493,014 $ 37,117,017 $ 39,491,435
Net realized gain (loss) on
investments and foreign currency
transactions......................... (1,896,895) (4,465,423) 62,517,472 (62,112,954)
Net change in unrealized appreciation
on translation of assets and
liabilities in foreign currencies.... 2,319,205 3,260,081 174,082 (302)
Net change in unrealized appreciation
(depreciation) of investments........ (1,121,083) 12,089,374 31,730,913 24,969,833
------------- ------------- ------------- -------------
Net increase in net assets resulting
from operations.................... 31,104,161 57,377,046 131,539,484 2,348,012
------------- ------------- ------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............ (15,504,590) (29,604,447) (13,418,057) (12,528,224)
From net realized gain on
investments.......................... (8,183,323) -- (1,230,117) (474,126)
In excess of net investment income.... -- -- -- --
Return of capital..................... -- -- -- (737,846)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............ (9,165,193) (15,123,091) (18,753,394) (17,274,071)
From net realized gain on
investments.......................... (5,303,358) -- (1,719,241) (622,059)
In excess of net investment income.... -- -- -- --
Return of capital..................... -- -- -- (1,015,555)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............ (7,915) (3,476) (505,715) (54,186)
From net realized gain on
investments.......................... (2,893) -- (46,362) --
In excess of net investment income.... -- -- -- --
Return of capital..................... -- -- -- (3,075)
------------- ------------- ------------- -------------
Total distributions................. (38,167,272) (44,731,014) (35,672,886) (32,709,142)
------------- ------------- ------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 386,482,407 359,717,885 583,133,415 418,666,106
Decrease from capital shares
repurchased.......................... (592,826,606) (515,847,692) (592,743,855) (430,339,278)
------------- ------------- ------------- -------------
Net decrease from capital share
transactions....................... (206,344,199) (156,129,807) (9,610,440) (11,673,172)
------------- ------------- ------------- -------------
Total increase (decrease) in net
assets................................. (213,407,310) (143,483,775) 86,256,158 (42,034,302)
Net assets:
Beginning of year..................... 621,015,828 764,499,603 358,362,327 400,396,629
------------- ------------- ------------- -------------
End of year........................... $ 407,608,518* $ 621,015,828** $ 444,618,485* $ 358,362,327**
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
<CAPTION>
STRATEGIC INCOME
----------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
------------- -------------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income................. $ 40,286,756 $ 54,919,073
Net realized gain (loss) on
investments and foreign currency
transactions......................... 36,675,981 (82,675,607)
Net change in unrealized appreciation
on translation of assets and
liabilities in foreign currencies.... 1,913,734 (3,747,114)
Net change in unrealized appreciation
(depreciation) of investments........ 27,794,834 35,939,954
------------- -------------
Net increase in net assets resulting
from operations.................... 106,671,305 4,436,306
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............ (12,520,881) (16,844,112)
From net realized gain on
investments.......................... -- --
In excess of net investment income.... (1,097,884) --
Return of capital..................... -- (852,171)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............ (22,200,673) (27,777,018)
From net realized gain on
investments.......................... -- --
In excess of net investment income.... (1,946,649) --
Return of capital..................... -- (1,405,284)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............ (46,547) (14,952)
From net realized gain on
investments.......................... -- --
In excess of net investment income.... (4,081) --
Return of capital..................... -- (756)
------------- -------------
Total distributions................. (37,816,715) (46,894,293)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 335,665,174 194,343,201
Decrease from capital shares
repurchased.......................... (432,196,117) (339,216,716)
------------- -------------
Net decrease from capital share
transactions....................... (96,530,943) (144,873,515)
------------- -------------
Total increase (decrease) in net
assets................................. (27,676,353) (187,331,502)
Net assets:
Beginning of year..................... 546,459,599 733,791,101
------------- -------------
End of year........................... $ 518,783,246* $ 546,459,599**
------------- -------------
------------- -------------
<FN>
- ----------------
* Includes undistributed net investment income of $364,918, $0, and $0,
respectively.
** Includes undistributed net investment income (loss) of $1,761,999,
$78,582,766, and $(68,169), respectively.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F18
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1996 (D) 1995 (D) 1994 (D) 1993 (D) 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.81 $ 8.63 $ 11.07 $ 9.83 $ 10.29
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income................. 0.57 0.62 0.65 0.74 0.92
Net realized and unrealized gain
(loss) on investments................ 0.03 0.15 (1.52) 1.34 (0.31)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.60 0.77 (0.87) 2.08 0.61
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.57) (0.59) (0.65) (0.74) (0.83)
From net realized gain on
investments.......................... (0.10) -- (0.27) -- (0.13)
In excess of net realized gain on
investments.......................... -- -- (0.55) -- --
Return of capital..................... -- -- (0.10) -- --
From sources other than net investment
income............................... -- -- -- (0.10) (0.11)
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.67) (0.59) (1.57) (0.84) (1.07)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 8.74 $ 8.81 $ 8.63 $ 11.07 $ 9.83
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 7.11% 9.22% (8.87)% 21.9% 6.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 240,945 $ 385,404 $ 502,094 $ 708,301 $ 623,387
Ratio of net investment income to
average net assets..................... 6.52% 6.98% 6.87% 7.1% 9.0%
Ratio of expenses to average net assets:
(Note 1)
With expense reductions............... 1.34% 1.35% 1.33% 1.4% 1.6%
Without expense reductions............ 1.39% 1.38% --%* --%* --%*
Portfolio turnover rate++++............. 268% 385% 625% 495% 351%
</TABLE>
- ----------------
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
+ All capital shares issued and oustanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
F19
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
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>
CLASS B++
-----------------------------------------------------------
OCTOBER 22,
1992
YEAR ENDED OCTOBER 31, TO
--------------------------------------------- OCTOBER 31,
1996 (D) 1995 (D) 1994 (D) 1993 (D) 1992
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 8.80 $ 8.64 $ 11.07 $ 9.83 $ 9.87
--------- --------- --------- --------- -----------
Income from investment
operations:
Net investment income....... 0.51 0.55 0.59 0.67 0.02
Net realized and unrealized
gain (loss) on
investments................ 0.04 0.14 (1.52) 1.34 (0.06)
--------- --------- --------- --------- -----------
Net increase (decrease)
from investment
operations............... 0.55 0.69 (0.93) 2.01 (0.04)
--------- --------- --------- --------- -----------
Distributions to shareholders:
From net investment
income..................... (0.51) (0.53) (0.59) (0.67) --
From net realized gain on
investments................ (0.10) -- (0.27) -- --
In excess of net realized
gain on investments........ -- -- (0.54) -- --
Return of capital........... -- -- (0.10) -- --
From sources other than net
investment income.......... -- -- -- (0.10) --
--------- --------- --------- --------- -----------
Total distributions....... (0.61) (0.53) (1.50) (0.77) --
--------- --------- --------- --------- -----------
Net asset value, end of
period....................... $ 8.74 $ 8.80 $ 8.64 $ 11.07 $ 9.83
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
Total investment return (c)... 6.54% 8.22% (9.39)% 21.1% (0.4)% (a)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $166,577 $235,481 $262,405 $182,972 $2,624
Ratio of net investment income
to average net assets........ 5.87% 6.33% 6.22% 6.5% 8.0% (b)
Ratio of expenses to average
net assets: (Note 1)
With expense reductions..... 1.99% 2.00% 1.98% 2.0% 1.9% (b)
Without expense
reductions................. 2.04% 2.03% --%* --%* --% *
Portfolio turnover rate++++... 268% 385% 625% 495% 351%
<CAPTION>
ADVISOR CLASS+++
--------------------------
YEAR JUNE 1, 1995
ENDED TO
OCTOBER 31, OCTOBER 31,
1996 (D) 1995 (D)
----------- ------------
<S> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 8.80 $ 8.98
----------- ------------
Income from investment
operations:
Net investment income....... 0.60 0.26
Net realized and unrealized
gain (loss) on
investments................ 0.03 (0.19)
----------- ------------
Net increase (decrease)
from investment
operations............... 0.63 0.07
----------- ------------
Distributions to shareholders:
From net investment
income..................... (0.60) (0.25)
From net realized gain on
investments................ (0.10) --
In excess of net realized
gain on investments........ -- --
Return of capital........... -- --
From sources other than net
investment income.......... -- --
----------- ------------
Total distributions....... (0.70) (0.25)
----------- ------------
Net asset value, end of
period....................... $ 8.73 $ 8.80
----------- ------------
----------- ------------
Total investment return (c)... 7.49% 0.83% (a)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $ 86 $ 131
Ratio of net investment income
to average net assets........ 6.87% 7.33% (b)
Ratio of expenses to average
net assets: (Note 1)
With expense reductions..... 0.99% 1.00% (b)
Without expense
reductions................. 1.04% 1.03% (b)
Portfolio turnover rate++++... 268% 385%
</TABLE>
- ----------------
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
+ All capital shares issued and oustanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
F20
<PAGE>
GT GLOBAL HIGH INCOME FUND - CONSOLIDATED
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
OCTOBER 22,
1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS) TO
--------------------------------------------- OCTOBER 31,
1996 (E) 1995 1994 (E) 1993 (E) 1992
--------- --------- --------- --------- -----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 11.70 $ 12.56 $ 14.92 $ 11.43 $ 11.43
--------- --------- --------- --------- -----------------
Income from investment
operations:
Net investment income....... 1.27 1.35 0.94 0.78 --
Net realized and unrealized
gain (loss) on
investments................ 3.09 (1.09) (1.87) 3.92 --
--------- --------- --------- --------- -----------------
Net increase (decrease)
from investment
operations............... 4.36 0.26 (0.93) 4.70 --
--------- --------- --------- --------- -----------------
Distributions to shareholders:
From net investment
income..................... (1.11) (1.03) (0.94) (0.78) --
From net realized gain on
investments................ (0.10) (0.03) (0.27) -- --
In excess of net realized
gain on investments........ -- -- (0.22) -- --
Return of capital........... -- (0.06) -- -- --
From sources other than net
investment income.......... -- -- -- (0.43) --
--------- --------- --------- --------- -----------------
Total distributions....... (1.21) (1.12) (1.43) (1.21) --
--------- --------- --------- --------- -----------------
Net asset value, end of
period....................... $ 14.85 $ 11.70 $ 12.56 $ 14.92 $ 11.43
--------- --------- --------- --------- -----------------
--------- --------- --------- --------- -----------------
Total investment return (d)... 39.05% 2.81% (6.45)% 43.6% --% (a)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $178,318 $142,002 $167,974 $143,171 $ 207
Ratio of net investment income
to average net assets........ 9.52% 11.85% 7.00% 6.40% N/A(c)
Ratio of operating expenses to
average net assets........... 1.69% 1.75% 1.57% 2.20% N/A(c)
Ratio of interest expense to
average net assets........... 0.04% N/A 0.22% N/A N/A
Portfolio turnover rate++..... 290% --% --% --% --%
</TABLE>
- ----------------
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
(a) Not annualized
(b) Annualized
(c) Ratios are not meaningful due to short period of operation.
(d) Total investment return does not include sales charges.
(e) These selected per share operating data were calculated based upon
weighted average shares outstanding during the year.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F21
<PAGE>
GT GLOBAL HIGH INCOME FUND - CONSOLIDATED
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
OCTOBER 22, ADVISOR CLASS+
1992 --------------------------
(COMMENCEMENT YEAR JUNE 1, 1995
YEAR ENDED OCTOBER 31, OF OPERATIONS) TO ENDED TO
--------------------------------------------- OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 (E) 1995 1994 (E) 1993 (E) 1992 1996 (E) 1995
--------- --------- --------- --------- ----------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 11.69 $ 12.56 $ 14.90 $ 11.43 $ 11.43 $ 11.71 $ 11.44
--------- --------- --------- --------- ----------------- ----------- ------------
Income from investment
operations:
Net investment income....... 1.17 1.27 0.86 0.70 -- 1.34 0.57
Net realized and unrealized
gain (loss) on
investments................ 3.09 (1.09) (1.85) 3.90 -- 3.05 0.17
--------- --------- --------- --------- ----------------- ----------- ------------
Net increase (decrease)
from investment
operations............... 4.26 0.18 (0.99) 4.60 -- 4.39 0.74
--------- --------- --------- --------- ----------------- ----------- ------------
Distributions to shareholders:
From net investment
income..................... (1.03) (0.96) (0.86) (0.70) -- (1.16) (0.44)
From net realized gain on
investments................ (0.09) (0.03) (0.27) -- -- (0.11) --
In excess of net realized
gain on investments........ -- -- (0.22) -- -- -- --
Return of capital........... -- (0.06) -- -- -- -- (0.03)
From sources other than net
investment income.......... -- -- -- (0.43) -- -- --
--------- --------- --------- --------- ----------------- ----------- ------------
Total distributions....... (1.12) (1.05) (1.35) (1.13) -- (1.27) (0.47)
--------- --------- --------- --------- ----------------- ----------- ------------
Net asset value, end of
period....................... $ 14.83 $ 11.69 $ 12.56 $ 14.90 $ 11.43 $ 14.83 $ 11.71
--------- --------- --------- --------- ----------------- ----------- ------------
--------- --------- --------- --------- ----------------- ----------- ------------
Total investment return (d)... 38.16% 2.07% (6.99)% 42.6% --% (a) 39.38% 6.54% (a)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $251,002 $214,897 $232,423 $127,035 $ 53 $15,298 $ 1,463
Ratio of net investment income
to average net assets........ 8.87% 11.20% 6.35% 5.8% N/A(c) 9.87% 12.20% (b)
Ratio of operating expenses to
average net assets........... 2.34% 2.40% 2.22% 2.8% N/A(c) 1.34% 1.40% (b)
Ratio of interest expense to
average net assets........... 0.04% N/A 0.22% N/A N/A 0.04% N/A
Portfolio turnover rate++..... 290% --% --% --% --% 290% --% (b)
</TABLE>
- ----------------
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
(a) Not annualized
(b) Annualized
(c) Ratios are not meaningful due to short period of operation.
(d) Total investment return does not include sales charges.
(e) These selected per share operating data were calculated based upon
weighted average shares outstanding during the year.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F22
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
1996 (E) 1995 (E) 1994 1993 (E) 1992
--------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 10.32 $ 10.88 $ 13.61 $ 11.25 $ 10.91
--------- --------- --------- --------- --------
Income from investment
operations:
Net investment income....... 0.89 0.97 0.79 0.96 0.86
Net realized and unrealized
gain (loss) on
investments................ 1.44 (0.69) (2.14) 2.85 0.31
--------- --------- --------- --------- --------
Net increase (decrease)
from investment
operations............... 2.33 0.28 (1.35) 3.81 1.17
--------- --------- --------- --------- --------
Distributions to shareholders:
From net investment
income..................... (0.82) (0.80) (0.79) (0.96) (0.83)
From net realized gain on
investments................ -- -- (0.38) (0.37) --
In excess of net investment
income..................... (0.07) -- -- -- --
Return of capital........... -- (0.04) (0.21) -- --
From sources other than net
investment income.......... -- -- -- (0.12) --
--------- --------- --------- --------- --------
Total distributions....... (0.89) (0.84) (1.38) (1.45) (0.83)
--------- --------- --------- --------- --------
Net asset value, end of
period....................... $ 11.76 $ 10.32 $ 10.88 $ 13.61 $ 11.25
--------- --------- --------- --------- --------
--------- --------- --------- --------- --------
Total investment return (c)... 23.00% 3.06% (10.44)% 37.0% 11.1%
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $185,126 $188,165 $275,241 $287,870 $83,849
Ratio of net investment income
to average net assets........ 8.09% 9.64% 6.74% 7.2% 7.6%
Ratio of expenses to average
net assets:
With expense reductions
(Note 1)................... 1.38% 1.42% 1.40% 1.7% 1.8%
Without expense
reductions................. 1.40% 1.45% --%* --%* --%*
Ratio of interest expenses to
average net assets........... N/A N/A 0.10% N/A N/A
Portfolio turnover rate++++... 177% 238% 583% 310% 418%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992, were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Ratios are not meaningful due to the short period of operation of
Class B shares.
(e) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
F23
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
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>
CLASS B++
---------------------------------------------------------------- ADVISOR CLASS+++
OCTOBER 22, --------------------------
1992 YEAR JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO ENDED TO
--------------------------------------------- OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 (E) 1995 (E) 1994 1993 (E) 1992 1996 (E) 1995 (E)
--------- --------- --------- --------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 10.33 $ 10.88 $ 13.60 $ 11.24 $ 11.36 $ 10.33 $10.32
--------- --------- --------- --------- ---------------- ----------- ------------
Income from investment
operations:
Net investment income....... 0.82 0.91 0.73 0.89 0.01 0.93 0.41
Net realized and unrealized
gain (loss) on
investments................ 1.44 (0.69) (2.14) 2.85 (0.13) 1.44 (0.04)
--------- --------- --------- --------- ---------------- ----------- ------------
Net increase (decrease)
from investment
operations............... 2.26 0.22 (1.41) 3.74 (0.12) 2.37 0.37
--------- --------- --------- --------- ---------------- ----------- ------------
Distributions to shareholders:
From net investment
income..................... (0.75) (0.73) (0.72) (0.89) -- (0.86) (0.34)
From net realized gain on
investments................ -- -- (0.38) (0.37) -- -- --
In excess of net investment
income..................... (0.07) -- -- -- -- (0.07) --
Return of capital........... -- (0.04) (0.21) -- -- -- (0.02)
From sources other than net
investment income.......... -- -- -- (0.12) -- -- --
--------- --------- --------- --------- ---------------- ----------- ------------
Total distributions....... (0.82) (0.77) (1.31) (1.38) -- (0.93) (0.36)
--------- --------- --------- --------- ---------------- ----------- ------------
Net asset value, end of
period....................... $ 11.77 $ 10.33 $ 10.88 $ 13.60 $ 11.24 $ 11.77 $10.33
--------- --------- --------- --------- ---------------- ----------- ------------
--------- --------- --------- --------- ---------------- ----------- ------------
Total investment return (c)... 22.15% 2.48% (11.02)% 36.2% (1.1)% (b) 23.39% 3.72% (b)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $333,178 $357,852 $458,550 $310,431 $ 533 $ 479 $ 443
Ratio of net investment income
to average net assets........ 7.44% 8.99% 6.09% 6.5% N/A(d) 8.44% 9.99% (a)
Ratio of expenses to average
net assets:
With expense reductions
(Note 1)................... 2.03% 2.07% 2.05% 2.4% N/A(d) 1.03% 1.07% (a)
Without expense
reductions................. 2.05% 2.10% --%* --%* --% * 1.05% 1.10% (a)
Ratio of interest expenses to
average net assets........... N/A N/A 0.10% N/A N/A N/A N/A
Portfolio turnover rate++++... 177% 238% 583% 310% 418% 177% 238%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992, were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares issued.
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Ratios are not meaningful due to the short period of operation of
Class B shares.
(e) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
The accompanying notes are an integral part of the financial statements.
F24
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES TO
FINANCIAL STATEMENTS
October 31, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Government Income Fund, GT Global High Income Fund, and GT Global
Strategic Income Fund ("Funds") are separate series of G.T. Investment Funds,
Inc. ("Company"). Collectively, these Funds are known as the "GT Global Income
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 twelve series of shares
in operation, each series corresponding to a distinct portfolio of investments.
The GT Global High Income Fund invests substantially all of its investable
assets in the Global High Income Portfolio ("Portfolio"). The Portfolio is
organized as a New York Trust and is registered under the 1940 Act as a
non-diversified, open-end management investment company.
The Portfolio has investment objectives, policies, and limitations substantially
identical to those of its corresponding Fund. Therefore, the financial
statements of the Fund and its respective Portfolio have been presented on a
consolidated basis, and represent all activities of both the Fund and Portfolio.
Through October 31, 1996, all of the shares of beneficial interest of the
Portfolio were owned by either its Fund or Chancellor LGT Asset Management, Inc.
(the "Manager"), which has a nominal ($100) investment in the 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 Portfolio 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 and the Portfolio 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
Portfolio (the phrase "Funds or Portfolio" hereinafter refers to the GT Global
Government Income Fund, the GT Global Strategic Income Fund, and the Global High
Income Portfolio) after translation to U.S. dollars based on the exchange rates
on that day. The cost of each security is determined using historical exchange
rates. Income and withholding taxes are translated at prevailing exchange rates
when earned or incurred.
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.
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
F25
<PAGE>
GT GLOBAL INCOME FUNDS
Portfolio's books and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains or losses arise from
changes in the value of assets and liabilities other than investments in
securities at period end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by 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 on
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
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
F26
<PAGE>
GT GLOBAL INCOME FUNDS
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:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31,
-------------------------------- 1996
AGGREGATE VALUE CASH --------------
GT GLOBAL ON LOAN COLLATERAL FEES RECEIVED
- ---------------------------------------- --------------- -------------- --------------
<S> <C> <C> <C>
Government Income Fund.................. $ 85,475,086 $ 92,153,670 $250,204
Strategic Income Fund................... 44,548,682 47,372,677 108,002
</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. The GT Global Government Income Fund has a
capital loss carryforward of $156,095,393 of which $140,349,807 expires in 2002,
and $15,745,586 expires in 2003. The GT Global Strategic Income Fund has a
capital loss carryforward of $110,439,537 of which $33,635,683 expires in 2002,
and $76,803,854 expires in 2003.
(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 High Income Fund and the Portfolio in
connection with their organization, their initial registration with the
Securities and Exchange Commission and with various states and the initial
public offering of its shares aggregated $149,100 and $25,000, 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.
(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.
(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
Portfolio of Investments.
(O) LINE OF CREDIT
For the year ended October 31, 1996, the Global High Income Portfolio
periodically borrowed amounts from a bank at a base or Eurodollar rate. The
arrangement with the bank allows the Portfolio to borrow a maximum amount of
$25,000,000. On February 28 & 29, 1996, the Portfolio borrowed $24,000,000, all
of which was repaid on April 18, 1996.
For the year ended October 31, 1996, the weighted average outstanding daily
balance of bank loans (based on the number of
F27
<PAGE>
GT GLOBAL INCOME FUNDS
days the loans were outstanding) was $17,800,000 with a weighted average
interest rate of 6.63%. Interest expense for the year ended October 31, 1996 was
$163,819.
(P) SECURITIES PURCHASED ON A WHEN-ISSUED OR FORWARD COMMITMENT BASIS
A Fund or Portfolio may trade securities on a when-issued or forward commitment
basis, with payment and delivery scheduled for a future date. These transactions
are subject to market fluctuations and are subject to the risk that the value at
delivery may be more or less than the trade date purchase price. Although the
Fund or Portfolio will generally purchase these securities with the intention of
acquiring such securities, they may sell such securities before the settlement
date. These securities are identified on the accompanying Portfolio of
Investments. The Fund or Portfolio has set aside sufficient cash or liquid high
grade debt securities as collateral for these purchase commitments.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Funds' and Portfolio's 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. The GT Global Government Income
Fund and GT Global Strategic Income Fund each pays the Manager investment
management and administration fees at the annualized rate of 0.725% on the first
$500 million of the average daily net assets of the Fund; 0.70% on the next $1
billion; 0.675% on the next $1 billion; and 0.65% on amounts thereafter. The GT
Global High Income Fund pays administration fees to the Manager at the
annualized rate of 0.25% of its average daily net assets. 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.
The Global High Income Portfolio pays investment management and administration
fees to the Manager at the annualized rate of 0.475% on the first $500 million
of average daily net assets of the Portfolio; 0.45% on the next $1 billion;
0.425% on the next $1 billion; and 0.40% on amounts thereafter, plus 2% of the
Portfolio's total investment income calculated in accordance with generally
accepted accounting principles, adjusted daily for currency revaluations, on a
mark to market basis, of the Portfolio's assets; provided, however, that during
any fiscal year this amount shall not exceed 2% of the Portfolio's total
investment income calculated in accordance with generally accepted accounting
principles. These fees are computed daily and paid monthly.
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 period ended October 31, 1996, GT Global retained the
following sales charges: $55,131 for the GT Global Government Income Fund,
$69,243 for the Global High Income Fund, and $23,580 for the GT Global Strategic
Income 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: $17,709 for the GT Global Government Income Fund,
$0 for the GT Global High Income Fund and $10,099 for the GT Global Strategic
Income 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: $1,449,342 for the GT Global Government Income Fund, $1,739,271
for the Global High Income Fund, and $1,915,487 for the GT Global Strategic
Income 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 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for 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%
F28
<PAGE>
GT GLOBAL INCOME FUNDS
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 GT Global
Government Income Fund and GT Global Strategic Income Fund's expenses (exclusive
of brokerage commissions, taxes, interest, and extraordinary expense) to the
maximum annual rate of 1.85%, 2.50%, and 1.50% of the average daily net assets
of each Fund's Class A, Class B, and Advisor Class shares, respectively.
Similarly, they voluntarily have undertaken to limit GT Global High Income
Fund's expenses to the maximum annual rate of 2.20%, 2.85%, and 1.85% of the
average daily net assets of the Fund's Class A, Class B, and Advisor Class
shares, respectively. If necessary, these limitations will be effected by
waivers by the Manager of 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 each Fund's other
operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of LGT 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 and Portfolio. 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. The
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 the 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>
GT Global Government Income Fund................................................ $352,752,344 $921,279,705
Global High Income Portfolio.................................................... 96,288,547 983,932,679
GT Global Strategic Income Fund................................................. 71,587,672 816,104,575
</TABLE>
<TABLE>
<CAPTION>
SALES
------------------------------
U.S. GOVERNMENT OTHER ISSUES
--------------- ------------
<S> <C> <C>
GT Global Government Income Fund................................................ $441,687,203 $1,075,693,915
Global High Income Portfolio.................................................... 84,315,986 1,020,907,620
GT Global Strategic Income Fund................................................. 109,353,125 896,578,545
</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; 300,000,000 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:
F29
<PAGE>
GT GLOBAL INCOME FUNDS
CAPITAL SHARE TRANSACTIONS
GT GLOBAL GOVERNMENT INCOME 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............................. 19,126,586 $ 164,293,090 17,764,859 $ 154,603,577
Shares issued in connection with
reinvestment of distributions......... 1,643,833 14,228,931 2,042,839 17,630,697
--------------- ------------------ --------------- ------------------
20,770,419 178,522,021 19,807,698 172,234,274
Share repurchased....................... (36,969,597) (318,856,283) (34,203,619) (297,666,599)
--------------- ------------------ --------------- ------------------
Net decrease............................ (16,199,178) $ (140,334,262) (14,395,921) $ (125,432,325)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------------- -----------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 23,047,364 $ 198,774,141 20,700,346 $ 178,801,868
Shares issued in connection with
reinvestment of distributions......... 956,866 8,282,950 1,005,589 8,536,817
--------------- ------------------ --------------- ------------------
24,004,230 207,057,091 21,705,935 187,338,685
Share repurchased....................... (31,688,935) (273,022,079) (25,343,381) (218,171,165)
--------------- ------------------ --------------- ------------------
Net decrease............................ (7,684,705) $ (65,964,988) (3,637,446) $ (30,832,480)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
JUNE 1, 1995
YEARS ENDED (COMMENCEMENT OF SALE OF SHARES) TO
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------------- -----------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 105,543 $ 891,754 15,659 $ 141,450
Shares issued in connection with
reinvestment of distributions......... 1,345 11,541 397 3,476
--------------- ------------------ --------------- ------------------
106,888 903,295 16,056 144,926
Shares repurchased...................... (111,905) (948,244) (1,142) (9,928)
--------------- ------------------ --------------- ------------------
Net increase (decrease)................. (5,017) $ (44,949) 14,914 $ 134,998
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
</TABLE>
F30
<PAGE>
GT GLOBAL INCOME FUNDS
GT GLOBAL HIGH INCOME 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............................. 25,694,335 $ 346,426,450 25,003,318 $ 280,486,242
Shares issued in connection with
reinvestment of distributions......... 607,445 8,023,249 682,971 7,764,542
--------------- ------------------ --------------- ------------------
26,301,780 354,449,699 25,686,289 288,250,784
Share repurchased....................... (26,422,858) (355,715,247) (26,927,729) (301,862,112)
--------------- ------------------ --------------- ------------------
Net decrease............................ (121,078) $ (1,265,548) (1,241,440) $ (13,611,328)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------------- -----------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 14,568,804 $ 194,636,619 10,582,935 $ 119,426,735
Shares issued in connection with
reinvestment of distributions......... 765,798 10,086,445 826,797 9,372,626
--------------- ------------------ --------------- ------------------
15,334,602 204,723,064 11,409,732 128,799,361
Share repurchased....................... (16,793,522) (225,719,415) (11,542,431) (128,317,008)
--------------- ------------------ --------------- ------------------
Net increase (decrease)................. (1,458,920) $ (20,996,351) (132,699) $ 482,353
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
JUNE 1, 1995
YEAR ENDED (COMMENCEMENT OF SALE OF
OCTOBER 31, 1996 SHARES) TO OCTOBER 31, 1995
----------------------------------- -----------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,706,101 $ 23,413,749 133,919 $ 1,558,699
Shares issued in connection with
reinvestment of distributions......... 40,101 546,903 4,923 57,262
--------------- ------------------ --------------- ------------------
1,746,202 23,960,652 138,842 1,615,961
Share repurchased....................... (839,670) (11,309,193) (13,845) (160,158)
--------------- ------------------ --------------- ------------------
Net increase............................ 906,532 $ 12,651,459 124,997 $ 1,455,803
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
</TABLE>
F31
<PAGE>
GT GLOBAL INCOME FUNDS
GT GLOBAL STRATEGIC INCOME 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............................. 15,025,486 $ 168,473,834 10,413,395 $ 105,118,727
Shares issued in connection with
reinvestment of distributions......... 829,046 9,085,802 1,180,205 11,913,775
--------------- ------------------ --------------- ------------------
15,854,532 177,559,636 11,593,600 117,032,502
Shares repurchased...................... (18,331,797) (204,237,090) (18,672,585) (187,700,412)
--------------- ------------------ --------------- ------------------
Net decrease............................ (2,477,265) $ (26,677,454) (7,078,985) $ (70,667,910)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------------- -----------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 12,778,909 $ 141,835,937 5,950,544 $ 60,333,373
Shares issued in connection with
reinvestment of distributions......... 1,206,362 13,216,165 1,633,228 16,496,489
--------------- ------------------ --------------- ------------------
13,985,271 155,052,102 7,583,772 76,829,862
Shares repurchased...................... (20,318,197) (224,904,917) (15,079,063) (151,484,130)
--------------- ------------------ --------------- ------------------
Net decrease............................ (6,332,926) $ (69,852,815) (7,495,291) $ (74,654,268)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
JUNE 1, 1995
YEAR ENDED (COMMENCEMENT OF SALE OF SHARES) TO
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------------- -----------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 278,551 $ 3,010,280 44,461 $ 465,129
Shares issued in connection with
reinvestment of distributions......... 3,931 43,156 1,535 15,708
--------------- ------------------ --------------- ------------------
282,482 3,053,436 45,996 480,837
Shares repurchased...................... (284,638) (3,054,110) (3,115) (32,174)
--------------- ------------------ --------------- ------------------
Net increase (decrease)................. (2,156) $ (674) 42,881 $ 448,663
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
</TABLE>
5. WRITTEN OPTIONS:
The Global High Income Portfolio's written options contract activity for the
year ended October 31, 1996 was as follows:
COVERED CALL AND PUT OPTIONS WRITTEN
<TABLE>
<CAPTION>
UNDERLYING
NOMINAL
AMOUNT PREMIUMS
----------- ---------
<S> <C> <C>
Options outstanding at October 31, 1995.................................................................... 0 $ 0
Options written............................................................................................ 7,000,000 101,500
Options cancelled in closing purchase transactions......................................................... 0 0
Options expired prior to exercise.......................................................................... (7,000,000) (101,500)
Options exercised.......................................................................................... 0 0
----------- ---------
Options outstanding at October 31, 1996.................................................................... 0 $ 0
----------- ---------
----------- ---------
</TABLE>
- --------------
FEDERAL TAX INFORMATION:
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>
Government Income......................................................................................... --
High Income............................................................................................... $1,206,836
Strategic Income.......................................................................................... --
</TABLE>
F32
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL INCOME FUNDS
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, PLEASE CONTACT YOUR FINANCIAL 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 for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS GROWTH FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL 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 INFASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infastructure
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 U.S. companies believed to be undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Invests in global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in a portfolio of emerging market debt securities
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL GOVERNMENT INCOME FUND, GT GLOBAL STRATEGIC INCOME FUND, GT GLOBAL
HIGH INCOME FUND, GLOBAL HIGH INCOME PORTFOLIO, CHANCELLOR LGT ASSET
MANAGEMENT, INC. OR GT GLOBAL, INC. THIS STATEMENT OF ADDITIONAL INFORMATION
DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
INCSX703MC
<PAGE>
GT GLOBAL GROWTH &
INCOME FUND: ADVISOR CLASS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
March 1, 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Advisor Class shares of
GT Global Growth and Income Fund ("Fund"). The Fund is a non-diversified series
of G.T. Investment Funds, Inc. (the "Company"), a registered open-end management
investment company. This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with the Fund's
current Advisor Class Prospectus dated March 1, 1997, a copy of which is
available without charge by writing to the above address or by calling the Fund
at the toll-free telephone number listed above.
Chancellor LGT Asset Management, Inc. ( the "Manager") serves as the Fund's
investment manager and administrator. The distributor of the Fund's shares is GT
Global, Inc. ("GT Global"). The Fund's transfer agent is GT Global Investor
Services, Inc. ("GT Services" or the "Transfer Agent").
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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page No.
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<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 5
Risk Factors............................................................................................................. 13
Investment Limitations................................................................................................... 18
Execution of Portfolio Transactions...................................................................................... 19
Directors and Executive Officers......................................................................................... 21
Management............................................................................................................... 23
Valuation of Fund Shares................................................................................................. 24
Information Relating to Sales and Redemptions............................................................................ 25
Taxes.................................................................................................................... 26
Additional Information................................................................................................... 29
Investment Results....................................................................................................... 29
Description of Debt Ratings.............................................................................................. 35
Financial Statements..................................................................................................... 37
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
INVESTMENT OBJECTIVE AND
POLICIES
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INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term capital appreciation together
with current income. The Fund seeks its objective by investing in a global
portfolio of both equity securities and debt obligations allocated among diverse
international markets.
SELECTION OF EQUITY INVESTMENTS
For investment purposes, an issuer is typically considered as located in a
particular country if it (a) is incorporated under the laws of or has its
principal office in that country, or (b) it normally derives 50% or more of its
total revenue from business in that country. However, these are not absolute
requirements, and certain companies incorporated in a particular country and
considered by the Manager to be located in that country may have substantial
off-shore operations or subsidiaries and/or export sales exceeding in size the
assets or sales in that country.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Fund may invest in the securities of investment companies within the limits
of the Investment Company Act of 1940, as amended ("1940 Act"). These
limitations currently provide that, in general, the Fund may purchase shares of
a closed-end investment company unless (a) such a purchase would cause the Fund
to own in the aggregate more than 3 percent of the total outstanding voting
stock of the investment company or (b) such a purchase would cause the Fund to
have more than 5 percent of its total assets invested in the investment company
or more than 10 percent of its total assets invested in an aggregate of all such
investment companies. Investment in such investment companies may also involve
the payment of substantial premiums above the value of such companies' portfolio
securities. The Fund does not intend to invest in such investment companies
unless, in the judgment of 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
The Fund may hold equity securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs"), or other securities convertible into securities of
eligible issuers. These securities may not necessarily be denominated in the
same currency as the securities for which they may be exchanged. ADRs and ADSs
typically are issued by an American bank or trust company and evidence ownership
of underlying securities issued by a foreign corporation. EDRs, which are
sometimes referred to as Continental Depository Receipts ("CDRs"), are issued in
Europe typically by foreign banks and trust companies and evidence ownership of
either foreign or domestic securities. Generally, ADRs and ADSs in registered
form are designed for use in United States securities markets and EDRs in bearer
form are designed for use in European securities markets. For purposes of the
Fund's investment policies, the Fund's investments in ADRs, ADSs and EDRs will
be deemed to be investments in the equity securities representing securities of
foreign issuers into which they may be converted.
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
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
as deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans continuously be secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The Fund may pay reasonable
administrative and custodial fees in connection with loans of its securities.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund will have a right to call each loan and obtain the securities on five
business days' notice. The Fund will not have the right to vote equity
securities while they are lent, but it may call in a loan in anticipation of any
important vote. Loans will be made only 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 the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund typically will acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not an
investment policy or restriction of the Fund. For the purposes of calculation
with respect to the $1 billion figure, the assets of a bank will be deemed to
include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which the Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed upon price, date, and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Fund if the other party
to the repurchase agreement becomes bankrupt, the Fund intends to enter into
repurchase agreements only with banks and dealers believed by the Manager to
present minimum credit risks in accordance with guidelines established by the
Company's Board of Directors. The Manager will review and monitor the
creditworthiness of such institutions under the Board's general supervision.
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 10% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, i.e.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of the Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, within three days
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
(excluding Sundays and holidays) of such event the Fund may be required to sell
portfolio securities to restore the 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. The Fund also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to meet redemptions. Any borrowing by the Fund may cause greater
fluctuation in the value of its shares than would be the case if the Fund did
not borrow.
The Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. The Fund, however, currently is prohibited, pursuant to
a non-fundamental investment policy, from borrowing money in order to purchase
securities. Nevertheless, this policy may be changed in the future by a vote of
a majority of the Company's Board of Directors. In the event that the Fund
employs leverage in the future, it would be subject to certain additional risks.
Use of leverage creates an opportunity for greater growth of capital but would
exaggerate any increases or decreases in the Fund's net asset value. When the
income and gains on securities purchased with the proceeds of borrowings exceed
the costs of such borrowings, the Fund's earnings or net asset value will
increase faster than otherwise would be the case; conversely, if such income and
gains fail to exceed such costs, the Fund's earnings or net asset value would
decline faster than would otherwise be the case.
The Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. The Fund also may engage in "roll"
borrowing transactions which involve the Fund's sale of Government National
Mortgage Association certificates or other securities together with a commitment
(for which the Fund may receive a fee) to purchase similar, but not identical,
securities at a future date. The Fund will maintain, in a segregated account
with a custodian, cash 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
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility. The Fund may
only make short sales "against the box." In this type of short sale, at the time
of the sale the Fund owns the security it has sold short or has the immediate
and unconditional right to acquire the identical security at no additional cost.
In a short sale, the seller does not immediately deliver the securities sold and
does not receive the proceeds from the sale. To make delivery to the purchaser,
the executing broker borrows the securities being sold short on behalf of the
seller. The seller is said to have a short position in the securities sold until
it delivers the securities sold, at which time it receives the proceeds of the
sale. To secure its obligation to deliver securities sold short, the Fund will
deposit in a separate account with its custodian an equal amount of the
securities sold short or securities convertible into or exchangeable for such
securities at no cost. The Fund could close out a short position by purchasing
and delivering an equal amount of the securities sold short, rather than by
delivering securities already held by the Fund, because the Fund might want to
continue to receive interest and dividend payments on securities in its
portfolio that are convertible into the securities sold short.
The Fund might make a short sale "against the box" in order to hedge against
market risks when the Manager believes that the price of a security may decline,
causing a decline in the value of a security owned by the Fund or a security
convertible into or exchangeable for such security, or when the Manager wants to
sell the security the Fund owns at a current attractive price, but also wishes
to defer recognition of gain or loss for federal income tax purposes and for
purposes of satisfying certain tests applicable to regulated investment
companies under the Internal Revenue Code of 1986, as amended ("Code"). In such
case, any future losses in the Fund's long position should be reduced by a gain
in the short position. Conversely, any gain in the long position should be
reduced by a loss in the short position. The extent to which such gains or
losses in the long position are reduced will depend upon the amount of the
securities sold short relative to the amount of the securities the Fund owns,
either directly or indirectly, and, in the case where the Fund owns convertible
securities, changes in the investment values or conversion premiums of such
securities. There will be certain additional transaction costs associated with
short sales "against the box," but the Fund will endeavor to offset these costs
with income from the investment of the cash proceeds of short sales.
Statement of Additional Information Page 4
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
OPTIONS, FUTURES AND CURRENCY
STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon 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 Fund entered into a
short hedge because the Manager projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, a Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options generally will be written on securities and currencies that, in the
opinion of 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 Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objective. When writing a call option, the Fund, in return for
the
Statement of Additional Information Page 5
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Fund has no control
over when it may be required to sell the underlying securities or currencies,
since most options may be exercised at any time prior to the option's
expiration. If a call option that the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund will be obligated to
sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, 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 the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity normally are higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
The Fund generally would write put options in circumstances where the Manager
wishes to purchase the underlying security or currency for the Fund's portfolio
at a price lower than the current market price of the security or currency. In
such event, the Fund would write a put option at an exercise price that, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund also would receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at more than its market value.
Statement of Additional Information Page 6
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GT GLOBAL GROWTH & INCOME FUND
PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, the Fund has the right to sell the underlying security
or currency at the exercise price any any time until (American style) or
(European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund in order to protect against an anticipated
decline in the value of the security or currency. Such hedge protection is
provided only during the life of the put option when the Fund, as the holder of
the put option, is able to sell the underlying security or currency at the put
exercise price regardless of any decline in the underlying security's market
price or currency's exchange value. For example, a put option may be purchased
in order to protect unrealized appreciation of a security or currency when 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.
The Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique also may be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options also may be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in using
Forward Contracts by purchasing put or call options on currencies. A put option
gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be
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GT GLOBAL GROWTH & INCOME FUND
offset, in whole or in part, by an increase in the value of the put. If the
value of the currency instead should rise against the dollar, any gain to the
Fund would be reduced by the premium it had paid for the put option. A currency
call option might be purchased, for example, in anticipation of, or to protect
against, a rise in the value against the dollar of a currency in which the Fund
anticipates purchasing securities.
Options may be either listed on an exchange or traded 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. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the Securities and Exchange Commission ("SEC") considers purchased
OTC options to be illiquid securities. The Fund may also sell OTC options and,
in connection therewith, segregate assets or cover its obligations with respect
to OTC options written by the Fund. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the extent of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such calls as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund writes a call
on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When
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GT GLOBAL GROWTH & INCOME FUND
an index option is exercised, the amount of cash that the holder is entitled to
receive is determined by the difference between the exercise price and the
closing index level on the date when the option is exercised. As with other
kinds of options, the Fund as the call writer will not know that it has been
assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collectively, "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock price levels in order to establish more
definitely the effective return on securities or currencies held or intended to
be acquired by the Fund. The Fund's hedging may include sales of Futures as an
offset against the effect of expected increases in interest rates and decreases
in currency exchange rates or stock prices, and purchases of Futures as an
offset against the effect of expected declines in interest rates, and increases
in currency exchange rates or stock prices.
The Fund only will enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance the difference between the price at which the Futures
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GT GLOBAL GROWTH & INCOME FUND
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded, and may be modified significantly from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
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GT GLOBAL GROWTH & INCOME FUND
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a futures contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund either may
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds bonds
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with the
guidelines approved by the Company's Board of Directors.
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The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be predicted accurately, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund either may sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which the Manager believes will have a positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
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GT GLOBAL GROWTH & INCOME FUND
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash 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 the Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
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ILLIQUID SECURITIES
The Fund may invest up to 10% of its net assets in illiquid securities.
Securities may be considered illiquid if the Fund cannot reasonably expect
within seven days to sell the securities for approximately the amount at which
the Fund values such securities. The sale of illiquid securities, if they can be
sold at all, generally will require more time and result in higher brokerage
charges or dealer discounts and other selling expenses than the sale of liquid
securities, such as securities eligible for trading on U.S. securities exchanges
or in the over-the-counter markets. Moreover, restricted securities which may be
illiquid for purposes of this limitation, often sell, if at all, at a price
lower than similar securities that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-
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eligible restricted securities held by a Fund, however, could affect adversely
the marketability of such portfolio securities and the Fund might be unable to
dispose of such securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act, are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to the Manager in accordance with
procedures approved by the Company's Board of Directors. 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 who make quotes for the security; (iii) the number of dealers who have
undertaken to make a market in the security; (iv) the number of other potential
purchasers; and (v) the nature of the security and how trading is effected
(e.g., the time needed to sell the security, how offers are solicited and the
mechanics of transfer). The Manager monitors the liquidity of securities in the
Fund's portfolio and periodically reports on such decisions to the Board of
Directors.
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, the Fund could lose its entire investment in
any such country.
Certain countries in which the Fund may invest may have groups that advocate
radical religious or revolutionary philosophies or support ethnic independence.
Any disturbance on the part of such individuals could carry the potential for
widespread destruction or confiscation of property owned by individuals and
entities foreign to such country and could cause the loss of the Fund's
investment in those countries. Instability may also result from, among other
things: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which the Fund
invests and adversely affect the value of the Fund's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. The Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ in some cases significantly from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, 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
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matters as restrictions on market manipulation, insider trading rules,
shareholder proxy requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because the Fund, under normal circumstances, will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U. S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the movement of interest
rates, the pace of business activity in certain other countries and the U.S.,
and other economic and financial conditions affecting the world economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the U.S., and
foreign securities transactions usually are subject to fixed commissions, which
generally are higher than negotiated commissions on U.S. transactions. In
addition, foreign securities transactions may be subject to difficulties
associated with the settlement of such transactions. Delays in settlement could
result in temporary periods when assets of the Fund are uninvested and no return
is earned thereon. The inability of the Fund to make intended security purchases
due to settlement problems could cause the Fund to miss attractive
opportunities. Inability to dispose of a portfolio security due to settlement
problems either could result in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, could result in possible liability to the purchaser. The
Manager will consider such difficulties when determining the allocation of the
Fund's assets, although the Manager does not believe that such difficulties will
have a material adverse effect on the Fund's portfolio trading activities.
The Fund may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian; (ii) maintaining appropriate safeguards
to protect the Funds' investments and (iii) possible difficulties in obtaining
and enforcing judgments against such custodians.
WITHHOLDING TAXES. The Fund's net investment income from foreign issuers may
be subject to withholding taxes by the foreign issuer's country, thereby
reducing the Fund's net investment income or delaying the receipt of income
where those taxes may be recaptured. See "Taxes."
CONCENTRATION. To the extent the Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, it 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
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GT GLOBAL GROWTH & INCOME FUND
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 the
Fund.
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
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 Fund intends 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 the Fund
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
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GT GLOBAL GROWTH & INCOME FUND
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 into U.S. dollars and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation by any country, the Fund could lose its entire investment in any
such country.
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading value in issuers compared to the
volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities there may
be share registration and delivery delays or failures.
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 economies and securities
markets of certain emerging market countries.
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GT GLOBAL GROWTH & INCOME FUND
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
The Fund has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the holders of the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, and
(ii) more than 50% of the outstanding shares.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts, and may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Prospectus and this Statement of Additional
Information and subject to operating policy (4) below;
(4) Acquire securities subject to restrictions on disposition or
securities for which there is no readily available market, or enter into
repurchase agreements or purchase time deposits maturing in more than seven
days, or purchase OTC options or hold assets set aside to cover OTC options
written by the Fund, if, immediately after and as a result, the value of
such securities would exceed, in the aggregate, 10% of the Fund's net
assets;
(5) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act;
(6) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(7) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts subject to operating policy (4) below;
(8) Borrow money except from banks for temporary or emergency purposes
not in excess of 33 1/3% of the value of the Fund's total assets at the
lower of cost or fair market value. The Fund will not purchase securities
while borrowings in excess of 5% of its total assets are outstanding. This
restriction shall not prevent the Fund from entering into reverse repurchase
agreements and engaging in "roll" transactions, provided that reverse
repurchase agreements, "roll" transactions and any other transactions
constituting borrowing by the Fund may not exceed one-third of the Fund's
total assets. In the event that the asset coverage for the Fund's borrowings
falls below 300%, the Fund will reduce, within three days (excluding Sundays
and holidays), the amount of its borrowings in order to provide for 300%
asset coverage;
(9) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities;
(10) Invest in interests in oil, gas, or other mineral exploration or
development programs; or
(11) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, its investment adviser, or its
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer.
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GT GLOBAL GROWTH & INCOME FUND
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies and
may be changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund may not: (1) invest in securities of an issuer if
the investment would cause the Fund to own more than 10% of any class of
securities of any one issuer; (2) sell securities short, except to the extent
that the Fund contemporaneously owns or has the right to acquire at no
additional cost securities identical to those sold short; (3) invest more than
5% of its total assets in securities of companies having, together with their
predecessors, a record of less than three years of continuous operation; or (4)
enter into a futures contract, an option on a futures contract, or an option on
foreign currency traded on a CFTC-regulated exchange, in each case other than
for BONA FIDE hedging purposes (as defined by the CFTC), if the aggregate
initial margin and premiums required to establish all of those positions
(excluding the amount by which options are "in-the-money") exceeds 5% of the
liquidation value of the Fund's portfolio, after taking into account unrealized
profits and unrealized losses on any contracts the Fund has entered into.
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, the Manager
is responsible for the execution of the Fund's portfolio transactions and the
selection of broker/dealers who execute such transactions on behalf of the Fund.
In executing portfolio transactions, the Manager seeks the best net results for
the Fund, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. Although 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 the Fund may engage in soft dollar arrangements for
research services, as described below, the Fund has no obligation to deal with
any broker/dealer or group of broker/dealers in the execution of portfolio
transactions.
Debt securities generally are traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price of
the security usually includes a profit to the dealer. U.S. and foreign
government securities and money market instruments generally are traded in the
OTC markets. In underwritten offerings, securities usually are purchased at a
fixed price which includes an amount of compensation to the underwriter. On
occasion, securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Broker/dealers may receive commissions on
futures, currency and options transactions.
Consistent with the interests of the Fund, the Manager may select brokers to
execute the Fund's portfolio transactions, on the basis of the research and
brokerage services they provide to the Manager for its use in managing the Fund
and its other advisory accounts. Such services may include furnishing analyses,
reports and information concerning issuers, industries, securities, geographic
regions, economic factors and trends, portfolio strategy, and performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Research and brokerage
services received from such brokers are in addition to, and not in lieu of, the
services required to be performed by the Manager under the Management Contract
(defined below). A commission paid to such brokers may be higher than that which
another qualified broker would have charged for effecting the same transaction,
provided that 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 the Fund and its other clients and that the
total commissions paid by the Fund will be reasonable in relation to the
benefits received by the Fund over the long term. Research services may also be
received from dealers who execute Fund transactions in OTC markets.
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GT GLOBAL GROWTH & INCOME FUND
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 the Fund toward payment of the Fund's expenses, such as
transfer agent and custodian fees.
Investment decisions for the Fund and for other investment accounts managed by
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 the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases, the Manager
believes that coordination and the ability to participate in volume transactions
will be beneficial to the Fund.
Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, the Manager may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which the
Manager serves as investment manager in selecting brokers and dealers for the
execution of portfolio transactions. This policy does not imply a commitment to
execute portfolio transactions through all broker/dealers that sell shares of
the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in
over-the-counter markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. The fixed commissions paid in
connection with most such foreign stock transactions generally are higher than
negotiated commissions on United States transactions. There generally is less
government supervision and regulation of foreign stock exchanges and brokers
than in the United States. Foreign security settlements may in some instances be
subject to delays and related administrative uncertainties.
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the 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 the
Fund may invest generally are traded in the OTC markets.
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of the Liechtenstein Global Trust. The Company's Board of Directors
has adopted procedures in conformity with Rule 17e-1 under the 1940 Act to
ensure that all brokerage commissions paid to such affiliates are reasonable and
fair in the context of the market in which they are operating. Any such
transactions will be effected and related compensation paid only in accordance
with applicable SEC regulations.
For the fiscal years ended October 31, 1996, 1995 and 1994, the Fund paid
aggregate brokerage commissions of $257,953, $318,958 and $280,861,
respectively. For the fiscal year ended October 31, 1996, the Fund paid to LGT
Bank in Liechtenstein AG, an "affiliated" broker, aggregate brokerage
commissions of $16,898 for transactions involving purchases and sales of
portfolio securities which represented 6.55% of the total brokerage commissions
paid by the Fund and 0% of the aggregate dollar amount of transactions involving
payment of commissions by the Fund.
PORTFOLIO TRADING AND TURNOVER
The Fund engages in portfolio trading when the Manager has concluded that the
sale of a security owned by the Fund and/ or the purchase of another security of
better value can enhance principal and/or increase income. A security may be
sold to avoid any prospective decline in market value, or a security may be
purchased in anticipation of a market rise. Consistent with the Fund's
investment objective, a security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two securities.
Although the Fund does not intend generally to trade for short-term profits, the
securities in the Fund's portfolio will be sold whenever management believes it
is appropriate to do so, without regard to the length of time a particular
security may have been held. Portfolio turnover rate is calculated by dividing
the lesser of sales or purchases of portfolio securities by the Fund's average
month-end portfolio values excluding short-term investments. The portfolio
turnover rate will not be a limiting factor when the Manager deems portfolio
changes appropriate. Higher portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs that the Fund will bear
directly, and may result in the realization of net capital gains that are
taxable when distributed to the Fund's shareholders. For the fiscal years ended
October 31, 1996 and 1995, the Fund's portfolio turnover rates were 39% and 83%,
respectively.
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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) since 1995; President, GT Global since 1995;
50 California Street President and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice President
San Francisco, CA 94111 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 21
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
<TABLE>
<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 Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors for the
Company. Each of the Directors and officers of the Company is also a Director
and officer of G.T. Investment Portfolios, Inc., G.T. Global Developing Markets
Fund, Inc. and GT Global Floating Rate Fund, Inc., a Trustee and officer of G.T.
Global Growth Series and a Trustee of G.T. Global Eastern Europe Fund, G.T.
Global Variable Investment Trust, G.T. Global Variable Investment Series, Global
High Income Portfolio and Global Investment Portfolio, which are also registered
investment companies managed by the Manager. Each Director and Officer serves in
total as a Director or Trustee and Officer, respectively, of 11 registered
investment companies with 41 series managed or administered 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 per annum, plus $300 per Fund for each
meeting of the Board attended, and reimburses travel and other expenses incurred
in connection with attendance at such meetings. Other Directors and officers
receive no compensation or expense reimbursement from the Company. For the
fiscal year ended October 31, 1996, Mr. Anderson, Mr. Bayley, Mr. Patterson and
Ms. Quigley, who are not directors, officers or employees of the Manager or
other affiliated company, received total compensation of $30,200, $30,200,
$26,600 and 30,200, respectively, from the Company for which he or she serves as
a Director. For the fiscal year ended October 31, 1996 Mr. Anderson, Mr. Bayley,
Mr. Patterson and Ms. Quigley received total compensation of $80,100, $80,100,
$72,600 and $80,100, respectively, from the investment companies managed or
adminstered by the Manager for which he or she serves as a Director or Trustee.
Fees and expenses disbursed to the Directors contained no accrued or payable
pension or retirement benefits. As of February 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 the Fund or of all the
Company's funds in the aggregate.
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
The Manager serves as the Fund's investment manager and administrator 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 Fund and administers the
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 Fund,
and provides suitable office space, necessary small office equipment and
utilities. For these services, the Fund pays the Manager investment management
and administration fees, based on the Fund's average daily net assets, computed
daily and paid monthly, at the annualized rate of .975% on the first $500
million, .95% on the next $500 million, .925% on the next $500 million, and .90%
on amounts thereafter.
The Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract provides that with respect to the Fund, the Company or the
Manager may terminate the Contract without penalty upon sixty days' written
notice. The Management Contract terminates automatically in the event of its
assignment (as defined in the 1940 Act).
The following table discloses the amount of investment management and
administration fees paid by the Fund to the Manager during the Fund's last three
fiscal years:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- --------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1996..................................................................................................... $ 6,282,438
1995..................................................................................................... $ 6,301,399
1994..................................................................................................... $ 5,676,421
</TABLE>
DISTRIBUTION SERVICES
The Fund's Advisor Class shares are offered continuously through the Fund's
principal underwriter and distributor, GT Global, on a "best efforts" basis
without a sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agent has been retained by the Fund to perform shareholder
servicing, reporting and general transfer agent functions for the Fund. For
these services, the Transfer Agent receives an annual maintenance fee of $17.50
per account, a new account fee of $4.00 per account, a per transaction fee of
$1.75 for all transactions other than exchanges and a per exchange fee of $2.25.
The Transfer Agent also is reimbursed by the Fund for its out-of-pocket expenses
for such items as postage, forms, telephone charges, stationery and office
supplies. The Manager serves as the Fund's pricing and accounting agent. For the
fiscal years ended October 31, 1996 and October 31, 1995, the Fund paid transfer
agency and accounting services fees to the Manager of $1,398,892 and $1,414,035,
respectively.
EXPENSES OF THE FUND
The Fund pays all expenses not assumed by the Manager, GT Global and other
agents. These expenses include, in addition to the advisory, distribution,
transfer agency, pricing and accounting agency and brokerage fees discussed
above, legal and audit expenses, custodian fees, directors' fees, organizational
fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses
and the expenses of reports and prospectuses sent to existing investors. The
allocation of general Company expenses and expenses shared among the Fund and
other funds organized as series of the Company are allocated on a basis deemed
fair and equitable, which may be based on the relative net assets of the Fund or
the nature of the services performed and relative applicability to the Fund.
Expenditures, including costs incurred in connection with the purchase or sale
of portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are accounted
for as capital items and not as expenses. The ratio of the Fund's expenses to
its relative net assets can be expected to be higher than the expense ratios of
funds investing solely in
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
domestic securities, since the cost of maintaining the custody of foreign
securities and the rate of investment management fees paid by the Fund generally
are higher than the comparable expenses of such other funds.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the close of regular trading on the New York
Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern time, unless weather,
equipment failure or other factors contribute to an earlier closing time) on
each business day the NYSE is open for business. Currently, the NYSE is closed
on weekends and on certain days relating to the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
The Fund's portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs, and EDRs, which are traded on stock
exchanges, are valued at the last sale price on the exchange or in the principal
over-the-counter market in which such securities are traded, as of the close of
business on the day the securities are being valued or, lacking any sales, at
the last available bid price. In cases where securities are traded on more than
one exchange, the securities are valued on the exchange determined by the
Manager to be the primary market.
Long-term debt obligations are valued at the mean of representative quoted bid
and asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments are amortized to
maturity based on their cost, adjusted for foreign exchange translation,
provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or, in the case of OTC
options, at the average of the last bid prices obtained from dealers unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. The value of each security denominated in a currency other
than U.S. dollars will be translated into U.S. dollars at the prevailing market
rate as determined by the Manager on that day. When market quotations for
futures and options on futures held by the Fund are readily available, those
positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available (including restricted securities which are subject to limitations as
to their sale) are valued at fair value as determined in good faith by or under
the direction of the Company's Board of Directors. The valuation procedures
applied in any specific instance are likely to vary from case to case. However,
consideration generally is given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors also generally are considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Fund's net assets is so determined, that
value is then divided by the total number of shares outstanding (excluding
treasury shares), and the result, rounded to the nearer cent, is the net asset
value per share.
Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or at the mean of the
current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available, or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors, in good faith, will
establish a conversion rate for such currency.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
European, Far Eastern, or Latin American securities trading may not take place
on all days on which the NYSE is open. Further, trading takes place in Japanese
markets on certain Saturdays and in various foreign markets on days on which the
NYSE is not open. In addition, trading in securities on European and Far Eastern
securities exchanges and OTC markets generally is completed well before the
close of the business day in New York. Consequently, the calculation of the
Fund's net asset value may not take place contemporaneously with the
determination of the prices of securities held by the Fund. Events affecting the
values of portfolio securities that occur between the time their prices are
determined and the close of regular trading on the NYSE will not be reflected in
the Fund's net asset value unless the Manager, under the supervision of the
Company's Board of Directors, determines that the particular event would
materially affect net asset value. As a result, the Fund's net asset value may
be significantly affected by such trading on days when a shareholder cannot
purchase or redeem shares of the Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Advisor Class shares purchased should accompany the purchase order,
or funds should be wired to the Transfer Agent as described in the Prospectus.
Payment for Fund shares, other than by wire transfer, must be made by check or
money order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, on account of a check returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law.
EXCHANGES BETWEEN FUNDS
Shares of the Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Advisor Class shares
may be exchanged only for Advisor Class shares of other GT Global Mutual Funds.
The exchange privilege is not an option or right to purchase shares but is
permitted under the current policies of the respective GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the funds
upon 60 days prior notice to the shareholders of such fund and is available only
in states where the exchange may be legally made. Before purchasing shares
through the exercise of the exchange privilege, a shareholder should obtain and
read a copy of the prospectus of the fund to be purchased and should consider
the investment objective(s) of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s) and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution, if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by the Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Fund and the
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Transfer Agent reserve the right to refuse any telephone instructions and may
discontinue the aforementioned redemption options upon 30 days' written notice.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as determined by the SEC, (2) when an
emergency exists, as defined by the SEC, which would prohibit the Fund from
disposing of its portfolio securities or in fairly determining the value of its
assets, or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the net
assets of the Fund at the beginning of such period. This election is irrevocable
so long as Rule 18f-1 remains in effect, unless the SEC by order upon
application permits the withdrawal of such election.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
GENERAL
In order to qualify or to continue to qualify for treatment as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
("Code"), the Fund must distribute to its shareholders for each taxable year at
least 90% of its investment company taxable income (consisting generally of net
investment income, net short-term capital gain and net gains from certain
foreign currency transactions) ("Distribution Requirement") and must meet
several additional requirements. These requirements include the following: (1)
the Fund must derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of securities or foreign currencies, or other
income (including gains from options, Futures or Forward Contracts) derived with
respect to its business of investing in securities or those currencies ("Income
Requirement"); (2) the Fund must derive less than 30% of its gross income each
taxable year from the sale or other disposition of securities, or any of the
following, that were held for less than three months -- options or Futures
(other than those on foreign currencies), or foreign currencies (or options,
Futures or Forward Contracts thereon) that are not directly related to the
Fund's principal business of investing in securities (or options and Futures
with respect to securities) ("Short-Short Limitation"); (3) at the close of each
quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. government securities,
securities of other RICs and other securities, with these other securities
limited, in respect of any one issuer, to an amount that does not exceed 5% of
the value of the Fund's total assets and that does not represent more than 10%
of the issuer's outstanding voting securities; and (4) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its total
assets may be invested in securities (other than U.S. government securities or
the securities of other RICs) of any one issuer.
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
corporate shareholder and deducted by it pursuant to the dividends-received
deduction are subject indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
("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
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
taxes paid by it. Pursuant to the election, the 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 those taxes, (2)
treat his share of those taxes and of any dividend paid by the Fund that
represents income from foreign and U.S. possessions sources as his own income
from those sources, and (3) either deduct the taxes deemed paid by him in
computing his taxable income or, alternatively, use the foregoing information in
calculating the foreign tax credit against his federal income tax. The Fund will
report to its shareholders shortly after each taxable year their respective
shares of the Fund's income from sources within, and taxes paid to, foreign
countries and U.S. possessions if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund will be subject to
federal income tax on a portion of any "excess distribution" received on, or of
any gains from the disposition of, stock of a PFIC (collectively "PFIC income"),
plus interest thereon, even if the Fund distributed the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income will be included in
the Fund's investment company taxable income and, accordingly, will not be
taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if those earnings and
gain were not received by the Fund from the QEF. In most instances it will be
very difficult, if not impossible, to make this election because of certain
requirements thereof.
Pursuant to proposed regulations, an open-end RIC, such as the Fund, would be
entitled to elect to "mark-to-market" its stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. Distributions of net capital gain are not
subject to withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, those distributions ordinarily will be subject to
U.S. income tax at a rate of 30% (or lower treaty rate) if the individual is
physically present in the United States for more than 182 days during the
taxable year and the distributions are attributable to a fixed place of business
maintained by the individual in the United States.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
options, Futures and Forward Contracts derived by the Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement. However, income from the
disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities (or options and Futures with respect thereto) also will be subject to
the Short-Short Limitation if they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all those transactions. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts and or foreign currency positions beyond the time
when it otherwise would be advantageous to do so, in order for the Fund to
continue to qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, Futures and Forward
Contracts on foreign currencies ("Section 988" gains 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. The
Fund attempts to monitor section 988 transactions to minimize any adverse tax
impact.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL GROWTH & INCOME 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), 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, Germany.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Fund's independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P., conducts an
annual audit of the Fund, assists in the preparation of the Fund's federal and
state income tax returns and consults with the Company and the Fund as to
matters of accounting, regulatory filings, and federal and state income
taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of 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"
names and has reserved the right to withdraw its consent to the use of such
names by the Company and/or the Fund at any time, or to grant the use of such
names to any other company.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
STANDARDIZED RETURNS
The Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), are calculated
separately for Class A, Class B and Advisor Class shares of the 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
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 Fund, stated as average annualized total returns, for the periods shown,
were:
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND GROWTH AND
INCOME FUND INCOME FUND INCOME FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- --------------------------------------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996......................................... 11.25% 11.06% 17.19%
October 31, 1991 through October 31, 1996.................................. 10.07% n/a n/a
June 1, 1995 (commencement of operations) through October 31, 1996......... n/a n/a 14.83%
October 22, 1992 (commencement of operations) through October 31, 1996..... n/a 11.29% n/a
September 25, 1990 (commencement of operations) through October 31, 1996... 10.83% n/a n/a
</TABLE>
NON-STANDARDIZED RETURNS
In addition to Standardized Returns, the Fund may also 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 the 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 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 sales 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 Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND GROWTH AND
INCOME FUND INCOME FUND INCOME FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- --------------------------------------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
June 1, 1995 (commencement of operations) through October 31, 1996......... n/a n/a 21.68%
October 22, 1992 (commencement of operations) through October 31, 1996..... n/a 55.82% n/a
September 25, 1990 (commencement of operations) through October 31, 1996... 96.59% n/a n/a
</TABLE>
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or the Manager. The authors and publishers of such material are not to be
considered as "experts" under the Securities Act of 1933 on account of the
inclusion of such information herein.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of the Fund, nor is it a prediction
of such performance. The performance of the Fund will differ from the historical
performance of such indices. The performance of indices does not take expenses
into account, while the Fund incurs expenses in its operations which will reduce
performance. The Fund is actively managed, I.E. The Manager, as the Fund's
investment manager, actively purchases and sells securities in seeking the
Fund's investment objective. Moreover, the Fund may invest a portion of its
assets in corporate bonds, while the above data relates only to government
bonds. Each of these factors will cause the performance of the Fund to differ
from indices.
In addition, GT Global may in its radio, television and other advertising,
employ the use of sound effects such as, for example, sounds of electronic data
being communicated.
The Fund and GT Global may from time to time compare the Fund with, but not
limited to, the following:
(1) Various Salomon Brothers World Bond Indices, which measure the total
return performance of high quality non-U.S. dollar denominated securities in
major sectors of the worldwide bond markets.
(2) The Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
agencies of the U.S. Government (excluding mortgage-backed securities), and
all public, fixed rate, non-convertible investment grade domestic corporate
debt rated at least Baa by Moody's Investors Service Inc. or BBB by Standard
and Poor's, or, in the case of nonrated bonds, BBB by Fitch Investors
Service, Inc. ("Fitch") (excluding Collateralized Mortgage Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings and comparisons published or prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Company Services ("CDA/Wiesenberger") and/or other companies that
rank or compare mutual funds by overall performance, investment objectives,
assets, expense levels, periods of existence and/or other factors. In this
regard, the Fund may be compared to the Fund's "peer group" as defined by
Lipper, CDA/Wiesenberger and/or other firms, as applicable, or to specific
funds or groups of funds within or without such peer group. Morningstar is a
mutual fund rating service that also rates mutual funds on the basis of
risk-adjusted performance. Morningstar ratings are calculated from a fund's
three, five and ten year average annual returns with appropriate fee
adjustments and a risk factor that reflects fund performance relative to the
three-month U.S. Treasury bill monthly returns. Ten percent of the funds in
an investment category receive five stars and 22.5% receive four stars. The
ratings are subject to change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and Gross National Product ("GNP")-weighted
index, beginning in 1975. The returns are broken down by local market and
currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized index composed of the capitalization-weighted average of the
price of 500 of the largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-backed
fixed income securities.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies in Europe, Australia and the Far East.
(13) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(14) The World Bank Publication of Trends in Developing Countries (TIDE)
provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(15) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(16) Datastream and Worldscope each is an on-line database retrieval
service for information including but not limited to international financial
and economic data.
(17) International Financial Statistics, which is produced by the
International Monetary Fund.
(18) Various publications and reports produced by the World Bank and its
affiliates.
(19) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(20) Various publications including but not limited to ratings agencies
such as Moody's, S&P and Fitch.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
(21) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(22) Bank Rate National Monitor Index, which is an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.
(23) International Finance Corporation ("IFC") Emerging Markets Data Base
which provides detailed statistics on stock and bond markets in developing
countries.
(24) Various publications from the Organization for Economic Cooperation
and Development (OECD).
Indices, economic and financial data prepared by the research departments of
various financial organizations such as Salomon Brothers, Inc., Lehman Brothers,
Merrill Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan Stanley, Smith
Barney, S.G. Warburg, Jardine Flemming, The Bank for International Settlements,
Asian Development Bank, Bloomberg, L.P. and Ibbottson Associates may be used as
well as information reported by the Federal Reserve and the respective Central
Banks of various nations. In addition, performance rankings, ratings and
commentary reported periodically in national financial publications, included
but not limited to, Money Magazine, Mutual Fund Magazine, Smart Money, Global
Finance, EuroMoney, Financial World, Forbes, Fortune, Business Week, Latin
Finance, the Wall Street Journal, Emerging Markets Weekly, Kiplinger's Guide To
Personal Finance, Barron's, The Financial Times, USA Today, The New York Times,
Far Eastern Economic Review, The Economist and Investors Business Digest. Each
Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above and other indices which may be
developed and made available.
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.
GT Global believes the Fund is an appropriate investment for long-term
investment goals including, but not limited to funding retirement, paying for
education or purchasing a house. The Fund does not represent a complete
investment program and the investors should consider the Fund as appropriate for
a portion of their overall investment portfolio with regard to their long-term
investment goals.
GT Global believes that a growing number of consumer products, including, but
not limited to home appliances, automobiles and clothing, purchased by Americans
are manufactured abroad. GT Global believes that investing globally in the
companies that produce products for U.S. consumers can help U.S. investors seek
protection of the value of their assets against the potentially increasing costs
of foreign manufactured goods. Of course, there can be no assurance that there
will be any correlation between global investing and the costs of such foreign
goods unless there is a corresponding change in value of the U.S. dollar to
foreign currencies. From time to time, GT Global may refer to or advertise the
names of such companies although there can be no assurance that any GT Global
Mutual Fund may own the securities of these companies.
The Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above which may be developed and made
available in the future. The Fund may be compared in advertising to Certificates
of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan statistical areas, or other investments
issued by banks. The Fund differs from bank investments in several respects. The
Fund may offer greater liquidity or higher potential returns than CDs; but
unlike CDs, the Fund will have a fluctuating share price and return and is not
FDIC insured.
The Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
GT Global Mutual Funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the Fund. Ibbotson
calculates total returns in the same method as the Fund. The Fund may also
compare performance to that of other compilations or indices that may be
developed and made available in the future.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the Fund may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, the Fund may quote financial or
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of GT Global Mutual Funds to one another in appropriate categories
over specific periods of time may also be quoted in advertising.
The Fund may quote various measures of volatility and benchmark correlation,
such as beta, standard deviation and R(2) in advertising. In addition, the Fund
may compare these measures to those of other funds. Measures of volatility seek
to compare the Fund's historical share price fluctuations or total returns
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
The Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after-tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Funds through various retirement plans that offer
deferral of income taxes on investment earnings and may also enable an investor
to make pre-tax contributions. Because of their advantages, these retirement
plans may produce returns superior to comparable non-retirement investments. In
sales material and advertisements, the Fund 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
lessor 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
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 ("SEP" or "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh-type plans or 401(k) plans, but with fewer administrative requirements and
therefore potential lower annual administration expenses.
CODE SECTION 403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other not-for-profit corporations can make pre-tax salary reduction
contributions to these accounts.
PROFIT-SHARING (INCLUDING 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 permit 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 retirements plans.
GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.
From time to time, the Fund and GT Global will quote information including, but
not limited to, data regarding: individual countries, regions, world stock
exchanges, and economic and demographic statistics from sources GT Global deems
reliable, including, 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 Industry
Indices and IFC.
3) The number of listed companies: IFC, G.T. Guide to World Equity Markets,
Salomon Brothers, Inc. and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, 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: Organization for Economic Cooperation
and Development 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, G.T. Guide to World
Equity Markets, Salomon Brothers Inc. and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
17) Countries restructuring their debt, including those under the Brady Plan:
the Manager.
18) Political and economic structure of countries: Economist Intelligence Unit.
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
19) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
20) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 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 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.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
Moody's rates the debt securities issued by various entities from "Aaa"
to "C". Investment grade ratings are the first four categories:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or exceptionally stable margin, and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risk appear somewhat
greater.
A -- Upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Ba -- Have speculative elements and their future cannot be considered to
be well assured. Often the protection of interest and principal payments may
be very moderate, and thereby not well safeguarded during other good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B -- Generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small.
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Caa -- Poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca -- Speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
C -- Lowest rated class of bonds. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that are
not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published in
Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the Company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "DD" according to quality. Investment grade ratings are the first four
categories:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal although
they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" are
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of this
obligation. "BB" indicates the lowest degree of speculation and "C" the
highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.
BB -- Has less near-term vulnerability to default than other speculative
issues; however, it faces major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The "BB" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "BBB-" rating.
B -- Has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
CCC -- Has a currently indefinable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The "CCC" rating category
is also used for debt subordinated to senior debt that is assigned an actual
or implied "B" or "B-" rating.
CC -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC" rating.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
C -- Typically applied to debt subordinated to senior debt which is
assigned an actual or implied "CCC-" debt rating. The "C" rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" rating is used when interest payments
are not made on the date due even if the applicable grace period has not
expired, unless S&P believes that such payments will be made during such
grace period. The "D" rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1" and "Prime-2" to indicate
commercial paper having the highest capacity for timely repayment. Issuers rated
Prime-1 have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity normally will be evidenced by the
following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protections; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2 have a strong
capacity for repayment of short-term promissory obligations. This normally will
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into four categories ranging from
"A" for the highest quality obligations to "D" for the lowest. A -- Issues
assigned its highest rating are regarded as having the greatest capacity for
timely payment. Issues in this category are delineated with numbers 1, 2, and 3
to indicate the relative degree of safety. A-1 -- This designation indicates
that the degree of safety regarding timely payment is either overwhelming or
very strong. Those issues determined to possess overwhelming safety
characteristics will be denoted with a plus (++) sign designation. A-2 --
Capacity for timely payments on issues with this designation is strong; however,
the relative degree of safety is not as high as for issues designated "A-1."
COMMERCIAL PAPER RATINGS
The Fund may invest only in high quality commercial paper, i.e. commercial paper
rated Prime-1 by Moody's, A-1 by S&P, or, if unrated, judged by the Manager to
be of comparable quality. Issuers rated Prime-1 by Moody's have, in Moody's
judgment, a superior capacity for repayment of short-term debt obligations.
Prime-1 repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structures with
moderate reliance on debt and ample asset protections; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issues assigned the A-1 rating by S&P are regarded by S&P
as having the greatest capacity for timely payment. This designation indicates
that the degree of safety regarding timely payment is either overwhelming or
very strong.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Fund as of October 31, 1996, and for its
fiscal year then-ended appear on the following pages.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
Annual Report
To the Shareholders of GT Global Growth & Income Fund and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of GT
Global Growth & Income Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1996, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 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 GT
Global Growth & Income Fund as of October 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 13, 1996
F1
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Net
Equity Investments Country Shares Value Assets
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (22.8%)
Royal & Sun Alliance Insurance Group PLC ............... UK 2,081,400 $ 14,274,489 2.1
INSURANCE - MULTI-LINE
Schweizerischer Bankverein (Swiss Bank Corp.) .......... SWTZ 69,590 13,425,103 2.0
BANKS-MONEY CENTER
Union Bank of Switzerland - Bearer ..................... SWTZ 10,652 10,160,837 1.5
BANKS-MONEY CENTER
CS Holding AG - Registered ............................. SWTZ 98,500 9,852,341 1.5
BANKS-MONEY CENTER
AEGON N.V. ............................................. NETH 187,875 9,553,717 1.4
INSURANCE-LIFE
First Tennessee National Corp. ......................... US 245,400 8,926,425 1.3
BANKS-REGIONAL
ABN AMRO Holding N.V. .................................. NETH 151,374 8,553,866 1.3
BANKS-REGIONAL
ING Groep N.V. ......................................... NETH 264,262 8,237,263 1.2
OTHER FINANCIAL
Commonwealth Bank of Australia ......................... AUSL 757,700 7,113,005 1.1
BANKS-SUPER REGIONAL
American General Corp. ................................. US 170,000 6,332,500 0.9
INSURANCE-LIFE
IKB Deutsche Industriebank AG .......................... GER 33,700 6,123,629 0.9
BANKS-REGIONAL
Lloyds Abbey Life PLC .................................. UK 599,000 6,115,726 0.9
INSURANCE-LIFE
National Westminster Bank PLC .......................... UK 471,800 5,385,091 0.8
BANKS-MONEY CENTER
Deutsche Bank AG ....................................... GER 112,500 5,213,922 0.8
BANKS-MONEY CENTER
Generale de Banque S.A. ................................ BEL 14,762 5,162,201 0.8
BANKS-MONEY CENTER
General Accident PLC ................................... UK 400,000 4,764,074 0.7
INSURANCE - PROPERTY-CASUALTY
Kredietbank N.V. ....................................... BEL 12,980 4,195,492 0.6
BANKS-REGIONAL
Fortis Amev N.V. ....................................... NETH 135,042 4,034,311 0.6
OTHER FINANCIAL
Commercial Union PLC ................................... UK 361,550 3,823,747 0.6
INSURANCE - MULTI-LINE
Mercury Asset Management Group PLC ..................... UK 196,698 3,614,878 0.5
INVESTMENT MANAGEMENT
M & G Group PLC ........................................ UK 155,000 2,824,601 0.4
INVESTMENT MANAGEMENT
Banco de Santander S.A. ................................ SPN 48,750 2,503,823 0.4
BANKS-MONEY CENTER
Dresdner Bank AG ....................................... GER 72,350 1,936,154 0.3
BANKS-MONEY CENTER
Gerrard & National Holdings PLC ........................ UK 375,880 1,608,468 0.2
SECURITIES BROKER
Realty Development Corp., Ltd. "A" ..................... HK 5,000 19,142 --
REAL ESTATE
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Net
Equity Investments Country Shares Value Assets
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Generale de Banque Strip VVPR .......................... BEL 1,342 $ 861 --
BANKS-MONEY CENTER
------------
153,755,666
------------
Energy (12.9%)
Elektrowatt AG ......................................... SWTZ 45,508 17,306,164 2.6
ELECTRICAL & GAS UTILITIES
Royal Dutch Petroleum Co. .............................. NETH 87,050 14,372,406 2.1
OIL
Exxon Corp. ............................................ US 91,300 8,091,463 1.2
OIL
Electrabel S.A. ........................................ BEL 34,760 8,073,866 1.2
ELECTRICAL & GAS UTILITIES
Mobil Corp. ............................................ US 63,800 7,448,650 1.1
OIL
Shell Transport & Trading Co., PLC ..................... UK 358,800 5,881,728 0.9
OIL
RWE AG ................................................. GER 134,620 5,545,269 0.8
ELECTRICAL & GAS UTILITIES
Reunies Electrobel & Tractebel S.A. .................... BEL 11,587 5,520,274 0.8
ELECTRICAL & GAS UTILITIES
Pacific Gas and Electric Co. ........................... US 220,000 5,170,000 0.8
ELECTRICAL & GAS UTILITIES
Elf Aquitaine .......................................... FR 52,475 4,197,589 0.6
OIL
Groupe Bruxelles Lambert S.A. .......................... BEL 31,025 3,856,974 0.6
OIL
British Gas PLC ........................................ UK 459,500 1,427,994 0.2
GAS PRODUCTION & DISTRIBUTION
------------
86,892,377
------------
Services (6.4%)
Telecom Corporation of New Zealand Limited: ............ NZ -- -- 2.3
TELEPHONE NETWORKS
Common ............................................... -- 2,614,200 13,588,663 --
ADR{\/} .............................................. -- 19,000 1,581,750 --
McGraw-Hill, Inc. ...................................... US 162,000 7,593,750 1.1
BROADCASTING & PUBLISHING
United News & Media PLC ................................ UK 639,291 7,010,773 1.0
BROADCASTING & PUBLISHING
Dun & Bradstreet Corp. ................................. US 109,800 6,354,675 0.9
BROADCASTING & PUBLISHING
Royal PTT Nederland N.V. ............................... NETH 112,735 4,078,681 0.6
TELEPHONE NETWORKS
EMI Group PLC .......................................... UK 158,900 3,121,896 0.5
LEISURE & TOURISM
------------
43,330,188
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Net
Equity Investments Country Shares Value Assets
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (6.3%)
Western Mining Corporation Holdings Ltd. ............... AUSL 1,437,900 $ 9,033,151 1.3
METALS - NON-FERROUS
CSR Ltd. ............................................... AUSL 2,405,200 8,078,942 1.2
BUILDING MATERIALS & COMPONENTS
Solvay S.A. "A" ........................................ BEL 11,754 7,042,218 1.1
CHEMICALS
Akzo Nobel N.V. ........................................ NETH 51,450 6,481,651 1.0
CHEMICALS
Monsanto Co. ........................................... US 160,500 6,359,813 0.9
CHEMICALS
BASF AG ................................................ GER 180,800 5,782,159 0.8
CHEMICALS
------------
42,777,934
------------
Consumer Non-Durables (5.7%)
Avon Products, Inc. .................................... US 182,000 9,873,500 1.5
PERSONAL CARE/COSMETICS
EMAIL Ltd. ............................................. AUSL 3,264,200 8,973,124 1.3
HOUSEHOLD PRODUCTS
Philip Morris Cos., Inc. ............................... US 85,000 7,873,125 1.2
FOOD
Universal Corp. ........................................ US 280,500 7,643,625 1.1
TOBACCO
Brown-Forman Corp. "B" ................................. US 93,600 4,048,200 0.6
BEVERAGES - ALCOHOLIC
------------
38,411,574
------------
Health Care (3.7%)
Bristol Myers Squibb Co. ............................... US 138,700 14,667,525 2.2
PHARMACEUTICALS
Bayer AG ............................................... GER 258,600 9,777,383 1.5
PHARMACEUTICALS
------------
24,444,908
------------
Capital Goods (3.4%)
General Electric PLC ................................... UK 1,473,000 9,095,404 1.4
AEROSPACE/DEFENSE
BICC PLC ............................................... UK 1,559,172 7,420,400 1.1
INDUSTRIAL COMPONENTS
Lockheed Martin Corp. .................................. US 69,545 6,232,971 0.9
AEROSPACE/DEFENSE
------------
22,748,775
------------
Consumer Durables (1.9%)
GKN PLC ................................................ UK 685,800 12,888,041 1.9
------------
AUTO PARTS
Multi-Industry/Miscellaneous (1.4%)
VEBA AG ................................................ GER 170,200 9,083,556 1.4
------------
CONGLOMERATE
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Net
Equity Investments Country Shares Value Assets
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (0.3%)
Alcatel Alsthom Compagnie Generale d'Electricite ....... FR 21,860 $ 1,864,976 0.3
TELECOM TECHNOLOGY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $317,278,795) ............. 436,197,995 64.8
------------ -----
<CAPTION>
Principal % of Net
Fixed Income Investments Currency Amount Value Assets
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (25.6%)
Australia (2.0%)
Australian Government, 7.5% due 7/15/05 .............. AUD 16,500,000 13,198,170 2.0
Canada (0.6%)
Canadian Government, 8.75% due 12/1/05 ............... CAD 5,000,000 4,348,475 0.6
Denmark (1.1%)
Kingdom of Denmark, 8% due 3/15/06 ................... DKK 40,000,000 7,409,447 1.1
Germany (5.9%)
Deutschland Republic:
6.75% due 4/22/03 .................................. DEM 23,000,000 16,167,173 2.4
6.25% due 1/4/24 ................................... DEM 23,000,000 14,113,222 2.1
Bundesschatzanweisungen, 6.875% due 12/2/98 .......... DEM 7,000,000 4,907,956 0.7
Treuhandanstalt, 6.375% due 7/1/99 ................... DEM 7,000,000 4,888,067 0.7
Italy (3.2%)
Italian Buoni Poliennali del Tesoro (BTPS):
10.5% due 4/15/98 .................................. ITL 17,645,000,000 12,144,605 1.8
10.5% due 9/01/05 .................................. ITL 12,295,000,000 9,267,211 1.4
Spain (1.5%)
Kingdom of Spain, 10.3% due 6/15/02 .................. ESP 1,162,430,000 10,354,587 1.5
Sweden (2.4%)
Swedish Government, 6% due 2/9/05 .................... SEK 115,000,000 16,132,404 2.4
United Kingdom (3.7%)
United Kingdom Treasury:
7.75% due 9/8/06 ................................... GBP 11,895,000 19,487,111 2.9
9.5% due 1/15/99 ................................... GBP 3,000,000 5,144,717 0.8
United States (5.2%)
United States Treasury Note:
7.25% due 5/15/04 .................................. USD 8,600,000 9,109,617 1.4
7.5% due 2/15/05 ................................... USD 8,050,000 8,666,328 1.3
United States Treasury Bond:
6.25% due 8/15/23 .................................. USD 10,000,000 9,405,859 1.4
6% due 2/15/26 ..................................... USD 8,200,000 7,492,429 1.1
------------
Total Government & Government Agency Obligations (cost
$160,273,837) ........................................... 172,237,378
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal % of Net
Fixed Income Investments Currency Amount Value Assets
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (4.5%)
Germany (2.2%)
Siemens Capital Corp., 8% due 6/24/02+/+ ............. USD 4,710,000 $ 6,224,265 0.9
Deutsche Bank AG, 9% due 12/31/02+/+ ................. DEM 5,625,000 4,395,112 0.7
Commerzbank AG, Convertible Bond, 9.45% due
12/31/00+ ........................................... DEM 4,173,000 4,056,088 0.6
United Kingdom (2.3%)
Daily Mail & General Trust, Convertible Bond, 5.75%
due 9/26/03 ......................................... GBP 3,405,000 8,836,601 1.3
Land Securities PLC, Convertible Bond, 9.375% due
7/31/04 ............................................. GBP 3,485,000 6,560,600 1.0
------------
Total Corporate Bonds (cost $26,125,358) ................. 30,072,666
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $186,399,195) ....... 202,310,044 30.1
------------ -----
<CAPTION>
% of Net
Repurchase Agreement Value 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 $8,645,000 U.S. Treasury Bond,
7.125% due 2/15/23 (market value of collateral is
$9,130,814, including accrued interest). (cost
$8,946,379) ........................................... 8,946,379 1.3
------------ -----
TOTAL INVESTMENTS (cost $512,624,369) * ................. 647,454,418 96.2
Other Assets and Liabilities ............................. 25,799,981 3.8
------------ -----
NET ASSETS ............................................... $673,254,399 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
+ The coupon rate shown on floating rate note represents the rate at
period end.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
* For Federal income tax purposes, cost is $513,138,202 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 141,338,898
Unrealized depreciation: (7,022,682)
-------------
Net unrealized appreciation: $ 134,316,216
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depository Receipt
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL GROWTH & INCOME 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, Short-term
Rights & &
Country (Country Code/Currency Code) Equity Warrants Other Total
- -------------------------------------- ------------- ---------- ----- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 4.9 2.0 6.9
Belgium (BEL/BEF) .................... 5.1 5.1
Canada (CAN/CAD) ..................... 0.6 0.6
Denmark (DEN/DKK) .................... 1.1 1.1
France (FR/FRF) ...................... 0.9 0.9
Germany (GER/DEM) .................... 6.5 8.1 14.6
Italy (ITLY/ITL) ..................... 3.2 3.2
Netherlands (NETH/NLG) ............... 8.2 8.2
New Zealand (NZ/NZD) ................. 2.3 2.3
Spain (SPN/ESP) ...................... 0.4 1.5 1.9
Sweden (SWDN/SEK) .................... 2.4 2.4
Switzerland (SWTZ/CHF) ............... 7.6 7.6
United Kingdom (UK/GBP) .............. 13.2 6.0 19.2
United States & Other (US/USD) ....... 15.7 5.2 5.1 26.0
----- ----- ----- -----
Total ............................... 64.8 30.1 5.1 100.0
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $673,254,399.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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........................... 978,657 5.14010 11/19/96 $ 5,913
------------ ------------
Total Contracts to Buy (Payable
amount $972,744)................... 978,657 5,913
------------ ------------
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 0.15%.
Contracts to Sell:
- ----------------------------------------
Deutsche Marks 30,578,692 1.46710 11/29/96 912,004
French Francs 1,389,297 4.99600 11/06/96 31,840
French Francs 3,777,615 5.05905 11/19/96 37,330
Netherland Guilders 12,432,967 1.64860 11/15/96 365,771
Swiss Francs 14,014,758 1.23274 12/19/96 262,381
------------ ------------
Total Contracts to Sell (Receivable
amount $63,802,655)................ 62,193,329 1,609,326
------------ ------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 9.24%.
Total Open Forward Foreign Currency
Contracts.......................... $1,615,239
------------
------------
</TABLE>
- --------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $512,624,369) (Note 1)....................... $647,454,418
U.S. currency................................................................. $ 756
Foreign currencies (cost $44,124)............................................. 44,048 44,804
-------
Receivable for Fund shares sold........................................................ 20,169,512
Interest and interest withholding tax reclaims receivable.............................. 5,131,683
Receivable for open forward foreign currency contracts, net (Note 1)................... 1,615,239
Dividends and dividend withholding tax reclaims receivable............................. 1,127,871
Miscellaneous receivable............................................................... 4,762
Cash held as collateral for securities loaned (Note 1)................................. 109,660,818
------------
Total assets......................................................................... 785,209,107
------------
Liabilities:
Payable for Fund shares repurchased (Note 2)........................................... 1,082,087
Payable for investment management and administration fees (Note 2)..................... 534,801
Payable for service and distribution expenses (Note 2)................................. 401,630
Payable for printing and postage expenses.............................................. 106,632
Payable for transfer agent fees (Note 2)............................................... 61,755
Payable for professional fees.......................................................... 49,075
Payable for custodian fees (Note 1).................................................... 22,818
Payable for registration and filing fees............................................... 13,380
Payable for fund accounting fees (Note 2).............................................. 12,818
Payable for Directors' fees and expenses (Note 2)...................................... 4,464
Other accrued expenses................................................................. 4,430
Collateral for securities loaned (Note 1).............................................. 109,660,818
------------
Total liabilities.................................................................... 111,954,708
------------
Net assets............................................................................... $673,254,399
------------
------------
Class A:
Net asset value and redemption price per share ($286,203,273 DIVIDED BY 40,255,902 shares
outstanding)............................................................................ $ 7.11
------------
------------
Maximum offering price per share (100/95.25 of $7.11) *.................................. $ 7.46
------------
------------
Class B:+
Net asset value and offering price per share ($383,966,080 DIVIDED BY 53,993,849 shares
outstanding)............................................................................ $ 7.11
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($3,085,046
DIVIDED BY 434,291 shares outstanding).................................................. $ 7.10
------------
------------
Net assets consist of:
Paid in capital (Note 4)............................................................... $544,529,295
Undistributed net investment income.................................................... 755,291
Accumulated net realized loss on investments and foreign currency transactions......... (8,514,803)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................ 1,654,567
Net unrealized appreciation of investments............................................. 134,830,049
------------
Total -- representing net assets applicable to capital shares outstanding................ $673,254,399
------------
------------
<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.
F8
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income (net of foreign withholding tax of $70,369)................................ $15,829,738
Dividend income (net of foreign withholding tax of $1,768,337)............................. 15,064,935
-----------
Total investment income.................................................................. 30,894,673
-----------
Expenses:
Investment management and administration fees (Note 2)..................................... 6,282,438
Transfer agent fees (Note 2)............................................................... 1,236,857
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 968,051
Class B..................................................................... 3,702,842 4,670,893
-----------
Custodian fees (Note 1).................................................................... 456,141
Printing and postage expenses.............................................................. 170,158
Fund accounting fees (Note 2).............................................................. 162,035
Audit fees................................................................................. 57,724
Registration and filing fees............................................................... 43,188
Legal fees................................................................................. 25,986
Directors' fees and expenses (Note 2)...................................................... 16,712
Other expenses............................................................................. 23,615
-----------
Total expenses before reductions......................................................... 13,145,747
-----------
Expense reductions (Note 1 & 5)........................................................ (426,518)
-----------
Total net expenses....................................................................... 12,719,229
-----------
Net investment income........................................................................ 18,175,444
-----------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments.............................................. 11,446,471
Net realized gain on foreign currency transactions............................ 4,285,938
-----------
Net realized gain during the year........................................................ 15,732,409
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ 1,957,055
Net change in unrealized appreciation of investments.......................... 62,236,320
-----------
Net unrealized appreciation during the year.............................................. 64,193,375
-----------
Net realized and unrealized gain on investments and foreign currencies....................... 79,925,784
-----------
Net increase in net assets resulting from operations......................................... $98,101,228
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Year ended Year ended
October 31, October 31,
1996 1995
------------- -------------
Increase (Decrease) in net assets
Operations:
Net investment income......................................................... $ 18,175,444 $ 22,728,600
Net realized gain (loss) on investments and foreign currency transactions..... 15,732,409 (17,910,394)
Net change in unrealized appreciation (depreciation) on translation of assets
and liabilities in foreign currencies........................................ 1,957,055 (583,752)
Net change in unrealized appreciation of investments.......................... 62,236,320 32,281,086
------------- -------------
Net increase in net assets resulting from operations........................ 98,101,228 36,515,540
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income.................................................... (9,963,848) (10,790,288)
From net realized gain on investments......................................... (1,766,763) (506,546)
Class B:
Distributions to shareholders: (Note 1)
From net investment income.................................................... (10,894,963) (10,618,028)
From net realized gain on investments......................................... (2,225,842) (580,255)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income.................................................... (65,132) (18,236)
From net realized gain on investments......................................... (5,890) --
------------- -------------
Total distributions......................................................... (24,922,438) (22,513,353)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.............................. 237,835,679 150,425,919
Decrease from capital shares repurchased...................................... (279,569,655) (199,707,569)
------------- -------------
Net decrease from capital share transactions................................ (41,733,976) (49,281,650)
------------- -------------
Total increase (decrease) in net assets......................................... 31,444,814 (35,279,463)
Net assets:
Beginning of year............................................................. 641,809,585 677,089,048
------------- -------------
End of year................................................................... $ 673,254,399* $ 641,809,585**
------------- -------------
------------- -------------
<FN>
- --------------
* Includes undistributed net investment income of $755,291.
** Includes undistributed net investment income of $3,503,788.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A+
--------------------------------------------------------
Year ended October 31,
--------------------------------------------------------
1996 1995 1994 1993 (d) 1992
--------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.25
--------- --------- --------- --------- --------
Income from investment
operations:
Net investment income....... 0.22 0.24 0.22 0.24* 0.21*
Net realized and unrealized
gain (loss) on
investments................ 0.82 0.13 (0.03) 1.05 0.10
--------- --------- --------- --------- --------
Net increase (decrease)
from investment
operations............... 1.04 0.37 0.19 1.29 0.31
--------- --------- --------- --------- --------
Distributions to shareholders:
From net investment
income..................... (0.24) (0.22) (0.21) (0.24) (0.14)
From net realized gain on
investments................ (0.04) (0.01) (0.06) -- (0.14)
From sources other than net
investment income.......... -- -- -- (0.04) --
--------- --------- --------- --------- --------
Total distributions....... (0.28) (0.23) (0.27) (0.28) (0.28)
--------- --------- --------- --------- --------
Net asset value, end of
period....................... $ 7.11 $ 6.35 $ 6.21 $ 6.29 $ 5.28
--------- --------- --------- --------- --------
--------- --------- --------- --------- --------
Total investment return (e)... 16.80% 6.27% 3.14% 25.1% 5.9%
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $286,203 $284,069 $317,847 $251,428 $27,754
Ratio of net investment income
to average net assets........ 3.17% 3.85% 3.30% 3.3%* 4.1%*
Ratio of expenses to average
net assets:
With expense reductions
(Notes 1 & 5).............. 1.59% 1.70% 1.67% 1.8%* 1.9%*
Without expense
reductions................. 1.66% 1.74% --%** --%** --%**
Portfolio turnover rate++++... 39% 83% 117% 24% 53%
Average commission rate per
share paid on portfolio
transactions++++............. $ 0.0139 N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing among the
classes of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.005 and $0.02 for the year ended October
31, 1993 and 1992, respectively. Without such reimbursements, the
expense ratios would have been 1.9% and 2.2%, and the net investment
income to average net assets would have been 3.2% and 3.7% for the
year ended October 31, 1993 and 1992, respectively.
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) Ratios are not meaningful due to short period of operations of Class B
shares.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
(e) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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>
Class B++
----------------------------------------------------------- Advisor Class+++
October 22, --------------------------
1992 Year June 1, 1995
Year ended October 31, to ended to
--------------------------------------------- October 31, October 31, October 31,
1996 1995 1994 1993 (d) 1992 (d) 1996 1995
--------- --------- --------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.29 $ 6.35 $ 6.24
--------- --------- --------- --------- ----------- ----------- ------------
Income from investment
operations:
Net investment income....... 0.17 0.20 0.18 0.20 0.01 0.23 0.11
Net realized and unrealized
gain (loss) on
investments................ 0.82 0.13 (0.03) 1.05 (0.02) 0.82 0.13
--------- --------- --------- --------- ----------- ----------- ------------
Net increase (decrease)
from investment
operations............... 0.99 0.33 0.15 1.25 (0.01) 1.05 0.24
--------- --------- --------- --------- ----------- ----------- ------------
Distributions to shareholders:
From net investment
income..................... (0.20) (0.18) (0.17) (0.20) -- (0.26) (0.13)
From net realized gain on
investments................ (0.03) (0.01) (0.06) -- -- (0.04) --
From sources other than net
investment income.......... -- -- -- (0.04) -- -- --
--------- --------- --------- --------- ----------- ----------- ------------
Total distributions....... (0.23) (0.19) (0.23) (0.24) -- (0.30) (0.13)
--------- --------- --------- --------- ----------- ----------- ------------
Net asset value, end of
period....................... $ 7.11 $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 7.10 $ 6.35
--------- --------- --------- --------- ----------- ----------- ------------
--------- --------- --------- --------- ----------- ----------- ------------
Total investment return (e)... 16.06% 5.57% 2.48% 24.3% (0.2)% (a) 17.19% 3.83% (a)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $383,966 $356,796 $359,242 $150,768 $ 280 $ 3,085 $ 944
Ratio of net investment income
to average net assets........ 2.52% 3.20% 2.65% 2.6% N/A(c) 3.52% 4.20% (b)
Ratio of expenses to average
net assets:
With expense reductions
(Notes 1 & 5).............. 2.24% 2.35% 2.32% 2.5% N/A(c) 1.24% 1.35% (b)
Without expense
reductions................. 2.31% 2.39% --%** --%** --% **(c) 1.31% 1.39% (b)
Portfolio turnover rate++++... 39% 83% 117% 24% 53% 39% 83%
Average commission rate per
share paid on portfolio
transactions++++............. $ 0.0139 N/A N/A N/A N/A $ 0.0139 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing among the
classes of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.005 and $0.02 for the year ended October
31, 1993 and 1992, respectively. Without such reimbursements, the
expense ratios would have been 1.9% and 2.2%, and the net investment
income to average net assets would have been 3.2% and 3.7% for the
year ended October 31, 1993 and 1992, respectively.
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) Not annualized.
(b) Annualized.
(c) Ratios are not meaningful due to short period of operations of Class B
shares.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the year.
(e) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1996
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
GT Global Growth & Income Fund ("Fund") is a separate series of GT Investment
Funds, Inc. ("Company"). The Company is organized as a Maryland corporation and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a non-diversified, open-end management investment company. The Company has
twelve series of shares in operation, each series corresponding to a distinct
portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective service and distribution expenses, and
may differ in its transfer agent, registration, and certain other class-specific
fees and expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
the financial statements may include certain estimates made by management.
(A) Portfolio Valuation
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by, Chancellor LGT Asset
Management, Inc. (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 fluctuations, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Directors.
(B) Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Fund after translation
to U.S. dollars based on the exchange rates on that day. The cost of each
security is determined using historical exchange rates. Income and withholding
taxes are translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss
F13
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
equal to the difference between the value at the time it was opened and the
value at the time it was closed. Forward Contracts involve market risk in excess
of the amounts shown in the Fund's "Statement of Assets and Liabilities." The
Fund could be exposed to risk if a counter party is unable to meet the terms of
the contract or if the value of the currency changes unfavorably. The Fund may
enter into Forward Contracts in connection with planned purchases or sales of
securities, or to hedge against adverse fluctuations in exchange rates between
currencies.
(E) Option Accounting Principles
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. If an option expires on its
stipulated expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Fund can write options only on a covered
basis, which, for a call, requires that the Fund hold the underlying security
and, for a put, requires the Fund to set aside cash, U.S. government securities,
or other liquid, high grade debt securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund may use options to manage its exposure to the
stock or bond market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently 'marked-to-market' to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock or bond
market and to fluctuations in currency values or interest rates.
(G) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) Portfolio Securities Loaned
At October 31, 1996, stocks with an aggregate value of approximately
$103,616,512 were on loan to brokers. The loans were secured by cash collateral
of $109,660,818. For international securities, cash collateral is received by
the Fund against loaned securities in an amount at least equal to 105% of the
market value of the loaned securities at the inception of each loan. This
collateral must be maintained at not less than 103% of the market value of the
loaned securities during the period of the loan. For domestic securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the loan. For
the year ended October 31, 1996, the Fund received $408,455 of income from
securities lending which was used to offset the Fund's custody expenses.
F14
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
(I) Taxes
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carry forward of
$6,939,210, which expires in 2003.
(J) Distributions to Shareholders
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) Foreign Securities
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investment of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the price of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) Indexed Securities
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(M) Restricted Securities
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
2. Related Parties
Chancellor LGT Asset Management, Inc., is the Fund's 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. The Fund 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 the Fund's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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 $55,131
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $11,699 for the year ended October 31, 1996. 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 Fund's current
prospectus. For the year ended October 31, 1996, GT Global collected CDSCs in
the amount of $1,473,414. 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 Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for 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 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for 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, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for 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%
F15
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 1.85%, 2.50%, and 1.50% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of 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 Fund. 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 Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the 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.
3. Purchases and Sales of Securities
For the year ended October 31, 1996, purchases and sales of investment
securities by the Fund, other than short-term investments and U.S. government
obligations, aggregated $221,734,292 and $306,804,136, respectively. Purchases
and sales of U.S. government obligations were $27,669,250 and $12,391,250,
respectively, for the year ended October 31, 1996.
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, 200,000,000 were
classified as shares of the 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 Latin
America Growth Fund; 200,000,000 were classified as shares of GT Global Small
Companies Fund (inactive); 400,000,000 were classified as shares of GT Global
Telecommunications Fund; 200,000,000 were classified as shares of GT Global
Emerging Markets 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; 200,000,000 were classified as shares of GT Global High
Income 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 Fund were as follows:
F16
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Capital Share Transactions
<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............................. 21,196,018 $143,350,526 11,447,072 $ 70,539,906
Shares issued in connection with
reinvestment of distributions......... 1,500,319 9,894,388 1,579,506 9,534,463
----------- ------------ ----------- -------------
22,696,337 153,244,914 13,026,578 80,074,369
Shares repurchased...................... (27,157,086) (182,477,096) (19,470,580) (119,773,578)
----------- ------------ ----------- -------------
Net decrease............................ (4,460,749) $(29,232,182) (6,444,002) $ (39,699,209)
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
Year ended Year ended
October 31, 1996 October 31, 1995
------------------------- --------------------------
Class B Shares Amount Shares Amount
- ---------------------------------------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 9,561,545 $ 63,970,280 9,868,499 $ 60,082,182
Shares issued in connection with
reinvestment of distributions......... 1,656,409 10,934,244 1,542,069 9,322,768
----------- ------------ ----------- -------------
11,217,954 74,904,524 11,410,568 69,404,950
Shares repurchased...................... (13,373,837) (89,395,191) (13,074,922) 79,926,629)
----------- ------------ ----------- -------------
Net decrease............................ (2,155,883) $(14,490,667) (1,664,354) $ (10,521,679)
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
June 1, 1995
(commencement of sale of
Year ended shares) to October 31,
October 31, 1996 1995
------------------------- --------------------------
Advisor Class Shares Amount Shares Amount
- ---------------------------------------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,416,928 $ 9,616,882 146,947 $ 928,364
Shares issued in connection with
reinvestment of distributions......... 10,469 69,359 2,927 18,236
----------- ------------ ----------- -------------
1,427,397 9,686,241 149,874 946,600
Shares repurchased...................... (1,141,817) (7,697,368) (1,163) (7,362)
----------- ------------ ----------- -------------
Net increase............................ 285,580 $ 1,988,873 148,711 $ 939,238
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------
</TABLE>
5. Expense Reductions
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1996, the Fund's expenses
were reduced by $18,063 under these arrangements.
F17
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL 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 on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUNDS
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
FIXED INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, 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 GROWTH & INCOME 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.
GROSX703 MC
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND:
ADVISOR CLASS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
March 1, 1997
- --------------------------------------------------------------------------------
This statement of Additional Information relates to the Advisor Class shares of
GT Global Latin America Growth Fund ("Fund"). The Fund is a non-diversified
series of G.T. Investment Funds, Inc. (the "Company"), a registered open-end
management investment company. This Statement of Additional Information, which
is not a prospectus, supplements and should be read in conjunction with the
Fund's current Advisor Class Prospectus dated March 1, 1997. A copy of the
Fund's Prospectus is available without charge by either writing to the above
address or by calling the Fund at the toll-free telephone number printed above.
Chancellor LGT Asset Management, Inc. (the "Manager") serves as the Fund's
investment manager and administrator. The distributor of the Fund's shares is GT
Global, Inc. ("GT Global"). The Fund's transfer agent is GT Global Investor
Services, Inc. ("GT Services" or the "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 5
Risk Factors............................................................................................................. 14
Investment Limitations................................................................................................... 18
Execution of Portfolio Transactions...................................................................................... 19
Directors and Executive Officers......................................................................................... 22
Management............................................................................................................... 24
Valuation of Fund Shares................................................................................................. 25
Information Relating to Sales and Redemptions............................................................................ 26
Taxes.................................................................................................................... 27
Additional Information................................................................................................... 30
Investment Results....................................................................................................... 30
Description of Debt Ratings.............................................................................................. 37
Financial Statements..................................................................................................... 39
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is capital appreciation. The Fund will
normally invest at least 65% of its total assets in securities of a broad range
of Latin American issuers. Under current market conditions, the Fund expects to
invest primarily in equity and debt securities issued by companies and
governments in Mexico, Chile, Brazil and Argentina. Though the Fund can normally
invest up to 35% of its total assets in U.S. securities, the Fund reserves the
right to be primarily invested in U.S. securities for temporary defensive
purposes or pending investment of the proceeds of the offering made hereby.
SELECTION OF EQUITY INVESTMENTS
In determining the appropriate distribution of investments among various
countries for the Fund, the Manager ordinarily considers the following factors:
prospects for relative economic growth between the different countries in which
the Fund may invest; expected levels of inflation; government policies
influencing business conditions; the outlook for interest rates; the outlook for
currency relationships; and the range of the individual investment opportunities
available to international investors.
In analyzing companies for investment by the Fund, the Manager ordinarily looks
for one or more of the following characteristics: an above-average earnings
growth per share; high return on invested capital; healthy balance sheet; sound
financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; efficient service; pricing flexibility; strength of management; and
general operating characteristics which will enable the companies to compete
successfully in their respective marketplaces. In certain countries,
governmental restrictions and other limitations on investment may affect the
maximum percentage of equity ownership in any one company by the Fund. In
addition, in some instances only special classes of securities may be purchased
by foreigners and the market prices, liquidity and rights with respect to those
securities may vary from shares owned by nationals.
There may be times when, in the opinion of the Manager, prevailing market,
economic or political conditions warrant reducing the proportion of the Fund's
assets invested in equity securities and increasing the proportion held in cash
or short-term obligations denominated in U.S. dollars or other currencies. A
portion of the Fund's assets normally will be held in U.S. dollars or short-term
interest-bearing dollar-denominated securities to provide for ongoing expenses
and redemptions.
The Fund may be prohibited under the Investment Company Act of 1940, as amended
("1940 Act") from purchasing the securities of any foreign company that, in its
most recent fiscal year, derived more than 15% of its gross revenues from
securities-related activities ("securities-related companies"). In a number of
Latin American countries, commercial banks act as securities broker/dealers,
investment advisers and underwriters or otherwise engage in securities-related
activities, which may limit the Fund's ability to hold securities issued by
banks. The Fund has obtained an exemption from the Securities and Exchange
Commission ("SEC") to permit it to invest in certain of these securities subject
to certain restrictions.
DEBT CONVERSIONS
Several Latin American countries have adopted debt conversion programs, pursuant
to which investors may use external debt of a country, directly or indirectly,
to make investments in local companies. The terms of the various programs vary
from country to country, although each program includes significant restrictions
on the application of the proceeds received in the conversion and on the
remittance of profits on the investment and of the invested capital. The Fund
intends to acquire Sovereign Debt, as defined in the Prospectus, to hold and
trade in appropriate circumstances as described in the Prospectus, as well as to
participate in Latin American debt conversion programs. The Manager will
evaluate opportunities to enter into debt conversion transactions as they arise
but does not currently intend to invest more than 5% of the Fund's assets in
such programs.
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by the Fund presently may be made
only by acquiring shares of other investment companies with local governmental
approval to invest in those countries. The Fund may invest in the securities of
closed-end investment companies within the limits of the 1940 Act. These
limitations currently provide, in part, that the Fund may purchase shares of a
closed-end investment company unless (a) such a purchase would cause the Fund to
own in the aggregate more than 3 percent of the total outstanding voting stock
of the investment company or (b) such a purchase would cause the Fund to have
more than 5 percent of its total assets invested in the investment company or
more than 10 percent of its total assets invested in the aggregate in all such
investment companies. Investment in such investment companies may involve the
payment of substantial premiums above the value of such companies' portfolio
securities. The Fund does not intend to invest in such funds unless, in the
judgment of 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. At such time as direct
investment in these countries is allowed, the Fund anticipates investing
directly in these markets.
DEPOSITORY RECEIPTS
The Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs") or other securities convertible into securities of
eligible foreign issuers. These securities may not necessarily be denominated in
the same currency as the securities for which they may be exchanged. ADRs and
ADSs are typically issued by an American bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
receipts issued in Europe typically by foreign banks and trust companies that
evidence ownership of either foreign or domestic securities. Generally, ADRs and
ADSs in registered form are designed for use in United States securities markets
and EDRs and CDRs in bearer form are designed for use in European securities
markets. For purposes of the Fund's investment policies, the Fund's investments
in ADRs, ADSs, EDRs, and CDRs will be deemed to be investments in the equity
securities representing securities of foreign issuers into which they may be
converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass-through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 25% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans be continuously secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The Fund may pay reasonable
administrative and custodial fees in connection with loans of its securities.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund will have a right to call each loan and obtain the securities on five
business days' notice. The Fund will not have the right to vote equity
securities while they are lent, but it
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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 the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations may, however, be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund will typically acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not a
fundamental investment policy or restriction of the Fund. For the purposes of
calculation with respect to the $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which the Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed upon price, date, and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Fund if the other party
to the repurchase agreement becomes bankrupt, the Fund intends to enter into
repurchase agreements only with banks and dealers believed by the Manager to
present minimum credit risks in accordance with guidelines established by the
Company's Board of Directors. The Manager will review and monitor the
creditworthiness of such institutions under the Board's general supervision.
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 10% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING AND REVERSE REPURCHASE AGREEMENTS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, i.e.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of the Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, the Fund may be required to sell
portfolio securities to restore 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. The Fund also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to meet redemptions. Any borrowing by the Fund may cause greater
fluctuation in the value of its shares than would be the case if the Fund did
not borrow. The Fund's fundamental investment limitations prohibit the Fund from
purchasing securities during times when outstanding borrowings represent more
than 5% of its total assets.
The Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. The Fund will maintain in a segregated
account with a custodian cash or other liquid securities in an amount sufficient
to cover its obligations under reverse repurchase agreements with
broker/dealers. No segregation is required for reverse repurchase agreements
with banks.
SHORT SALES
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility.
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GT GLOBAL LATIN AMERICA GROWTH FUND
When the Fund makes a short sale of a security it does not own, it must borrow
the security sold short and deliver it to the broker-dealer or other
intermediary through which it made the short sale. The Fund may have to pay a
fee to borrow particular securities and will often be obligated to pay over any
payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral deposited with the intermediary.
The Fund 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
the Fund on such security, the Fund may not receive any payments (including
interest) on its collateral deposited with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss is theoretically unlimited.
The Fund will not make a short sale if, after giving effect to such sale, the
market value of the securities sold short exceeds 25% of the value of its total
assets or the Fund's aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of the Fund's net assets or 2% of the securities of any
class of the issuer. Moreover, the Fund may engage in short sales only with
respect to securities listed on a national securities exchange. The Fund may
make short sales "against the box" without respect to such limitations. In this
type of short sale, at the time of the sale the Fund owns the security it has
sold short or has the immediate and unconditional right to acquire at no
additional cost the identical security.
TEMPORARY DEFENSIVE STRATEGIES
The Latin America Growth Fund may invest in the following types of money market
securities (i.e., debt instruments with less than 12 months remaining until
maturity) denominated in U.S. dollars or in the currency of any Latin American
country, which consist of: (a) obligations issued or guaranteed by (i) the U.S.
government or the government of a Latin American country, their agencies or
instrumentalities, or municipalities; (ii) international organizations designed
or supported by multiple foreign governmental entities to promote economic
reconstruction or development ("supranational entities"); (b) finance company
obligations, corporate commercial paper and other short-term commercial
obligations; (c) bank obligations (including certificates of deposit, time
deposits, demand deposits and bankers' acceptances) (d) repurchase agreements
with respect to the foregoing; and (e) other substantially similar short-term
debt securities with comparable risk characteristics.
The Latin America Growth Fund may invest in commercial paper rated as low as A-3
by S&P or P-3 by Moody's. Such obligations are considered to have an acceptable
capacity for timely repayment. However, these securities may be more vulnerable
to adverse effects or changes in circumstances than obligations carrying higher
designations.
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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
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GT GLOBAL LATIN AMERICA GROWTH FUND
using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if the Fund entered into a
short hedge because the Manager projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, the Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
investment prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options will generally be written on securities and currencies that, in the
opinion of 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 Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
Style) or on (European Style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objectives. When writing a call option, the Fund, in return
for the premium, gives up the opportunity for profit from a price increase in
the underlying security or currency above the exercise price, and retains the
risk of loss should the price of the security or currency decline. Unlike one
who owns securities or currencies not subject to an option, the Fund has no
control over when it may be required to sell the underlying securities or
currencies, since most options may be exercised at any time prior to the
option's expiration. If a call option that the Fund has written expires, the
Fund will realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security or currency
during the option period. If the call option is exercised, the Fund will realize
a gain or loss from the sale of the underlying security or currency, which will
be increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, the Manager will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
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GT GLOBAL LATIN AMERICA GROWTH FUND
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity are normally higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option will generally reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American Style) or on (European Style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
The Fund would generally write put options in circumstances where the Manager
wishes to purchase the underlying security or currency for the Fund's portfolio
at a price lower than the current market price of the security or currency. In
such event, the Fund would write a put option at an exercise price that reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund would also receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at more than its market value.
PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indicies and currencies. As the
holder of a put option, the Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American Style) or
on (European Style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund to protect against an anticipated decline
in the value of the security or currency. Such protection is provided only
during the life of the put option when the Fund, as the holder of the put
option, is able to sell the underlying security or currency at the put exercise
price regardless of any decline in the underlying security's market price or
currency's exchange value. For example, a put option may be purchased in order
to protect unrealized appreciation of a security or currency when 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.
The Fund may also purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable,
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GT GLOBAL LATIN AMERICA GROWTH FUND
the market price of the underlying security or currency must decline
sufficiently below the exercise price to cover the premium and transaction
costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options or securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American Style) or on (European Style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique may also be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options may also be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in using
Forward Contracts by purchasing put or call options on currencies. A put option
gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
Style or on (European Style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American Style) or on
(European Style) the expiration date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be offset, in whole or in part, by an increase in the value of the put.
If the value of the currency instead should rise against the dollar, any gain to
the Fund would be reduced by the premium it had paid for the put option. A
currency call option might be purchased, for example, in anticipation of, or to
protect against, a rise in the value against the dollar of a currency in which
the Fund anticipates purchasing securities.
Options may be either listed on an exchange or traded 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. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the SEC considers purchased OTC options to be illiquid securities.
The Fund may also sell OTC options and, in connection therewith, segregate
assets or cover its obligations with respect to OTC options written by the Fund.
The assets used as cover for OTC options written by the Fund will be considered
illiquid unless the OTC options are sold to qualified dealers who agree that the
Fund may repurchase any OTC option it writes at a maximum price to be calculated
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GT GLOBAL LATIN AMERICA GROWTH FUND
by a formula set forth in the option agreement. The cover for an OTC option
written subject to this procedure would be considered illiquid only to the
extent that the maximum repurchase price under the formula exceeds the intrinsic
value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call or an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When an index option is exercised, the amount of cash that the holder
is entitled to receive is determined by the difference between the exercise
price and the closing index level on the date when the option is exercised. As
with other kinds of options, the Fund, as the call writer, will not know that it
has been assigned until the next business day at the earliest. The time lag
between exercise and notice of assignment poses no risk for the writer of a
covered call on a specific underlying security, such as common stock, because
there the writer's obligation is to deliver the underlying security, not to pay
its value as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
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GT GLOBAL LATIN AMERICA GROWTH FUND
INTEREST RATE AND CURRENCY FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collectively "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock prices in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by the Fund. The Fund's transactions may include sales of Futures as an offset
against the effect of expected increases in interest rates, and decreases in
currency exchange rates and stock prices, and purchases of Futures as an offset
against the effect of expected declines in interest rates, and increases in
currency exchange rates and stock prices.
The Fund will only enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. An
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts are usually closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Treasury Bills on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Treasury Bills on the same
exchange. In such instance the difference between the price at which the Futures
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded and may be significantly modified from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
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GT GLOBAL LATIN AMERICA GROWTH FUND
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
Markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
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GT GLOBAL LATIN AMERICA GROWTH FUND
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put),
at a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds securities
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds securities denominated in U.S.
dollars, but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with
guidelines approved by the Company's Board of Directors.
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
will not generally be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it
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GT GLOBAL LATIN AMERICA GROWTH FUND
matures. Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot (I.E., cash) market (and bear the expense of such
purchase) if the market value of the security is less than the amount of foreign
currency the Fund is obligated to deliver and if a decision is made to sell the
security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency the Fund is
obligated to deliver. The projection of short-term currency market movements is
extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts are usually entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract Sales limit the risk of
loss due to a decline in the value of the hedged currencies, at the same time
they limit any potential gain that might result should the value of the
currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which the Manager believes will have a positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
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GT GLOBAL LATIN AMERICA GROWTH FUND
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash 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 the Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
- --------------------------------------------------------------------------------
ILLIQUID SECURITIES
The Fund may invest up to 10% of its net assets in illiquid securities.
Securities may be considered illiquid if the Fund cannot reasonably expect
within seven days to sell the securities for approximately the amount at which
the Fund values such securities. See "Investment Limitations." The sale of
illiquid securities, if they can be sold at all, generally will require more
time and result in higher brokerage charges or dealer discounts and other
selling expenses than will the sale of liquid securities such as securities
eligible for trading on U.S. securities exchanges or in the over-the-counter
markets. Moreover, restricted securities, which may be illiquid for purposes of
this limitation, often sell, if at all, at a price lower than similar securities
that are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A eligible restricted securities held by
the Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act, are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to the Manager
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GT GLOBAL LATIN AMERICA GROWTH FUND
in accordance with procedures approved by the Company's Board of Directors. 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 who make quotes for the security; (iii) the number of
dealers that have undertaken to make a market in the security; (iv) the number
of other potential purchasers; and (v) the nature of the security and how
trading is effected (e.g., the time needed to sell the security, how offers are
solicited and the mechanics of transfer). The Manager monitors the liquidity of
securities in the Fund's portfolio and periodically reports such determinations
to the Board of Directors. Moreover, as noted in the Prospectus, certain
securities, such as those subject to repatriation restrictions of more than
seven days, will generally be treated as illiquid.
More than 10% of the Fund's total assets may consist of illiquid securities from
time to time either because of adverse events which occur following the purchase
of the securities which cause them to become illiquid or because liquid
securities are sold to meet redemption requests or other needs of the Fund.
Illiquid securities are more difficult to value accurately due to, among other
things, the fact that such securities often trade infrequently or only in
smaller amounts.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of Latin
American companies may entail additional risks due to the potential political,
social and economic instability of certain countries and the risks of
expropriation, nationalization, confiscation or the imposition of restrictions
on foreign investment, convertibility of currencies into U.S. dollars and on
repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation by any country, the Fund could lose its
entire investment in any such country.
In addition, even though opportunities for investment may exist in Latin
American countries, any change in the leadership or policies of the governments
of those countries or in the leadership or policies of any other government
which exercises a significant influence over those countries, may halt the
expansion of or reverse the liberalization of foreign investment policies now
occurring and thereby eliminate any investment opportunities which may currently
exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property, similar to the property which
will be represented by the securities purchased by the Fund. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Fund will not also be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Fund could lose a substantial portion of
its investments in such countries. The Fund's investments would similarly be
adversely affected by exchange control regulations in any of those countries.
RELIGIOUS AND ETHNIC INSTABILITY. Certain countries in which the Fund may
invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries. Instability may also
result from, among other things: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
the Fund invests and adversely affect the value of the Fund's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. The Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
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.
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GT GLOBAL LATIN AMERICA GROWTH FUND
companies. In particular, the assets, liabilities and profits appearing on the
financial statements of such a company may not reflect its financial position or
results of operations in the way they would be reflected had such financial
statements been prepared in accordance with U.S. generally accepted accounting
principles. Most of the securities held by the Fund will not be registered with
the SEC or regulators of any foreign country, nor will the issuers thereof be
subject to the SEC's reporting requirements. Thus, there will be less available
information concerning most foreign issuers of securities held by the Fund than
is available concerning U.S. issuers. In instances where the financial
statements of an issuer are not deemed to reflect accurately the financial
situation of the issuer, 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.
In addition, for companies that keep accounting records in local currency,
inflation accounting rules in some Latin American countries require, for both
tax and accounting purposes, that certain assets and liabilities be restated on
the company's balance sheet in order to express items in terms of currency of
constant purchasing power. Inflation accounting may indirectly generate losses
or profits. There is substantially less publicly available information about
foreign companies, including Latin American companies, and the governments of
Latin American countries than there are reports and ratings published about U.S.
companies and the U.S. Government. In addition, where public information is
available, it may be less reliable than such information regarding U.S. issuers.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on market manipulation, insider trading rules, shareholder proxy
requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because the Fund under normal circumstances will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to the Fund at one rate, while offering a lesser rate of exchange should the
Fund desire to sell that currency to the dealer.
Certain Latin American countries may have managed currencies which 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 dollar. Certain Latin
American countries also may restrict the free conversion of their currency into
foreign currencies, including the U.S. dollar. There is no significant foreign
exchange market for certain currencies and it would, as a result, be difficult
for the Fund to engage in foreign currency transactions designed to protect the
value of the Funds' certain interests in securities denominated in such
currencies.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers are generally
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions are usually subject to fixed
commissions, which are generally higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of the Fund are
uninvested and no return is earned thereon. The
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GT GLOBAL LATIN AMERICA GROWTH FUND
inability of the Fund to make intended security purchases due to settlement
problems could cause the Fund to miss attractive investment opportunities.
Inability to dispose of a portfolio security due to settlement problems either
could result in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser. The Manager will
consider such difficulties when determining the allocation of the Fund's assets,
although the Manager does not believe that such difficulties will have a
material adverse effect on the Fund's portfolio trading activities.
A high proportion of the shares of many Latin American companies may be held by
a limited number of persons, which may further limit the number of shares
available for investment by the Fund. A limited number of issuers in most, if
not all, Latin American securities markets may represent a disproportionately
large percentage of market capitalization and trading value. The limited
liquidity of Latin American securities markets also may affect the Fund's
ability to acquire or dispose of securities at the price and time it wishes to
do so. In addition, certain Latin American securities markets, including those
of Argentina, Brazil, Chile and Mexico, are susceptible to being influenced by
large investors trading significant blocks of securities or by large
dispositions of securities resulting from the failure to meet margin calls when
due.
The high volatility of certain Latin American securities markets is evidenced by
dramatic movements in the Brazilian and Mexican markets in recent years. This
market volatility may result in greater volatility in the Fund's net asset value
than would be the case for companies investing in domestic securities. If the
Fund were to experience unexpected net redemptions, it could be forced to sell
securities in its portfolio without regard to investment merit, thereby
decreasing the asset base over which Fund expenses can be spread and possibly
reducing the Fund's rate of return.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Emerging securities
markets, such as the markets of Latin America, are substantially smaller, less
developed, less liquid and more volatile than the major securities markets. The
limited size of emerging securities markets and limited trading volume in
issuers compared to the volume of trading in U.S. securities could cause prices
to be erratic for reasons apart from factors that affect the quality of the
securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets. In addition, securities traded in certain emerging markets may be
subject to risks due to the inexperience of financial intermediaries, a lack of
modern technology, the lack of a sufficient capital base to expand business
operations, and the possibility of permanent or temporary termination of
trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. This has, in turn, led to
high interest rates, extreme measures by governments to keep inflation in check
and a generally debilitating effect on economic growth. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain Latin American countries.
It should be noted that some Latin American countries require governmental
approval for the repatriation of investment income, capital or the proceeds of
securities sales by foreign investors. For instance, at present, capital
invested directly in Chile cannot under most circumstances be repatriated for at
least one year. The Fund could be adversely affected by delays in, or a refusal
to grant, any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investments.
SOVEREIGN DEBT. Sovereign Debt generally offers high yields, reflecting not
only perceived credit risk, but also the need to compete with other local
investments in domestic financial markets. Certain Latin American countries are
among the largest debtors to commercial banks and foreign governments. A
sovereign debtor's willingness or ability to repay principal and interest due in
a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy towards
the International Monetary Fund and the political constraints to which a
sovereign debtor may be subject. Sovereign debtors may default on their
Sovereign Debt. Sovereign debtors may also be dependent on expected
disbursements from foreign governments, multilateral agencies and others abroad
to reduce principal and interest arrearages on their debt. The commitment on the
part of these governments, agencies and others to make such disbursements may be
conditioned on a sovereign debtor's implementation of economic reforms and/or
economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result
Statement of Additional Information Page 17
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
in the cancellation of such third parties' commitments to lend funds to the
sovereign debtor, which may further impair such debtor's ability or willingness
to timely service its debts.
In recent years, some of the Latin American countries in which the Fund expects
to invest have encountered difficulties in servicing their Sovereign Debt. Some
of these countries have withheld payments of interest and/or principal of
Sovereign Debt. These difficulties have also led to agreements to restructure
external debt obligations -- in particular, commercial bank loans, typically by
rescheduling principal payments, reducing interest rates and extending new
credits to finance interest payments on existing debt. In the future, holders of
Sovereign Debt may be requested to participate in similar reschedulings of such
debt.
The ability of Latin American governments to make timely payments on their
Sovereign Debt is likely to be influenced strongly by a country's balance of
trade and its access to trade and other international credits. A country whose
exports are concentrated in a few commodities could be vulnerable to a decline
in the international prices of one or more of such commodities. Increased
protectionism on the part of a country's trading partners could also adversely
affect its exports. Such events could diminish a country's trade account
surplus, if any. To the extent that a country receives payment for its exports
in currencies other than hard currencies, its ability to make hard currency
payments could be affected.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing Sovereign Debt could adversely affect the Fund's investments.
The countries issuing such instruments are faced with social and political
issues and some of them have experienced high rates of inflation in recent years
and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance governmental
programs, and may have other adverse social, political and economic
consequences. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their Sovereign Debt. While the Manager intends to manage the Fund's portfolio
in a manner that will minimize the exposure to such risks, there can be no
assurance that adverse political changes will not cause the Fund to suffer a
loss of interest or principal on any of its holdings.
Periods of economic uncertainty may result in the volatility of market prices of
Sovereign Debt and in turn, the Fund's net asset value, to a greater extent than
the volatility inherent in domestic securities. The value of Sovereign Debt will
likely vary inversely with changes in prevailing interest rates, which are
subject to considerable variance in the international market. If the Fund were
to experience unexpected net redemptions, it may be forced to sell Sovereign
Debt in its portfolio without regard to investment merit, thereby decreasing its
asset base over which Fund expenses can be spread and possibly reducing its rate
of return.
WITHHOLDING TAXES. The Fund's net investment income from foreign issuers may
be subject to withholding taxes by the foreign country issuers, thereby reducing
the Fund's net investment income or delaying the receipt of income where those
taxes may be recaptured. See "Taxes."
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
The Fund has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the holders of the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, and
(ii) more than 50% of the outstanding shares.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts, and may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Prospectus and this Statement of Additional
Information;
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act;
(4) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and may make loans of portfolio securities;
(5) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts;
(6) Borrow money except from banks for temporary or emergency purposes
not in excess of 33 1/3% of the value of the Fund's total assets (at the
lower of cost or fair market value). The Fund will not purchase securities
while borrowings (including reverse repurchase agreements) in excess of 5%
of its total assets are outstanding. This restriction shall not prevent the
Fund from entering into reverse repurchase agreements, provided that reverse
repurchase agreements, and any other transactions constituting borrowing by
the Fund may not exceed one-third of the Fund's total assets. In the event
that the asset coverage for the Fund's borrowings falls below 300%, the Fund
will reduce, within three days (excluding Sundays and holidays), the amount
of its borrowings in order to provide for 300% asset coverage;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities;
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, the Fund may invest in the
securities of companies that engage in these activities.
For purposes of the Fund's concentration policy contained in limitation (1),
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government are considered to be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies and
may be changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 10% of its 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 Fund's investment adviser, or its
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer;
or
(6) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are 'in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into.
The Fund has the authority to invest up to 10% of its total assets in shares of
other investment companies pursuant to the 1940 Act. The Fund may not invest
more than 5% of its total assets in any one investment company or acquire more
than 3% of the outstanding voting securities of any one investment company.
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, the Manager
is responsible for the execution of the Fund's portfolio transactions and the
selection of broker/dealers who execute such transactions on behalf of the Fund.
In executing portfolio transactions, the Manager seeks the best net results for
the Fund, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. While 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 the Fund may engage in soft dollar arrangements for research
services, as described below, the Fund has no obligation to deal with any
broker/dealer or group of broker/dealers in the execution of portfolio
transactions.
Consistent with the interests of the Fund, the Manager may select brokers to
execute the Fund's portfolio transactions on the basis of the research and
brokerage services they provide to the Manager for its use in managing the Fund
and its other advisory accounts. Such services may include furnishing analyses,
reports and information concerning issuers, industries, securities, geographic
regions, economic factors and trends, portfolio strategy, and performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Research and brokerage
services received from such brokers are in addition to, and not in lieu of, the
services required to be performed by the Manager under the Management Contract
(defined below). A commission paid to such broker/dealers may be higher than
that which another qualified broker would have charged for effecting the same
transaction, provided that 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 the Fund and its other clients and that
the total commissions paid by the Fund will be reasonable in relation to the
benefits received by the Fund over the long term. Research services may also be
received from dealers who execute Fund transactions in 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 the Fund toward payment of the Fund's expenses, such as
transfer agent and custodian fees.
Investment decisions for the Fund and for other investment accounts managed by
the Manager are made independently of each other in light of differing
conditions. However, the same investment decision may occasionally be made for
two or more of such accounts including the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases the Manager
believes that coordination and the ability to participate in volume transactions
will be beneficial to the Fund.
Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, the Manager may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which the
Manager serves as investment manager in selecting brokers and dealers for the
execution of portfolio transactions. This policy does not imply a commitment to
execute portfolio transactions through all broker/dealers that sell shares of
the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in OTC markets
or stock exchanges located in the countries in which the respective principal
offices of the issuers of the various securities are located, if that is the
best available market. The fixed commissions paid in connection with most such
foreign stock transactions generally are higher than negotiated commissions on
United States transactions. There generally is less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the 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 the
Fund may invest are generally traded in the OTC markets.
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of Liechtenstein Global Trust. The Company's Board of Directors has
adopted procedures in conformity with Rule 17e-1 under the 1940 Act to ensure
that all brokerage commissions paid to such affiliates are reasonable and fair
in the context of the market in which they are operating. Any such transactions
will be effected and related compensation paid only in accordance with
applicable SEC regulations. For the Fund's fiscal years ended October 31, 1996,
1995 and 1994, the Fund paid aggregate brokerage commissions of $2,094,634,
$891,513 and $708,799, respectively.
PORTFOLIO TRADING AND TURNOVER
The Fund engages in portfolio trading when the Manager has concluded that the
sale of a security owned by the Fund and/ or the purchase of another security of
better value can enhance principal and/or increase income. A security may be
sold to avoid any prospective decline in market value, or a security may be
purchased in anticipation of a market rise. Consistent with the Fund's
investment objective, a security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two securities.
Although the Fund does not intend generally to trade for short-term profits, the
securities in the Fund's portfolio will be sold whenever management believes it
is appropriate to do so, without regard to the length of time a particular
security may have been held. The portfolio turnover rate is calculated by
dividing the lesser of sales or purchases of portfolio securities by the Fund's
average month-end portfolio value, excluding short-term investments. The Fund's
portfolio turnover rate will not be a limiting factor when the Manager deems
portfolio changes appropriate. Higher portfolio turnover involves
correspondingly greater brokerage commissions and other transaction costs that
the Fund will bear directly, and may result in the realization of net capital
gains that are taxable when distributed to the Fund's shareholders. The Fund's
portfolio turnover rates for the fiscal years ended October 31, 1996 and 1995
were 101% and 125%, respectively.
Statement of Additional Information Page 21
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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) since 1995; President, GT Global since 1995;
50 California Street President and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice President
San Francisco, CA 94111 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 22
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- -------------------------------- ------------------------------------------------------------------------
<S> <C> <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
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, the Manager, GT Global, GT Services and G.T. Insurance from
New York, NY 10036 February 1996 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 for 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., 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 High Income
Portfolio, Global Investment Portfolio and Growth Portfolio, which are also
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 administered 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 per annum, plus $300
per Fund for each meeting of the Board attended, and reimburses travel and other
expenses incurred in connection with attendance at such meetings. Other
Directors and officers receive no compensation or expense reimbursement from the
Company. For the fiscal year ended October 31, 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 year ended October 31, 1996, Mr. Anderson, Mr. Bayley, Mr.
Patterson and Ms. Quigley each 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 accrued 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 the Fund or of all the
Company's funds in the aggregate.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION
The Manager serves as the Fund's investment manager and administrator 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 Fund and administers the
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 Fund,
and provides suitable office space, necessary small office equipment and
utilities.
The Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract provides that with respect to the Fund either the Company or
the Manager may terminate the Contract without penalty upon sixty (60) days'
written notice. The Management Contract terminates automatically in the event of
its assignment (as defined in the 1940 Act).
For the fiscal years ended October 31, 1996, 1995 and 1994, the Fund paid
investment management and administration fees to the Manager in the amounts of
$3,365,375, $3,913,429 and $3,601,031, respectively.
Certain Latin American countries require a local entity to provide
administrative services for all direct investments by foreigners. Where required
by local law, the Fund intends to retain a local entity to provide such
administrative services. The local administrator will be paid a fee by the Fund
for its services.
DISTRIBUTION SERVICES
The Fund's Advisor Class shares are continuously offered through the Fund's
principal underwriter and distributor, GT Global, on a "best efforts" basis
without a sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agent has been retained by the Fund to perform shareholder
servicing, reporting and general transfer agent functions for the Fund. For
these services, the Transfer Agent receives an annual maintenance fee of $17.50
per account, a new account fee of $4.00 per account, a per transaction fee of
$1.75 for all transactions other than exchanges and a per exchange fee of $2.25.
The Transfer Agent is also reimbursed by the Fund for its out-of-pocket expenses
for such items as postage, forms, telephone charges, stationary and office
supplies. The Manager serves as the Fund's pricing and accounting agent. For the
fiscal years ended October 31, 1995 and October 31, 1996, the Fund paid transfer
agency and accounting services fees to the Manager of $1,737,638 and $1,532,798,
respectively.
EXPENSES OF THE FUND
The Fund pays all expenses not assumed by the Manager, GT Global and other
agents. These expenses include, in addition to the advisory, transfer agency,
pricing and accounting agency and brokerage fees discussed above, legal and
audit expenses, custodian fees, directors' fees, organizational fees, fidelity
bond and other insurance premiums, taxes, extraordinary expenses and the
expenses of reports and prospectuses sent to existing investors. The allocation
of general Company expenses and expenses shared by the Fund and other funds
organized as series of the Company with one another are allocated on a basis
deemed fair and equitable, which may be based on the relative net assets of the
Fund or the nature of the services performed and relative applicability to the
Fund. Expenditures, including costs incurred in connection with the purchase or
sale of portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are accounted
for as capital items and not as expenses. The ratio of the Fund's expenses to
its relative net assets can be expected to be higher than the expense ratios of
funds investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
the Fund generally are higher than the comparable expenses of such other funds.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
The Fund's portfolio securities and other assets are valued as follows:
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the close of normal trading on the NYSE
(currently 4:00 p.m. Eastern time)(unless weather, equipment failure or other
factors contribute to an earlier closing time) on each day for which the NYSE is
open for business. Currently, the NYSE is closed on weekends and on certain days
relating to the following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, July 4th, Labor Day, Thanksgiving Day and Christmas Day.
Equity securities, including ADRs, ADSs, CDRs and EDRs, which are traded on
stock exchanges are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. In cases
where securities are traded on more than one exchange, the securities are valued
on the exchange determined by the Manager to be the primary market. Securities
traded in the over-the-counter market are valued at the last available bid price
prior to the time of valuation.
Long-term debt obligations are valued at the mean of representative quoted bid
and asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
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,
provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or, in the case of OTC
options, at the average of the last bid prices obtained from dealers unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. The value of each security denominated in a currency other
than U.S. dollars will be translated into U.S. dollars at the prevailing
exchange rate as determined by the Manager on that day. When market quotations
for futures and options on futures held by the Fund are readily available, those
positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Company's Board of Directors. The valuation procedures applied
in any specific instance are likely to vary from case to case. However,
consideration is generally given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors are also generally considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Fund's net assets is so determined, that
value is then divided by the total number of shares outstanding (excluding
treasury shares), and the result, rounded to the nearer cent, is the net asset
value per share.
Any assets or liabilities initially denominated in terms of foreign currencies
are translated into U.S. dollars at the official exchange rate or at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors in good faith will
establish a conversion rate for such currency.
Latin American securities trading may not take place on all days on which the
NYSE is open. Further, trading takes place in various foreign markets on days on
which the NYSE is not open. Consequently, the calculation of the Fund's net
asset value may not take place contemporaneously with the determination of the
prices of securities held by the Fund. Events
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
affecting the values of portfolio securities that occur between the time their
prices are determined and the close of regular trading on the NYSE will not be
reflected in the Fund's net asset value unless the Manager, under the
supervision of the Company's Board of Directors, determines that the particular
event would materially affect net asset value. As a result, the Fund's net asset
value may be significantly affected by such trading on days when a shareholder
cannot purchase or redeem shares of the Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES AND
REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Advisor Class shares purchased should accompany the purchase order,
or funds should be wired to the Transfer Agent as described in the Prospectus.
Payment, other than by wire transfer, must be made by check or money order drawn
on a U.S. bank. Checks or money orders must be payable in U.S. dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, because a check is returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law.
EXCHANGES BETWEEN FUNDS
A shareholder may exchange shares of the Fund for shares of other GT Global
Mutual Funds, based on their respective net asset values without imposition of
any sales charges provided the registration remains identical. The exchange
privilege is not an option or right to purchase shares but is permitted under
the current policies of the respective GT Global Mutual Funds. The privilege may
be discontinued or changed at any time by any of the funds upon 60 days' written
notice to the shareholders of such fund and is available only in states where
the exchange may be legally made. Advisor Class shares may be exchanged only for
Advisor Class shares of other GT Global Mutual Funds. Before purchasing shares
through the exercise of the exchange privilege, a shareholder should obtain and
read a copy of the prospectus of the fund to be purchased and should consider
the investment objectives of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
will be borne by the Fund. Proceeds of less than $1,000 will be mailed to the
shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days' written notice.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
closings, or trading on the NYSE is restricted as directed by the SEC, (2) when
an emergency exists, as defined by the SEC, which makes it not reasonably
practicable for the Fund to dispose of securities owned by it or fairly to
determine the value of its assets, or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketed securities. Such securities would be valued at the same value assigned
to them in computing the net asset value per share. Shareholders receiving such
securities would incur brokerage costs in selling any such securities so
received. However, despite the foregoing, the Company has filed with the SEC an
election pursuant to Rule 18f-1 under the 1940 Act. This means that the Fund
will pay in cash all requests for redemption made by any shareholder of record,
limited in amount with respect to each shareholder during any ninety-day period
to the lesser of $250,000 or 1% of the value of the net assets of the Fund at
the beginning of such period. This election will be irrevocable so long as Rule
18f-1 remains in effect, unless the SEC by order upon application permits the
withdrawal of such election.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
GENERAL
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"), the Fund
must distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. These requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from options, Futures or Forward Contracts) derived with respect to its
business of investing in securities or those currencies ("Income Requirement");
(2) the Fund must derive less than 30% of its gross income each taxable year
from the sale or other disposition of securities, or any of the following, that
were held for less than three months -- options or Futures (other than those on
foreign currencies), or foreign currencies (or options, Futures or Forward
Contracts thereon) that are not directly related to the Fund's principal
business of investing in securities (or options and Futures with respect to
securities) ("Short-Short Limitation"); (3) at the close of each quarter of the
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. government securities, securities of
other RICs and other securities, with these other securities limited, in respect
of any one issuer, to an amount that does not exceed 5% of the value of the
Fund's total assets and that does not represent more than 10% of the issuer's
outstanding voting securities; and (4) at the close of each quarter of the
Fund's taxable year, not more than 25% of the value of its total assets may be
invested in securities (other than U.S. government securities or the securities
of other RICs) of any one issuer.
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
aware that if shares are purchased shortly before the record date for any
dividend or other distribution, the shareholder will pay full price for the
shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding, or other taxes imposed by foreign countries and U.S. possessions
("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
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
taxes paid by it. Pursuant to the election, the 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 those taxes, (2)
treat his share of those taxes and of any dividend paid by the Fund that
represents income from foreign and U.S. possessions sources as his own income
from those sources, and (3) either deduct the taxes deemed paid by him in
computing his taxable income or, alternatively, use the foregoing information in
calculating the foreign tax credit against his federal income tax. The Fund will
report to its shareholders shortly after each taxable year their respective
shares of the Fund's income from sources within, and taxes paid to, foreign
countries and U.S. possessions if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund will be subject to
federal income tax on a portion of any "excess distribution" received on, or of
any gain from the disposition of, stock of a PFIC (collectively "PFIC income"),
plus interest thereon, even if the Fund distributes the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income will be included in
the Fund's investment company taxable income and, accordingly, will not be
taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise-Tax -- even if those earnings and
gain were not received by the Fund from the QEF. In most instances it will be
very difficult, if not impossible, to make this election because of certain
requirements thereof.
Pursuant to proposed regulations, an open-end RIC, such as the Fund, would be
entitled to elect to "mark-to-market" its stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. Distributions of net capital gain are not
subject to withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, those distributions ordinarily will be subject to
U.S. income tax at a rate of 30% (or lower treaty rate) if the individual is
physically present in the United States for more than 182 days during the
taxable year and the distributions are attributable to a fixed place of business
maintained by the individual in the United States.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Gains from the disposition of foreign
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
currencies (except certain gains that may be excluded by future regulations),
and gains from options, Futures and Forward Contracts derived by the Fund with
respect to its business of investing in securities or foreign currencies will
qualify as permissible income under the Income Requirement. However, income from
the disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securitie (or options and Futures with respect thereto) also will be subject to
the Short-Short Limitation if they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all those transactions. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts and/or foreign currency positions beyond the time
when it otherwise would be advantageous to do so, in order for the Fund to
continue to qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, Futures and Forward
Contracts on foreign currencies ("Section 988" gains 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. The
Fund attempts to monitor section 988 transactions to minimize any adverse tax
impact.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH 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 GT Management PLC, in London, England; LGT Asset
Management Ltd., formerly GT Management (Asia) Ltd., in Hong Kong; LGT Asset
Management Ltd., formerly GT Management (Japan), in Tokyo; LGT Asset Management
Pte. Ltd., formerly GT Management (Singapore) PTE Ltd., in Singapore; LGT Asset
Management Ltd., formerly GT Management (Australia) Ltd., in Sydney; and LGT
Asset Management GmbH, formerly BIL Asset Management GmbH, in Frankfurt.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P., will conduct an
annual audit of the Fund, assists in the preparation of the Fund's federal and
state income tax returns and consults with the Company and the Fund as to
matters of accounting, regulatory filings, and federal and state income
taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of 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"
names and has reserved the right to withdraw its consent to the use of such
names by the Company and/or the Fund at any time or to grant the use of such
names to any other company.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
STANDARDIZED RETURNS
The Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), are calculated
separately for Class A, Class B and Advisor Class shares of the 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
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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 Return for the Class A, Class B and Advisor Class shares of the
Fund, stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
LATIN AMERICA
LATIN AMERICA LATIN AMERICA FUND
PERIOD FUND (CLASS A) FUND (CLASS B) (ADVISOR CLASS)
- ---------------------------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996...... 11.94% 12.02% 18.16%
October 31, 1991 through October 31,
1996................................... 4.31% n/a n/a
June 1, 1995 (commencement of
operations) through October 31, 1996... n/a n/a 9.73%
April 1, 1993 (commencement of
operations) through October 31, 1996... n/a 4.13% n/a
August 13, 1991 (commencement of
operations) through October 31, 1996... 6.98% n/a n/a
</TABLE>
NON-STANDARDIZED RETURNS
In addition to Standardized Returns, the 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 the 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 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 sales 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 Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
LATIN AMERICA
LATIN AMERICA LATIN AMERICA FUND
PERIOD FUND (CLASS A) FUND (CLASS B) (ADVISOR CLASS)
- ---------------------------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C>
June 1, 1995 (commencement of
operations) through October 31, 1996... n/a n/a 14.08 %
April 1, 1993 (commencement of
operations) to October 31, 1996........ n/a 18.60% n/a
August 13, 1991 (commencement of
operations) through October 31, 1996... 49.27% n/a n/a
</TABLE>
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS.
Information relating to foreign market performance, market capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the Securities Act of 1933 on account of the
inclusion of such information herein.
GT Global believes information relating to foreign market performance, market
capitalization and diversification may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in equity and/or debt securities on a global basis.
However, this data is not a representation of the past performance of the Fund
nor is it a prediction of such performance. The performance of the Fund will
differ from the historical performance of the indices represented above. The
performance of indices does not take expenses into account, while the Fund
incurs expenses in its operations that will reduce performance. Moreover, the
Fund is actively managed, i.e. the Manager as the Fund's investment manager
actively purchases and sells securities in seeking the Fund's investment
objective. Moreover, the Fund's concentration in the equity and debt securities
of Latin American issuers will cause the Fund's performance to differ from the
general equity and bond indices.
The Fund and GT Global may from time to time compare the Fund with, but not
limited to, the following:
(1) The Salomon Brothers Non-U.S. Dollars Indices, which are measures of
the total return performance of high quality non-U.S. dollar denominated
securities in major sectors of the worldwide bond markets.
(2) The Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's Investors Service,
Inc. ("Moody's") or BBB
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
by Standard & 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) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Company Service ("CDA/Wiesenberger"), Morningstar, Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard the Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger, Morningstar and/or other
firms as applicable, or to specific funds or groups of funds within or
without such peer group. Morningstar is a mutual fund rating service that
also rates mutual funds on the basis of risk-adjusted performance.
Morningstar ratings are calculated from a fund's three, five and ten year
average annual returns with appropriate fee adjustments and a risk factor
that reflects fund performance relative to the three-month U.S. Treasury
bill monthly returns. Ten percent of the funds in an investment category
receive five stars and 22.5% receive four stars. The ratings are subject to
change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and Gross National Product ("GNP") weighted
index, beginning in 1975. The returns are broken down by local market and
currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized index composed of the capitalization-weighted average of the
price of 500 of the largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-back
fixed income securities.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies in Europe, Australia and the Far East.
(13) Morgan Stanley Capital International Latin America Emerging Market
Indices, including the Morgan Stanley Emerging Markets Free Latin America
Index (which excludes Mexican banks and securities companies which cannot be
purchased by foreigners) and the Morgan Stanley Emerging Markets Global
Latin America Index. Both indices include 60% of the market capitalization
of the following countries: Argentina, Brazil, Chile and Mexico. The indices
are weighted by market capitalization and are calculated without dividends
reinvested.
(14) International Financial Corporation ("IFC") Latin American Indices
which include 60% of the market capitalization in the covered countries and
are market weighted. One index includes dividends and one excludes
dividends.
(15) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(16) The World Bank Publication of Trends in Developing Countries (TIDE)
provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(17) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
(18) Datastream and Worldscope each is an on-line database retrieval
service for information including but not limited to international financial
and economic data.
(19) International Financial Statistics, which is produced by the
International Monetary Fund.
(20) Various publications and annual reports such as the World
Development Report, produced by the World Bank and its affiliates.
(21) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(22) Various publications including but not limited to ratings agencies
such as Moody's, S&P and Fitch.
(23) Various publications from the Organization for Economic Cooperation
and Development (OECD).
(24) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wider range
of securities.
Indices, economic and financial data prepared by the research departments of
various financial organizations such as Salomon Brothers, Inc., Lehman Brothers,
Merrill Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan Stanley, Smith
Barney, S.G. Warburg, Jardine Flemming, The Bank for International Settlements,
Asian Development Bank, Bloomberg, L.P. and Ibbottson Associates, may be used as
well as information reported by the Federal Reserve and the respective Central
Banks of various nations. In addition, GT Global may use performance rankings,
ratings and commentary reported periodically in national financial publications,
included but not limited to, Money Magazine, Mutual Fund 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. The Fund may compare its performance to that of other compilations
indices of comparable quality to those listed above and other indices which may
be developed and made available.
GT Global believes the Fund is an appropriate investment for long-term
investment goals including but not limited to funding retirement, paying for
education or purchasing a house. The Fund does not represent a complete
investment program and the investors should consider the Fund as appropriate for
a portion of their overall investment portfolio with regard to their long-term
investment goals.
GT Global believes that a growing number of consumer products, including but not
limited to home appliances, automobiles and clothing, purchased by Americans are
manufactured abroad. GT Global believes that investing globally in the companies
that produce products for U.S. consumers can help U.S. investors seek protection
of the value of their assets against the potentially increasing costs of foreign
manufactured goods. Of course, there can be no assurance that there will be any
correlation between global investing and the costs of such foreign goods unless
there is a corresponding change in value of the U.S. dollar to foreign
currencies. From time to time, GT Global may refer to or advertise the names of
such companies although there can be no assurance that any GT Global Mutual Fund
may own the securities of these companies.
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys Inc. in advertising materials.
The Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above which may be developed and made
available in the future. The Fund may be compared in advertising to Certificates
of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan statistical areas, or other investments
issued by banks. The Fund differs from bank investments in several respects. The
Fund may offer greater liquidity or higher potential returns than CDs; but
unlike CDs, the Fund will have a fluctuating share price and return and is not
FDIC insured.
The Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
GT Global Mutual Funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the Fund. Ibbotson
calculates total returns in the same method as the Fund. The Fund may also
compare performance to that of other compilations or indices that may be
developed and made available in the future.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the Fund may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, the Fund may quote financial or
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of GT Global Mutual Funds to one another in appropriate categories
over specific periods of time may also be quoted in advertising.
The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviction and R2 in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns compared
to those of a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from
the return each year at a 39.6% rate. An equivalent tax-deferred investment
would have an after-tax value of $19,626 after ten years, assuming tax was
deducted at a 39.6% rate from the deferred earnings at the end of the ten-year
period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Mutual Funds through various retirement plans that
offer deferral of income taxes on investment earnings and may also enable an
investor to make pre-tax contributions. Because of their advantages, these
retirement accounts and plans may produce returns superior to comparable
non-retirement investments. The Funds may also discuss these accounts and plans
which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): 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.
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can rollover (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible roll-over distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
SEP-IRAS: Simplified employee pension plans ("SEPs" or "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh-type plans or 401(k) plans, but with fewer administrative requirements and
therefore potential lower annual administration expenses.
CODE SECTION 403(b)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other not-for-profit corporations can make pre-tax salary reduction
contributions to these accounts.
PROFIT-SHARING (INCLUDING 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 methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk, 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.
From time to time, the Fund and GT Global will quote information regarding
individual companies, countries, regions, world stock exchanges, and economic
and demographic statistics from sources GT Global deems reliable, including 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 Industry
Indices, and IFC.
(3) The number of listed companies: IFC, G.T. Guide to World Equity Markets,
Salomon Brothers, Inc., and S.G. Warburg.
(4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
(5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
(6) Stock market performance: Morgan Stanley Capital International World
Indices, 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: Organization for Economic Cooperation
and Development 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, G.T. Guide to
World Equity Markets, Salomon Brothers Inc., and S.G. Warburg.
(15) Foreign direct investments to developing countries: The World Bank and
Datastream.
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
(16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to, electricity, water,
transportation, construction materials, natural resources, technology,
other basic infrastructure, financial services, health care services and
supplies, consumer products and services and telecommunications equipment
and services (sources of such information may include, but would not be
limited to, The World Bank, OECD, IMF, Bloomberg and Datastream.
(17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
(18) Countries restructuring their debt, including those under the Brady Plan:
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) Dividends yields for U.S. and non-U.S. companies: Bloomberg.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 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 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 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.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1," "Prime-2" and "Prime-3" to indicate
commercial paper having the highest capacity for timely repayment. Issuers rated
Prime-1 have a superior capacity for repayment of senior short-term promissory
obligations. Prime-1 repayment ability will often be evidenced by the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protections; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations. This
normally will be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
S&P rates commercial paper in four categories ranging from "A-1" for the highest
quality obligations to "D" for the lowest. A-1 -- This highest category
indicates that the degree of safety regarding timely payments is strong. Those
issues determined to possess extremely strong safety characteristics will be
denoted with a plus sign (+) designation. A-2 -- Capacity for timely payment on
issues with this designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1." A-3 -- Issues carrying
this designation have adequate capacity for timely payment. They are, however,
more vulnerable to the adverse effects of changes in circumstances than
obligations carrying the higher designations. B -- Issues rated "B" are regarded
as having only speculative capacity for timely payment. C -- This rating is
assigned to short-term debt obligations with a doubtful capacity for payment. D
- -- Debt rated "D" is in payment default. The "D" rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bond because margins of protection may not be as large as in
Aaa securities, fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risk appear somewhat larger than the Aaa securities.
A -- Upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba -- These bonds are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- These bonds generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
Caa -- These bonds are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Ca -- These bonds represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C -- These bonds are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
ABSENCE OF RATING:
Where no rating has been assigned or where a rating has been suspended or
withdrawn, it may be for reasons unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published
in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
ranking; and the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.
S&P rates the long-term securities debt of various entities in categories
ranging from "AAA" to "D" according to quality. Investment grade ratings are as
follows:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change
in circumstances and economic conditions, than debt in higher rated
categories.
Speculative grade ratings are as follows:
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB -- Have less near-term vulnerability to default than other
speculative issues. However, these bonds face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
This rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied 'BBB-'rating.
B -- Have greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. This rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied 'BB' or 'BB-' rating.
CCC -- Have a currently identifiable vulnerability to default, and are
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, these bonds are not
likely to have the capacity to pay interest and repay principal. The 'CCC'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'B' or 'B-' rating.
CC -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' rating.
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
C -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC-' debt rating. This rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.
CI -- This rating is reserved for income bonds on which no interest is
being paid.
D -- Are in payment default. This rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. This rating also will be
used up on the filing of a bankruptcy petition if debt service payments are
jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of GT Global Latin America Growth Fund as of
October 31, 1996 and for the period then ended appear on the following pages.
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of GT Global Latin America Growth Fund and Board of
Directors of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of GT
Global Latin America Growth Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1996, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and 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 GT
Global Latin America Growth Fund as of October 31, 1996, the results of
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 13, 1996
F1
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (23.0%)
Uniao Bancos Brasileiras "A" Preferred-/- ............... BRZL 378,050,000 $ 10,488,100 3.3
BANKS-MONEY CENTER
Banco Bradesco S.A. Preferred ........................... BRZL 1,227,498,430 10,467,134 3.3
BANKS-MONEY CENTER
Grupo Financiero Banamex Accival, S.A. de C.V. "B"-/- ... MEX 4,727,000 10,019,825 3.2
BANKS-MONEY CENTER
Inversiones y Representaciones S.A. (IRSA): ............. ARG -- -- 2.9
REAL ESTATE
Common-/- ............................................. -- 2,378,500 7,279,666 --
GDR-/- {\/} ........................................... -- 58,300 1,778,150 --
Banco Provincial S.A. ................................... VENZ 3,183,913 6,421,963 2.0
OTHER FINANCIAL
Banco BHIF - ADR-/- {\/} ................................ CHLE 344,500 6,201,000 2.0
BANKS-REGIONAL
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} ................................................ PAN 91,700 4,791,325 1.5
OTHER FINANCIAL
Grupo Financiero Banorte "B"-/- ......................... MEX 4,439,000 4,427,930 1.4
BANKS-REGIONAL
Administradora de Fondos de Pensiones Provida S.A. -
ADR{\/} ................................................ CHLE 170,800 3,971,100 1.3
OTHER FINANCIAL
Grupo Financiero Bancomer, S.A. de C.V.: ................ MEX -- -- 1.1
BANKS-MONEY CENTER
"B"-/- ................................................ -- 7,167,000 3,047,315 --
"L"-/- ................................................ -- 817,296 280,245 --
Seguros Comercial America S.A. "B"-/- ................... MEX 6,965,000 2,084,289 0.7
INSURANCE - MULTI-LINE
Banco de Galicia y Buenos Aires S.A. de C.V. -
ADR{\/} ................................................ ARG 40,500 734,063 0.2
BANKS-MONEY CENTER
Grupo Financiero Probusa S.A. de C.V. "B"-/- ............ MEX 7,621,563 465,657 0.1
OTHER FINANCIAL
------------
72,457,762
------------
Services (21.5%)
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR{\/} ................................................ BRZL 185,000 13,782,498 4.4
TELEPHONE NETWORKS
Disco S.A. - ADR-/- {\/} ................................ ARG 464,350 10,447,875 3.3
RETAILERS-FOOD
Univision Communications, Inc.-/- ....................... US 274,400 9,261,000 2.9
BROADCASTING & PUBLISHING
Cifra S.A. de C.V.: ..................................... MEX -- -- 2.8
RETAILERS-OTHER
"B" - ADR-/- {\/} ..................................... -- 3,125,000 3,781,250 --
"C"-/- ................................................ -- 2,878,000 3,696,185 --
"B" ................................................... -- 1,100,000 1,409,975 --
Lojas Americanas S.A. Preferred-/- ...................... BRZL 467,535,469 7,350,042 2.3
RETAILERS-OTHER
Santa Isabel S.A. - ADR{\/} ............................. CHLE 254,800 7,166,250 2.3
RETAILERS-FOOD
TV Filme, Inc.-/- {\/} .................................. BRZL 428,200 6,423,000 2.0
CABLE TELEVISION
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Telecomunicacoes do Rio de Janeiro S.A. (Telerj)
Preferred-/- ........................................... BRZL 47,791,322 $ 4,605,608 1.5
TELEPHONE NETWORKS
------------
67,923,683
------------
Energy (17.9%)
Centrais Eletricas Brasileiras S.A. (Eletrobras): ....... BRZL -- -- 5.4
ELECTRICAL & GAS UTILITIES
"B" Preferred{z} ...................................... -- 36,600,000 11,863,915 --
Common-/- ............................................. -- 16,500,000 5,123,625 --
Companhia Energetica de Minas Gerais (CEMIG): ........... BRZL -- -- 3.6
ELECTRICAL & GAS UTILITIES
ADR-/- {\/} ........................................... -- 208,600 6,518,750 --
Preferred-/- {z} ...................................... -- 146,792,050 4,672,540 --
Compania Boliviana de Energia Electrica{::} {\/} ........ BOL 224,800 9,497,800 3.0
ELECTRICAL & GAS UTILITIES
C.A. La Electricidad de Caracas-/- ...................... VENZ 8,070,933 8,860,015 2.8
ELECTRICAL & GAS UTILITIES
Enron Global Power & Pipelines L.L.C. ................... US 296,250 8,332,031 2.6
ENERGY SOURCES
Electricidad de Argentina S.A.(.) -/- {\/} .............. ARG 110,857 1,507,655 0.5
ELECTRICAL & GAS UTILITIES
------------
56,376,331
------------
Materials/Basic Industry (17.0%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" .............. MEX 581,700 11,242,332 3.6
PAPER/PACKAGING
Companhia Vale do Rio Doce Preferred{z} ................. BRZL 509,400 10,561,881 3.3
METALS - NON-FERROUS
Cia de Minas Buenaventura: .............................. PERU -- -- 3.3
METALS - NON-FERROUS
"C" ................................................... -- 1,268,276 9,846,344 --
"B"-/- ................................................ -- 61,942 525,787 --
Venezolana de Cementos, S.A.C.A. "A" .................... VENZ 2,476,397 6,784,433 2.2
CEMENT
Sociedad Quimica y Minera de Chile S.A. - ADR{\/} ....... CHLE 98,200 5,646,500 1.8
CHEMICALS
Cemex, S.A. de C.V. "B" ................................. MEX 1,202,000 4,323,903 1.4
CEMENT
Companhia Siderurgica Nacional S.A. ..................... BRZL 117,700,000 2,921,591 0.9
METALS - STEEL
Apasco S.A. ............................................. MEX 261,000 1,594,638 0.5
CEMENT
------------
53,447,409
------------
Consumer Non-Durables (14.4%)
Companhia Cervejaria Brahma Preferred{z} ................ BRZL 17,520,000 10,829,553 3.4
BEVERAGES - ALCOHOLIC
Grupo Industrial Maseca, S.A. de C.V. "B" ............... MEX 7,852,000 9,575,132 3.0
FOOD
Grupo Modelo S.A. "C" ................................... MEX 1,805,000 9,373,847 3.0
BEVERAGES - ALCOHOLIC
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Grupo Industrial Bimbo, S.A. de C.V. "A" ................ MEX 1,523,000 $ 7,558,030 2.4
FOOD
Mavesa S.A. - ADR{\/} ................................... VENZ 715,000 4,468,750 1.4
FOOD
Multicanal Participacoes S.A. - ADR-/- {\/} ............. BRZL 149,500 2,093,000 0.7
OTHER CONSUMER GOODS
Compania Nacional de Chocolates S.A. .................... COL 130,800 1,098,720 0.3
FOOD
Companhia Tecidos Norte de Mina Preferred ............... BRZL 1,311,300 440,376 0.1
TEXTILES & APPAREL
Jugos Del Valle S.A. "B"-/- ............................. MEX 227,000 312,479 0.1
BEVERAGES - NON-ALCOHOLIC
------------
45,749,887
------------
Multi-Industry/Miscellaneous (4.9%)
San Luis "CPO"{::} ...................................... MEX 1,710,000 8,592,643 2.7
CONGLOMERATE
Brazil Realty S.A. -144A ADR{.} -/- {\/} ................ BRZL 312,000 6,357,000 2.0
MISCELLANEOUS
Grupo Sidek, S.A. de C.V. - ADR-/- {\/} ................. MEX 608,800 608,800 0.2
CONGLOMERATE
------------
15,558,443
------------ -----
TOTAL EQUITY INVESTMENTS (cost $272,965,225) .............. 311,513,515 98.7
------------ -----
<CAPTION>
NO. OF % OF NET
RIGHTS COUNTRY RIGHTS VALUE ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Banco de Galicia y Buenos Aires S.A. de C.V. ADR Rights,
expire 11/1/96{\/ } .................................... ARG 12,385 -- --
------------ -----
BANKS-REGIONAL (Cost $0)
TOTAL INVESTMENTS (cost $272,965,225) * .................. 311,513,515 98.7
Other Assets and Liabilities .............................. 4,078,457 1.3
------------ -----
NET ASSETS ................................................ $315,591,972 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{z} All or part of the Fund's holdings in this security is segregated
as collateral for written futures. See Note 1 of Notes to Financial
Statements.
-/- Non-income producing security.
{\/} U.S. currency denominated.
(.) Restricted securities: At October 31, 1996, the Fund owned the
following restricted security constituting 0.5% of net assets which
may not be publicly sold without registration under the Securities
Act of 1933 (Note 1). Additional information on the restricted
security is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION MARKET VALUE
DESCRIPTION DATE SHARES COST PER SHARE
- ------------------------------ ----------- ------- ----------- ------------
<S> <C> <C> <C> <C>
Electricidad de Argentina
S.A.......................... 12/23/93 110,857 $ 1,939,998 $13.60
</TABLE>
{::} See Note 5 of Notes to Financial Statements.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
{.} 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.
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
* For Federal income tax purposes, cost is $273,597,742 and
appreciation (depreciation) is as follows:
</TABLE>
<TABLE>
<S> <C>
Unrealized appreciation: $ 53,931,731
Unrealized depreciation: (16,015,958)
-------------
Net unrealized appreciation: $ 37,915,773
-------------
-------------
</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}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Argentina (ARG/ARS) .................. 6.9 6.9
Bolivia (BOL/BOL) .................... 3.0 3.0
Brazil (BRZL/BRL) .................... 36.2 36.2
Chile (CHLE/CLP) ..................... 7.4 7.4
Colombia (COL/COP) ................... 0.3 0.3
Mexico (MEX/MXN) ..................... 26.2 26.2
Panama (PAN/PND) ..................... 1.5 1.5
Peru (PERU/PES) ...................... 3.3 3.3
United States & Other (US/USD) ....... 5.5 1.3 6.8
Venezuela (VENZ/VEB) ................. 8.4 8.4
------ --- -----
Total ............................... 98.7 1.3 100.0
------ --- -----
------ --- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $315,591,972.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN FUTURES CONTRACTS OUTSTANDING
OCTOBER 31, 1996
<TABLE>
<CAPTION>
EXPIRATION NO. OF
DESCRIPTION DATE CONTRACTS CURRENCY MARKET VALUE
- ---------------------------------------- ------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C>
Brazilian Real Futures (face
$28,818,000)........................... 12/31/96 300 USD $ 28,818,000
</TABLE>
- --------------
See Note 1 to the Financial Statements.
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $272,965,225) (Note 1)........................... $311,513,515
Receivable for Fund shares sold............................................................ 12,300,099
Receivable for securities sold............................................................. 9,449,458
Dividends receivable....................................................................... 806,579
Receivable for initial & variation margin (Note 1)......................................... 311,370
Miscellaneous receivable................................................................... 2,623
Cash held as collateral for securities loaned (Note 1)..................................... 17,198,999
------------
Total assets............................................................................. 351,582,643
------------
Liabilities:
Due to custodian........................................................................... 13,449,049
Payable for Fund shares repurchased........................................................ 2,400,422
Payable for securities purchased........................................................... 2,093,000
Payable for investment management and administration fees (Note 2)......................... 285,657
Payable for service and distribution expenses (Note 2)..................................... 207,738
Payable for transfer agent fees (Note 2)................................................... 142,254
Payable for printing and postage expenses.................................................. 105,957
Payable for professional fees.............................................................. 51,201
Payable for registration and filing fees................................................... 25,324
Payable for custodian fees (Note 1)........................................................ 11,871
Payable for fund accounting fees (Note 2).................................................. 6,971
Payable for Directors' fees and expenses (Note 2).......................................... 4,003
Other accrued expenses..................................................................... 8,225
Collateral for securities loaned (Note 1).................................................. 17,198,999
------------
Total liabilities........................................................................ 35,990,671
------------
Net assets................................................................................... $315,591,972
------------
------------
Class A:
Net asset value and redemption price per share ($177,373,411 DIVIDED BY 9,881,172 shares
outstanding)................................................................................ $ 17.95
------------
------------
Maximum offering price per share (100/95.25 of $17.95) *..................................... $ 18.85
------------
------------
Class B:+
Net asset value and offering price per share ($137,400,074 DIVIDED BY 7,725,949 shares
outstanding)................................................................................ $ 17.78
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($818,487 DIVIDED
BY 45,630 shares outstanding)............................................................... $ 17.94
------------
------------
Net assets consist of:
Paid in capital (Note 4)................................................................... $377,749,062
Accumulated net realized loss on investments and foreign currency transactions............. (100,673,019)
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies................................................................................ (32,361)
Net unrealized appreciation of investments................................................. 38,548,290
------------
Total -- representing net assets applicable to capital shares outstanding.................... $315,591,972
------------
------------
<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.
F6
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $499,299)............................... $7,792,298
Interest income............................................................................ 813,731
----------
Total investment income.................................................................. 8,606,029
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 3,365,375
Service and distribution expenses: (Note 2)
Class A...................................................................... $1,007,846
Class B...................................................................... 1,425,667 2,433,513
----------
Transfer agent fees (Note 2)............................................................... 1,446,362
Printing and postage expenses.............................................................. 202,870
Custodian fees (Note 1).................................................................... 200,934
Fund accounting fees (Note 2).............................................................. 86,436
Audit fees................................................................................. 80,126
Registration and filing fees............................................................... 62,704
Legal fees................................................................................. 28,182
Amortization of organization costs (Note 1)................................................ 16,576
Directors' fees and expenses (Note 2)...................................................... 13,712
Other expenses............................................................................. 13,870
----------
Total expenses before reductions......................................................... 7,950,660
----------
Expense reductions (Notes 1 & 6)....................................................... (223,037)
----------
Total net expenses....................................................................... 7,727,623
----------
Net investment income........................................................................ 878,406
----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized loss on investments............................................... (1,655,860)
Net realized loss on foreign currency transactions............................. (3,308,864)
----------
Net realized loss during the year........................................................ (4,964,724)
Net change in unrealized depreciation on translation of assets and liabilities
in foreign currencies......................................................... 608,089
Net change in unrealized appreciation of investments........................... 63,484,288
----------
Net unrealized appreciation during the year.............................................. 64,092,377
----------
Net realized and unrealized gain on investments and foreign currencies....................... 59,127,653
----------
Net increase in net assets resulting from operations......................................... $60,006,059
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
------------- -------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income.................................................... $ 878,406 $ 2,650,890
Net realized loss on investments and foreign currency transactions....... (4,964,724) (98,872,602)
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 608,089 (795,171)
Net change in unrealized appreciation (depreciation) of investments...... 63,484,288 (97,151,861)
------------- -------------
Net increase (decrease) in net assets resulting from operations........ 60,006,059 (194,168,744)
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................... (842,524) --
From net realized gain on investments.................................... -- (19,567,238)
In excess of net investment income....................................... (381,092) --
Class B:
Distributions to shareholders: (Note 1)
From net investment income............................................... (93,201) --
From net realized gain on investments.................................... -- (14,468,347)
In excess of net investment income....................................... (42,157) --
Advisor Class:
Distributions to shareholders:
From net investment income............................................... (4,285) --
In excess of net investment income....................................... (1,938) --
------------- -------------
Total distributions.................................................... (1,365,197) (34,035,585)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 1,551,794,195 1,098,477,187
Decrease from capital shares repurchased................................. (1,612,200,649) (1,101,548,404)
------------- -------------
Net decrease from capital share transactions........................... (60,406,454) (3,071,217)
------------- -------------
Total decrease in net assets............................................... (1,765,592) (231,275,546)
Net assets:
Beginning of year........................................................ 317,357,564 548,633,110
------------- -------------
End of year.............................................................. $ 315,591,972* $ 317,357,564**
------------- -------------
------------- -------------
<FN>
- --------------
* Includes undistributed net investment income of $0.
** Includes undistributed net investment income of $1,356,776.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1996 (A) 1995 (A) 1994 (A) 1993 (A) 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 15.38 $ 26.11 $ 19.78 $ 15.59 $ 16.45
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.09 0.15 (0.08) 0.18 0.25*
Net realized and unrealized gain
(loss) on investments................ 2.59 (9.28) 6.75 5.21 (0.98)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 2.68 (9.13) 6.67 5.39 (0.73)
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.08) -- (0.19) (0.12) (0.13)
From net realized gain on
investments.......................... -- (1.60) (0.15) (1.08) --
In excess of net investment income.... (0.03) -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.11) (1.60) (0.34) (1.20) (0.13)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 17.95 $ 15.38 $ 26.11 $ 19.78 $ 15.59
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (d)............. 17.52% (37.16)% 34.10% 37.1% (4.5)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 177,373 $ 182,462 $ 336,960 $ 129,280 $ 94,085
Ratio of net investment income (loss) to
average net assets..................... 0.46% 0.86% (0.29)% 1.3%* 1.3%*
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 2.03% 2.11% 2.04% 2.4%* 2.4%*
Without expense reductions............ 2.10% 2.12% --%** --%** --%**
Portfolio turnover rate++++............. 101% 125% 155% 112% 159%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0005 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.
++ 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 among the
classes of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02 and $0.04 for the years ended October
31, 1993 and 1992, respectively. Without such reimbursements, the
expense ratios would have been 2.49% and 2.62% and the ratios of net
investment income to average net assets would have been 1.25% and
1.07% for the years ended October 31, 1993 and 1992, respectively.
** Calculation of "Ratio of expenses to net assets" was made without
considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon average
shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
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>
CLASS B++ ADVISOR CLASS+++
---------------------------------------------- ----------------------
APRIL 1, JUNE 1,
1993 1995
TO YEAR ENDED TO
YEAR ENDED OCTOBER 31, OCTOBER OCTOBER OCTOBER
---------------------------------- 31, 31, 31,
1996 (A) 1995 (A) 1994 (A) 1993 (A) 1996 (A) 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 15.21 $ 25.94 $ 19.75 $ 16.26 $ 15.40 $ 15.95
---------- ---------- ---------- ---------- ---------- ----------
Income from investment
operations:
Net investment income
(loss)..................... (0.00) 0.06 (0.22) (0.07) 0.17 0.09
Net realized and unrealized
gain (loss) on
investments................ 2.59 (9.19) 6.74 3.56 2.58 (0.64)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease)
from investment
operations............... 2.59 (9.13) 6.52 3.49 2.75 (0.55)
---------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment
income..................... (0.01) -- (0.18) -- (0.14) --
From net realized gain on
investments................ -- (1.60) (0.15) -- -- --
In excess of net investment
income..................... (0.01) -- -- -- (0.07) --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions....... (0.02) (1.60) (0.33) -- (0.21) --
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period....................... $ 17.78 $ 15.21 $ 25.94 $ 19.75 $ 17.94 $ 15.40
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Total investment return (d)... 17.02% (37.42)% 33.33% 21.5%(b) 18.16% (3.45)%(b)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $ 137,400 $ 134,527 $ 211,673 $ 13,576 $ 818 $ 369
Ratio of net investment income
(loss) to average net
assets....................... (0.04)% 0.36% (0.79)% (0.7)%(c) 0.96% 1.36%(c)
Ratio of expenses to average
net assets:
With expense reductions
(Notes 1 & 6).............. 2.53% 2.61% 2.54% 2.9%(c) 1.53% 1.61%(c)
Without expense
reductions................. 2.60% 2.62% --%** --%** 1.60% 1.62%(c)
Portfolio turnover rate++++... 101% 125% 155% 112% 101% 125%
Average commission rate per
share paid on portfolio
transactions++++............. $ 0.0005 N/A N/A N/A $ 0.0005 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing among the
classes of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02 and $0.04 for the years ended October
31, 1993 and 1992, respectively. Without such reimbursements, the
expense ratios would have been 2.49% and 2.62% and the ratios of net
investment income to average net assets would have been 1.25% and
1.07% for the years ended October 31, 1993 and 1992, respectively.
** Calculation of "Ratio of expenses to net assets" was made without
considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon average
shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Latin America Growth Fund ("Fund") is a separate series of GT
Investment Funds, Inc. ("Company"). The Company is organized as a Maryland
corporation and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as a non-diversified, open-end management investment
company. The Company has twelve series of shares in operation, each series
corresponding to a distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective service and distribution expenses, and
may differ in its transfer agent, registration, and certain other class-specific
fees and expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
the financial statements may include certain estimates made by management.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (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 maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records are maintained in U.S. dollars. The market values of
foreign securities, currency holdings, and other assets and liabilities are
recorded in the books and records of the Fund after translation to U.S. dollars
based on the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are translated at
prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss
F11
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
equal to the difference between the value at the time it was opened and the
value at the time it was closed. Forward Contracts involve market risk in excess
of the amount shown in the Fund's "Statement of Assets and Liabilities." The
Fund could be exposed to risk if a counterparty is unable to meet the terms of
the contract or if the value of the currency changes unfavorably. The Fund may
enter into Forward Contracts in connection with planned purchases or sales of
securities, or to hedge against adverse fluctuations in exchange rates between
currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. If an option expires on its
stipulated expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Fund can write options only on a covered
basis, which, for a call, requires that the fund hold the underlying securities
and, for a put, requires the Fund to maintain in a segregated account cash, U.S.
government securities, or other liquid, high-grade debt securities in an amount
not less than the exercise price or otherwise provide adequate cover at all
times while the put option is outstanding. The Fund may use options to manage
its exposure to the stock or bond market and to fluctuations in currency values
or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock or bond
market and to fluctuations in currency values or interest rates. At October 31,
1996, the fund had segregated securities valued at $34,032,814 and cash of
$311,370 to cover margin requirements on open futures contracts.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Interest income is recorded on the
accrual basis. Where a high level of uncertainty exists as to its collection,
income is recorded net of all withholding tax with any rebate recorded when
received. The Fund may trade securities on other than normal settlement terms.
This may increase the risk if the other party to the transaction fails to
deliver and causes the Fund to subsequently invest at less advantageous prices.
(H) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carry forward of
$100,040,502, of which $93,313,175 expires in 2003 and $6,727,327 expires in
2004.
(I) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ
F12
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
from generally accepted accounting principles. These differences are primarily
due to differing treatments of income and gains on various investment securities
held by the Fund and timing differences.
(J) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $177,793. These
expenses have been amortized on a straight line basis over a five-year period.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(M) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(N) PORTFOLIO SECURITIES LOANED
At October 31, 1996, stocks with an aggregate value of approximately $15,138,626
were on loan to brokers. The loans were secured by cash collateral of
$17,198,999. For international securities, cash collateral is received by the
Fund against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For domestic securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the loan. For
the year ended October 31, 1996, the Fund received $48,028 of income from
securities lending which was used to offset the Fund's custody expenses.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's 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. The Fund pays investment management and
administration fees to the Manager at the annualized rate of 0.975% of the first
$500 million of average daily net assets of the Fund; 0.95% of the next $500
million; 0.925% of the next $500 million and 0.90% on amounts thereafter. These
fees are computed daily and paid monthly, and are subject to reduction in any
year to the extent that the Fund's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, is the Fund's
distributor. The Fund offers Class A, Class B and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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 $98,352
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $18,250 for the year ended October 31, 1996. 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 Fund's current
prospectus. For the year ended October 31, 1996, GT Global collected CDSCs in
the amount of $824,774. 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 Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for 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.
F13
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for 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 the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40%, 2.90%, and 1.90% of the average
net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of 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 Fund. 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 Fund. The monthly fee
for these services to the manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the results according to the Funds 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.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1996, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$323,525,648 and $362,046,941. There were no purchases or sales of U.S.
government obligations for the year ended October 31, 1996.
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, 200,000,000 were
classified as shares of the 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
Natural Resources Fund; 200,000,000 were classified as shares of GT Global
Infrastructure Fund; 400,000,000 were classified as shares of GT Global
Telecommunications Fund; 200,000,000 were classified as shares of GT Global
Emerging Markets Fund; and 200,000,000 were classified as shares of GT Global
Financial Services Fund; 200,000,000 were classified as shares of GT Global High
Income 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 Fund were as follows:
F14
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GT GLOBAL LATIN AMERICA GROWTH FUND
CAPITAL SHARE TRANSACTIONS
<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............................. 76,364,877 $1,304,172,875 52,467,821 $ 904,752,193
Shares issued in connection with
reinvestment of distributions......... 66,851 1,023,814 673,780 16,139,240
----------- ------------- ----------- -------------
76,431,728 1,305,196,689 53,141,601 920,891,433
Shares repurchased...................... (78,414,835) (1,346,357,898) (54,183,599) (943,221,637)
----------- ------------- ----------- -------------
Net decrease............................ (1,983,107) $ (41,161,209) (1,041,998) $ (22,330,204)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 13,503,991 $ 230,324,732 9,341,199 $ 166,467,703
Shares issued in connection with
reinvestment of distributions......... 6,914 105,073 439,250 10,440,947
----------- ------------- ----------- -------------
13,510,905 230,429,805 9,780,449 176,908,650
Shares repurchased...................... (14,627,921) (250,064,111) (9,097,593) (158,042,884)
----------- ------------- ----------- -------------
Net increase (decrease)................. (1,117,016) $ (19,634,306) 682,856 $ 18,865,766
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
YEAR ENDED SHARES) TO OCTOBER 31,
OCTOBER 31, 1996 1995
-------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 932,074 $ 16,161,478 41,561 $ 677,104
Shares issued in connection with
reinvestment of distributions......... 408 6,223 -- --
----------- ------------- ----------- -------------
932,482 16,167,701 41,561 677,104
Shares repurchased...................... (910,792) (15,778,640) (17,621) (283,883)
----------- ------------- ----------- -------------
Net increase............................ 21,690 $ 389,061 23,940 $ 393,221
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1996, amounted to
$18,090,443, at value.
Transactions with affiliated companies are as follows:
<TABLE>
<CAPTION>
PURCHASES NET REALIZED DIVIDEND
AFFILIATES COST SALES COST GAIN INCOME
- ---------------------------------------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C>
Compania Boliviana de Energia
Electrica.............................. $ -- $ 671,076 $ 264,155 $190,749
Dixie Toga S.A. Preferred............... 729,186 5,847,339 1,577,576 39,312
San Luis "CPO".......................... 5,394,408 3,680,995 2,247,803 242,517
</TABLE>
6. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1996, the Fund's expenses
were reduced by $175,009 under these arrangements.
F15
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL LATIN AMERICA GROWTH FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, PLEASE CONTACT YOUR FINANCIAL 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 for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on large cap equity securities of U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns high monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in a portfolio of emerging market debt securities
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL LATIN AMERICA GROWTH FUND, G.T. INVESTMENT FUNDS, INC., CHANCELLOR
LGT ASSET MANAGEMENT, INC. OR GT GLOBAL, INC. THIS STATEMENT OF ADDITIONAL
INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
LATSX703MC
<PAGE>
GT GLOBAL EMERGING MARKETS FUND:
ADVISOR CLASS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
March 1, 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Advisor Class shares of
the GT Global Emerging Markets Fund ("Fund"). The Fund is a diversified series
of G.T. Investment Funds, Inc. (the "Company"), a registered open-end management
investment company. This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with the Fund's
current Advisor Class Prospectus dated March 1, 1997. A copy of the Fund's
Prospectus is available without charge by writing to the above address or by
calling the Fund at the toll-free telephone number listed above.
Chancellor LGT Asset Management, Inc. (the "Manager") serves as the Fund's
investment manager and administrator. The distributor of the Fund's shares is GT
Global, Inc. ("GT Global"). The Fund's transfer agent is GT Global Investor
Services, Inc. ("GT Services" or the "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 6
Risk Factors............................................................................................................. 14
Investment Limitations................................................................................................... 18
Execution of Portfolio Transactions...................................................................................... 19
Directors and Executive Officers......................................................................................... 21
Management............................................................................................................... 23
Valuation of Fund Shares................................................................................................. 24
Information Relating to Sales and Redemptions............................................................................ 25
Taxes.................................................................................................................... 27
Additional Information................................................................................................... 29
Investment Results....................................................................................................... 30
Description of Debt Ratings.............................................................................................. 35
Financial Statements..................................................................................................... 38
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term growth of capital. The Fund
seeks this objective by investing, under normal circumstances, at least 65% of
its total assets in equity securities of companies in emerging markets. The Fund
does not consider the following countries to be emerging markets: Australia,
Austria, Belgium, Canada, Denmark, England, Finland, France, Germany, Ireland,
Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland
and United States. The Fund normally may invest up to 35% of its assets in a
combination of (i) debt securities of government or corporate issuers in
emerging markets; (ii) equity and debt securities of issuers in developed
countries, including the United States; (iii) securities of issuers in emerging
markets not included in the list of emerging markets set forth in the Fund's
current Prospectus, if investing therein becomes feasible and desirable
subsequent to the date of the Fund's current Prospectus; and (iv) cash and money
market instruments.
In determining what countries constitute emerging markets, the Manager will
consider, among other things, data, analysis, and classification of countries
published or disseminated by the International Bank for Reconstruction and
Development (commonly known as the World Bank) and the International Finance
Corporation.
SELECTION OF EQUITY INVESTMENTS
In determining the appropriate distribution of investments among various
countries and geographic regions for the Fund, the Manager ordinarily considers
the following factors: prospects for relative economic growth between the
different countries in which the Fund may invest; expected levels of inflation;
government policies influencing business conditions; the outlook for currency
relationships; and the range of the individual investment opportunities
available to international investors.
In analyzing companies in emerging markets for investment by the Fund, the
Manager ordinarily looks for one or more of the following characteristics: an
above-average earnings growth per share; high return on invested capital;
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; efficient service; pricing flexibility;
strength of management; and general operating characteristics which will enable
the companies to compete successfully in their respective marketplaces. In
certain countries, governmental restrictions and other limitations on investment
may affect the maximum percentage of equity ownership in any one company by the
Fund. In addition, in some instances only special classes of securities may be
purchased by foreigners and the market prices, liquidity and rights with respect
to those securities may vary from shares owned by nationals.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
The Fund may be prohibited under the Investment Company Act of 1940, as amended
("1940 Act") from purchasing the securities of any foreign company that, in its
most recent fiscal year, derived more than 15% of its gross revenues from
securities-related activities ("securities-related companies"). In a number of
countries, commercial banks act as securities broker/dealers, investment
advisers and underwriters or otherwise engage in securities-related activities,
which may limit the Fund's ability to hold securities issued by banks. The Fund
has obtained an exemption from the Securities and Exchange Commission ("SEC") to
permit it to invest in certain of these securities subject to certain
restrictions.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries investments by the Fund presently may be made
only by acquiring shares of other investment companies with local governmental
approval to invest in those countries. The Fund may invest in the securities of
closed-end investment companies within the limits of the 1940 Act. These
limitations currently provide, in part, that the Fund may purchase shares of a
closed-end investment company unless (a) such a purchase would cause the Fund to
own in
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GT GLOBAL EMERGING MARKETS FUND
the aggregate more than 3 percent of the total outstanding voting stock of the
investment company or (b) such a purchase would cause the Fund to have more than
5 percent of its total assets invested in the investment company or more than 10
percent of its total assets invested in the aggregate in all such investment
companies. Investment in such investment companies may involve the payment of
substantial premiums above the value of such companies' portfolio securities.
The Fund does not intend to invest in such funds unless, in the judgment of 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. At such time as direct investment in these countries
is allowed, the Fund anticipates investing directly in these markets.
SAMURAI AND YANKEE BONDS
Subject to its fundamental investment restrictions, the Fund may invest in
yen-denominated bonds sold in Japan by non-Japanese issuers ("Samurai bonds"),
and may invest in dollar-denominated bonds sold in the United States by non-U.S.
issuers ("Yankee bonds"). As compared with bonds issued in their countries of
domicile, such bond issues normally carry a higher interest rate but are less
actively traded. It is the policy of the Fund to invest in Samurai or Yankee
bond issues only after taking into account considerations of quality and
liquidity, as well as yield. These bonds would be issued by governments which
are members of the Organization for Economic Cooperation and Development or have
AAA ratings.
DEPOSITORY RECEIPTS
The Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs"), or other securities convertible into securities of
eligible foreign issuers. These securities may not necessarily be denominated in
the same currency as the securities for which they may be exchanged. ADRs and
ADSs typically are issued by an American bank or trust company and evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
issued in Europe typically by foreign banks and trust companies and evidence
ownership of either foreign or domestic securities. Generally, ADRs and ADSs in
registered form are designed for use in United States securities markets and
EDRs and CDRs in bearer form are designed for use in European securities
markets. For purposes of the Fund's investment policies, the Fund's investments
in ADRs, ADSs, EDRs, and CDRs will be deemed to be investments in the equity
securities representing securities of foreign issuers into which they may be
converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in
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GT GLOBAL EMERGING MARKETS FUND
obligations of domestic issuers. Although the Fund typically will acquire
obligations issued and supported by the credit of U.S. or foreign banks having
total assets at the time of purchase in excess of $1 billion, this $1 billion
figure is not a fundamental investment policy or restriction of the Fund. For
the purposes of calculation with respect to the $1 billion figure, the assets of
a bank will be deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which the Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed upon price, date, and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Fund if the other party
to the repurchase agreement becomes bankrupt, the Fund intends to enter into
repurchase agreements only with banks and dealers believed by the Manager to
present minimum credit risks in accordance with guidelines established by the
Company's Board of Directors. The Manager reviews and monitors the
creditworthiness of such institutions under the Board's general supervision.
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 15% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, i.e.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of the Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, the Fund may be required to sell
portfolio securities to restore 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. The Fund also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to meet redemptions. Any borrowing by the Fund may cause greater
fluctuation in the value of its shares than would be the case if the Fund did
not borrow.
The Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. The Fund, however, currently is prohibited, pursuant to
a non-fundamental investment policy, from purchasing securities during times
when outstanding borrowings represent more than 5% of its assets. Nevertheless,
this policy may be changed in the future by vote of a majority of the Company's
Board of Directors. In the event that the Fund employs leverage in the future,
it would be subject to certain additional risks. Use of leverage creates an
opportunity for greater growth of capital but would exaggerate any increases or
decreases in the Fund's net asset value. When the income and gains on securities
purchased with the proceeds of borrowings exceed the costs of such borrowings,
the Fund's earnings or net asset value will increase faster than otherwise would
be the case; conversely, if such income and gains fail to exceed such costs, the
Fund's earnings or net asset value would decline faster than would otherwise be
the case.
The Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. The Fund also may engage in "roll"
borrowing transactions which involve the Fund's sale of Government National
Mortgage Association certificates or other securities together with a commitment
(for which the Fund may receive a fee) to purchase similar, but not identical,
securities at a future date. The Fund will maintain in a segregated account with
a custodian cash or other 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.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans continuously be secured by collateral at
least equal at all times to the value of the
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GT GLOBAL EMERGING MARKETS FUND
securities lent plus any accrued interest, "marked to market" on a daily basis.
The Fund may pay reasonable administrative and custodial fees in connection with
loans of its securities. While the securities loan is outstanding, the Fund will
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities, as well as interest on the investment of the
collateral or a fee from the borrower. The Fund has a right to call each loan
and obtain the securities on five business days' notice. The Fund will not have
the right to vote equity securities while they are being lent, but it will call
in a loan in anticipation of any important vote. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delay in receiving additional collateral or in recovery of the securities or
possible loss of rights in the collateral should the borrower fail financially.
Loans only will be made to firms deemed by 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.
SHORT SALES
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility.
When the Fund makes a short sale of a security it does not own, it must borrow
the security sold short and deliver it to the broker/dealer or other
intermediary through which it made the short sale. The Fund may have to pay a
fee to borrow particular securities and will often be obligated to pay over any
payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral deposited with the intermediary.
The Fund also will 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
the Fund on such security, the Fund may not receive any payments (including
interest) on its collateral deposited with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss theoretically is unlimited.
The Fund will not make a short sale if, after giving effect to such sale, the
market value of the securities sold short exceeds 25% of the value of its total
assets or the Fund's aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of the Fund's net assets or 2% of the securities of any
class of the issuer. Moreover, the Fund may engage in short sales only with
respect to securities listed on a national securities exchange. The Fund may
make short sales "against the box" without respect to such limitations. In this
type of short sale, at the time of the sale the Fund owns the security it has
sold short or has the immediate and unconditional right to acquire at no
additional cost the identical security.
TEMPORARY DEFENSIVE STRATEGIES
The Emerging Markets Fund may invest in the following types of money market
instruments (i.e., debt instruments with less than 12 months remaining until
maturity) denominated in U.S. dollars or other currencies: (a) obligations
issued or guaranteed by the U.S. or foreign governments, their agencies,
instrumentalities or municipalities; (b) obligations of international
organizations designed or supported by multiple foreign governmental entities to
promote economic reconstruction or development; (c) finance company obligations,
corporate commercial paper and other short-term commercial obligations; (d) bank
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances); (e) repurchase agreements with respect to the
foregoing; and (f) other substantially similar short-term debt securities with
comparable characteristics.
The Emerging Markets Fund may invest in commercial paper rated as low as A-3 by
S&P or P-3 by Moody's or, if not rated, determined by the Manager to be of
comparable quality. Obligations rated A-3 and P-3 are considered by S&P and
Moody's, respectively, to have an acceptable capacity for timely repayment.
However, these securities may be more vulnerable to adverse effects of changes
in circumstances than obligations carrying higher designations.
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GT GLOBAL EMERGING MARKETS FUND
OPTIONS, FUTURES AND
CURRENCY STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon 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 the Fund entered into a
short hedge because the Manager projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, the Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options generally will be written on securities and currencies that, in the
opinion of 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 Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). As long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objectives. When writing a call option, the Fund, in return
for the
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GT GLOBAL EMERGING MARKETS FUND
premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Fund has no control
over when it may be required to sell the underlying securities or currencies,
since most options may be exercised at any time prior to the option's
expiration. If a call option that the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written. 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 the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity are normally higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American Style) or on (European Style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is identical substantially to that of call options.
The Fund generally would write put options in circumstances where the Manager
wishes to purchase the underlying security or currency for the Fund's portfolio
at a price lower than the current market price of the security or currency. In
such event, the Fund would write a put option at an exercise price that, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund would also receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at more than its market value.
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PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, the Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund to protect against an anticipated decline
in the value of the security or currency. Such protection is provided only
during the life of the put option when the Fund, as the holder of the put
option, is able to sell the underlying security or currency at the put exercise
price regardless of any decline in the underlying security's market price or
currency's exchange value. For example, a put option may be purchased in order
to protect unrealized appreciation of a security or currency when 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.
The Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique also may be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options also may be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in its
use of Forward Contracts by purchasing put or call options on currencies. A put
option gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or on
(European style) the expiratiaon date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be
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GT GLOBAL EMERGING MARKETS FUND
offset, in whole or in part, by an increase in the value of the put. If the
value of the currency instead should rise against the dollar, any gain to the
Fund would be reduced by the premium it had paid for the put option. A currency
call option might be purchased, for example, in anticipation of, or to protect
against, a rise in the value against the dollar of a currency in which the Fund
anticipates purchasing securities.
Options may be either listed on an exchange or traded 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. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the SEC considers purchased OTC options to be illiquid securities.
The Fund may also sell OTC options and, in connection therewith, segregate
assets or cover its obligations with respect to OTC options written by the Fund.
The assets used as cover for OTC options written by the Fund will be considered
illiquid unless the OTC options are sold to qualified dealers who agree that the
Fund may repurchase any OTC option it writes at a maximum price to be calculated
by a formula set forth in the option agreement. The cover for an OTC option
written subject to this procedure would be considered illiquid only to the
extent that the maximum repurchase price under the formula exceeds the intrinsic
value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When
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GT GLOBAL EMERGING MARKETS FUND
an index option is exercised, the amount of cash that the holder is entitled to
receive is determined by the difference between the exercise price and the
closing index level on the date when the option is exercised. As with other
kinds of options, the Fund, as the call writer, will not know that it has been
assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE AND CURRENCY FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collective "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock prices in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by the Fund. The Fund's transactions may include sales of Futures as an offset
against the effect of expected increases in interest rates, and decreases in
currency exchange rates and stock prices, and purchases of Futures as an offset
against the effect of expected declines in interest rates, and increases in
currency exchange rates and stock prices.
The Fund will only enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. An
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts are usually closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance the difference between the price at which the Futures
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
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GT GLOBAL EMERGING MARKETS FUND
The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded and may be modified significantly from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less value, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
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GT GLOBAL EMERGING MARKETS FUND
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds securities
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds securities denominated in U.S.
dollars, but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with
guidelines approved by the Company's Board of Directors.
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
will not generally be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it
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GT GLOBAL EMERGING MARKETS FUND
matures. Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot (I.E., cash) market (and bear the expense of such
purchase) if the market value of the security is less than the amount of foreign
currency the Fund is obligated to deliver and if a decision is made to sell the
security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency the Fund is
obligated to deliver. The projection of short-term currency market movements is
extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which the Manager believes will have a positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
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GT GLOBAL EMERGING MARKETS FUND
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash 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 the Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
ILLIQUID SECURITIES
The Fund may invest up to 15% of its net assets in illiquid securities.
Securities may be considered illiquid if the Fund cannot reasonably expect
within seven days to sell the securities for approximately the amount at which
the Fund values such securities. See "Investment Limitations." The sale of
illiquid securities, if they can be sold at all, generally will require more
time and result in higher brokerage charges or dealer discounts and other
selling expenses than the sale of liquid securities such as securities eligible
for trading on U.S. securities exchanges or in the over-the-counter markets.
Moreover, restricted securities, which may be illiquid for purposes of this
limitation, often sell, if at all, at a price lower than similar securities that
are not subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
the Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act, are
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GT GLOBAL EMERGING MARKETS FUND
liquid or illiquid. The Board has delegated the function of making day-to-day
determinations of liquidity to the Manager, in accordance with procedures
approved by the Company's Board of Directors. 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 who
make quotes for the security: (iii) the number of dealers who have undertaken to
make a market in the security; (iv) the number of other potential purchasers;
and (v) the nature of the security and how trading is affected (e.g., the time
needed to sell the security, how offers are solicited and the mechanics of
transfer). The Manager monitors the liquidity of securities in the Fund's
portfolio and periodically reports on such decisions to the Board of Directors.
FOREIGN SECURITIES
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in equity
securities of companies in emerging markets may entail greater risks than
investing in equity securities in developed countries. These risks include (i)
less social, political and economic stability; (ii) the small current size of
the markets for such securities and the currently low or nonexistent volume of
trading, which result in a lack of liquidity and in greater price volatility;
(iii) certain national policies which may restrict the Fund's investment
opportunities, including restrictions on investment in issuers or industries
deemed sensitive to national interests; (iv) foreign taxation; and (v) the
absence of developed structures governing private or foreign investment or
allowing for judicial redress for injury to private property. Investing in the
securities of companies in emerging markets, including the markets of Latin
America and certain Asian markets such as Taiwan, Malaysia and Indonesia, may
entail special risks relating to the potential political and economic
instability and the risks of expropriation, nationalization, confiscation or the
imposition of restrictions on foreign investment, convertibility of currencies
into U.S. dollars and on repatriation of capital invested. In the event of such
expropriation, nationalization or other confiscation by any country, the Fund
could lose its entire investment in any such country.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
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 economies and securities
markets of certain emerging market countries.
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 the 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 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 Fund intends 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 the Fund
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.
Statement of Additional Information Page 15
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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.
CONCENTRATION. To the extent the Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, the Fund may be subject to greater risks and may experience greater
volatility than a fund that is more broadly diversified geographically.
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, the Fund could lose its entire investment in
any such country.
In addition, even though opportunities for investment may exist in emerging
markets, any change in the leadership or policies of the governments of those
countries or in the leadership or policies of any other government which
exercises a significant influence over those countries, may halt the expansion
of or reverse the liberalization of foreign investment policies now occurring
and thereby eliminate any investment opportunities which may currently exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property similar to the property which
will be represented by the securities purchased by the Fund. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Fund will not also be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Fund could lose its entire investment in
such countries. The Fund's investments would similarly be adversely affected by
exchange control regulation in any of those countries.
RELIGIOUS AND ETHNIC INSTABILITY. Certain countries in which the Fund may
invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries. Instability may also
result from, among other things: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
the Fund invests and adversely affect the value of the Fund's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or may limit the investment by foreign persons to only a specific class
of securities of a company that may have less advantageous terms than securities
of the company available for purchase by nationals. Moreover, the national
policies of certain countries may restrict investment opportunities in issuers
or industries deemed sensitive to national interests. In addition, some
countries require governmental approval for the repatriation of investment
income, capital or the proceeds of securities sales by foreign investors. In
Statement of Additional Information Page 16
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
addition, if there is a deterioration in a country's balance of payments or for
other reasons, a country may impose restrictions on foreign capital remittances
abroad. The Fund could be adversely affected by delays in, or a refusal to
grant, any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, 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 the Fund, under normal circumstances, will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and pace of business activity in the other countries, and the
U.S., and other economic and financial conditions affecting the world economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers are generally
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions are usually subject to fixed
commissions, which are generally higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of the Fund are
uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. The Manager will consider such difficulties when
determining the allocation of the Fund's assets, although the Manager does not
believe that such difficulties will have a material adverse effect on the Fund's
portfolio trading activities.
Statement of Additional Information Page 17
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
The Fund may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian; (ii) maintaining appropriate safeguards
to protect the Fund's investments and (iii) possible difficulties in obtaining
and enforcing judgments against such custodians.
WITHHOLDING TAXES. The Fund's net investment income from foreign issuers may
be subject to withholding taxes by the foreign issuer's country, thereby
reducing the Fund's net investment income or delaying the receipt of income
where those taxes may be recaptured. See "Taxes."
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
The Fund has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the holders of the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, and
(ii) more than 50% of the outstanding shares.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Purchase or sell real estate, provided that the Fund may invest in
securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell commodities or commodity contracts, except that the
Fund may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in transactions in
foreign currencies;
(4) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund may be
deemed an underwriter under federal or state securities laws;
(5) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(6) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with the use of options, futures contracts, options thereon or
forward currency contracts. The Fund may make deposits of margin in
connection with futures and forward contracts and options thereon;
(7) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(8) Mortgage, pledge, or in any other manner transfer as security for
any indebtedness any of its assets, except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of the Fund's assets;
(9) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs, however, the Fund may invest in
securities of companies that engage in these activities; or
(10) With respect to 75% of its total assets, invest more than 5% of its
assets in the securities of any one issuer or purchase more than 10% of the
outstanding voting securities of any one issuer.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
Statement of Additional Information Page 18
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
The following operating policies of the Fund are not fundamental policies and
may be changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Purchase or retain the securities of any issuer, if, to the Fund's
knowledge, one or more of the officers or Directors of the Company, the
Fund's investment adviser, or its distributor, each own beneficially more
than 1/2 of 1% of the securities of such issuer and together own
beneficially more than 5% of the securities of such issuer;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into;
(5) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Fund's total
assets, except that the Fund may purchase securities when outstanding
borrowings represent less than 5% of the Fund's assets;
(6) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation; or
(7) Invest more than 10% of its total assets in securities that are
restricted as to resale without registration under the 1933 Act.
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, the Manager
is responsible for the execution of the Fund's portfolio transactions and the
selection of brokers and dealers who execute such transactions on behalf of the
Fund. In executing portfolio transactions, the Manager seeks the best net
results for the Fund, taking into account such factors as the price (including
the applicable brokerage commission or dealer spread), size of the order,
difficulty of execution and operational facilities of the firm involved.
Although 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 the Fund may engage in soft dollar
arrangements for research services, as described below, the Fund has no
obligation to deal with any broker/dealer or group of broker/dealers in the
execution of portfolio transactions.
Consistent with the interests of the Fund, the Manager may select brokers to
execute the Fund's portfolio transactions on the basis of the research and
brokerage services they provide to the Manager for its use in managing the Fund
and its other advisory accounts. Such services may include furnishing analyses,
reports and information concerning issuers, industries, securities, geographic
regions, economic factors and trends, portfolio strategy, and performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Research and brokerage
services received from such brokers are in addition to, and not in lieu of, the
services required to be performed by the Manager under the Management Contract
(defined below). A commission paid to such brokers may be higher than that which
another qualified broker would have charged for effecting the same transaction,
provided that 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 the Fund and its other clients and that the
total commissions paid by the Fund will be reasonable in relation to the
benefits received by the Fund over the long term. Research services may also be
received from dealers who execute Fund transactions in OTC markets.
Statement of Additional Information Page 19
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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 the Fund toward payment of the Fund's expenses, such as
transfer agent and custodian fees.
Investment decisions for the Fund and for other investment accounts managed by
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 the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases the Manager
believes that coordination and the ability to participate in volume transactions
will be beneficial to the Fund.
Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, the Manager may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which the
Manager serves as investment manager in selecting brokers and dealers for the
execution of portfolio transactions. This policy does not imply a commitment to
execute portfolio transactions through all broker/dealers that sell shares of
the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in
over-the-counter markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. The fixed commissions paid in
connection with most such foreign stock transactions generally are higher than
negotiated commissions on United States transactions. There generally is less
government supervision and regulation of foreign stock exchanges and
broker/dealers than in the United States. Foreign security settlements may in
some instances be subject to delays and related administrative uncertainties.
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the 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 the
Fund may invest are generally traded in the OTC markets.
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of Liechtenstein Global Trust. The Company's Board of Directors has
adopted procedures in conformity with Rule 17e-1 under the 1940 Act to ensure
that all brokerage commissions paid to affiliates are reasonable and fair in the
context of the market in which they are operating. Any such transactions will be
effected and related compensation paid only in accordance with applicable SEC
regulations. For the fiscal years ended October 31, 1994, 1995 and 1996, the
Fund paid aggregate brokerage commissions of $1,747,307, $3,307,402 and
$3,648,347, respectively.
PORTFOLIO TRADING AND TURNOVER
The Fund engages in portfolio trading when the Manager has concluded that the
sale of a security owned by the Fund and/ or the purchase of another security of
better value can enhance principal and/or increase income. A security may be
sold to avoid any prospective decline in market value, or a security may be
purchased in anticipation of a market rise. Consistent with the Fund's
investment objective, a security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two securities.
Although the Fund generally does not intend to trade for short-term profits, the
securities in the Fund's portfolio will be sold whenever the Manager believes it
is appropriate to do so, without regard to the length of time a particular
security may have been held. The portfolio turnover rate is calculated by
dividing the lesser of sales or purchases of portfolio securities by the Fund's
average month-end portfolio value, excluding short-term investments. 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 Fund will bear directly, and may result in the realization of net capital
gains that are taxable when distributed to the Fund's shareholders. For the
fiscal years ended October 31, 1996 and 1995, the Fund's portfolio turnover
rates were 104% and 114%, respectively.
Statement of Additional Information Page 20
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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) since 1995; President, GT Global since 1995;
50 California Street President and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice President
San Francisco, CA 94111 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 21
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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, the Manager, GT Global, GT Services and G.T. Insurance from
New York, NY 10036 February 1996 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 Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors of the
Company. Each of the Directors and Officers of the Company is also a Director
and Officer of G.T. Investment Portfolios, Inc., G.T. Global Developing Markets
Fund, Inc. and GT Global Floating Rate Fund, Inc., 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, 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 administered 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 per annum, plus $300
per Fund for each meeting of the Board attended, and reimburses travel and other
expenses incurred in connection with attendance at such meetings. Other
Directors and Officers receive no compensation or expense reimbursement from the
Company. For the fiscal year ended October 31, 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 year ended October 31, 1996, Mr. Anderson, Mr. Bayley, Mr.
Patterson and Ms. Quigley 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 accrued 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 the Fund or of all the
Company's funds in the aggregate.
Statement of Additional Information Page 22
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
MANAGEMENT
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INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
The Manager serves as the Fund's investment manager and administrator 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 Fund and administers the
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 Fund,
and provides suitable office space, necessary small office equipment and
utilities. For these services, the Fund pays the Manager investment management
and administration fees, based on the Fund's average daily net assets, computed
daily and paid monthly at the annualized rate of .975% on the first $500
million, .95% on the next $500 million, .925% on the next $500 million and .90%
on amounts thereafter.
The Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract provides that with respect to the Fund either the Company or
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).
For the fiscal years ended October 31, 1994, 1995 and 1996, the Fund paid
investment management and administration fees to the Manager in the amounts of
$4,702,869, $5,410,744 and $4,883,626, respectively.
Certain emerging market countries require a local entity to provide
administrative services for all direct investments by foreigners. Where required
by local law, the Fund intends to retain a local entity to provide such
administrative services. The local administrator will be paid a fee by the Fund
for its services.
DISTRIBUTION SERVICES
The Fund's Advisor Class shares are offered through the Fund's principal
underwriter and distributor, GT Global, on a "best efforts" basis without a
sales charge or a contingent deferred sales charge.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agent has been retained by the Fund to perform shareholder
servicing, reporting and general transfer agent functions for the Fund. For
these services, the Transfer Agent receives an annual maintenance fee of $17.50
per account, a new account fee of $4.00 per account, a per transaction fee of
$1.75 for all transactions other than exchanges and a per exchange fee of $2.25.
The Transfer Agent also is reimbursed by the Fund for its out-of-pocket expenses
for such items as postage, forms, telephone charges, stationery and office
supplies. The Manager serves as the Fund's pricing and accounting agent. For the
fiscal years ended October 31, 1996 and October 31, 1995, the Fund paid transfer
agency and accounting services fees to the Manager of $2,055,856 and $1,994,216,
respectively.
EXPENSES OF THE FUND
As described in the Prospectus, the Fund pays all of its own expenses not
assumed by other parties. These expenses include, in addition to the advisory,
transfer agency, pricing and accounting agency and brokerage fees discussed
above, legal and audit expenses, custodian fees, directors' fees, organizational
fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses
and expenses of reports and prospectuses sent to existing investors. The
allocation of general Company expenses and expenses shared among the Fund and
other funds organized as series of the Company are allocated on a basis deemed
fair and equitable, which may be based on the relative net assets of the Fund or
the nature of the services performed and relative applicability to the Fund.
Expenditures, including costs incurred in connection with the purchase or sale
of portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are accounted
for as capital items and not as expenses. The ratio of the Fund's expenses to
its relative net assets can be expected to be higher than the expense ratios of
funds investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
the Fund generally are higher than the comparable expenses of such other funds.
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
VALUATION OF FUND SHARES
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As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the end of regular trading on the New York
Stock Exchange ("NYSE") (currently at 4:00 p.m. Eastern time, unless weather,
equipment failure or other factors contribute to an earlier closing time), on
each Business Day as open for business. Currently, the NYSE is closed on
weekends and on certain days relating to the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day, Thanksgiving
Day and Christmas Day.
The Fund's portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs, CDRs and EDRs, which are traded on
stock exchanges, are valued at the last sale price on the exchange, or in the
principal over-the-counter market on which such securities are traded, as of the
close of business on the day the securities are being valued or, lacking any
sales, at the last available bid price. In cases where securities are traded on
more than one exchange, the securities are valued on the exchange determined by
the Manager to be the primary market. Securities and assets for which market
quotations are not readily available (including restricted securities which are
subject to limitations as to their sale) are valued at fair value as determined
in good faith by or under the direction of the Board of Directors. Trading in
securities on European and Far Eastern securities exchanges and over-the-counter
markets is normally completed well before the close of the business day in New
York.
Long-term debt obligations are valued at the mean of representative quoted bid
and asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments are amortized to
maturity based on their cost, adjusted for foreign exchange translation,
provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or, in the case of OTC
options, at the average of the last bid prices obtained from dealers unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. The value of each security denominated in a currency other
than U.S. dollars will be translated into U.S. dollars at the prevailing
exchange rate as determined by the Manager on that day. When market quotations
for futures and options on futures held by the Fund are readily available, those
positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Company's Board of Directors. The valuation procedures applied
in any specific instance are likely to vary from case to case. However,
consideration generally is given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors also generally are considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Fund's net assets is so determined, that
value is then divided by the total number of shares outstanding (excluding
treasury shares), and the result, rounded to the nearer cent, is the net asset
value per share.
Any assets or liabilities initially denominated in terms of foreign currencies
are translated into U.S. dollars at the official exchange rate or at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors in good faith will
establish a conversion rate for such currency.
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
Securities trading in emerging markets may not take place on all days on which
the NYSE is open. Further, trading takes place in Japanese markets on certain
Saturdays and in various foreign markets on days on which the NYSE is not open.
Consequently, the calculation of the Fund's net asset values therefore may not
take place contemporaneously with the determination of the prices of securities
held by the Fund. Events affecting the values of portfolio securities that occur
between the time their prices are determined and the close of regular trading on
the NYSE will not be reflected in the Fund's net asset value unless the Manager,
under the supervision of the Company's Board of Directors, determines that the
particular event would materially affect net asset value. As a result, the
Fund's net asset value may be significantly affected by such trading on days
when a shareholder cannot provide or redeem the Fund.
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INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment of Advisor Class shares purchased should accompany the purchase order,
or funds should be wired to the Transfer Agent as described in the Prospectus.
Payment, other than by wire transfer, must be made by check or money order drawn
on a U.S. bank. Checks or money orders must be payable in U.S. dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, because a check is returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law.
EXCHANGES BETWEEN FUNDS
Shares of the Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Advisor Class shares
may be exchanged only for Advisor Class shares of other GT Global Mutual Funds.
The exchange privilege is not an option or right to purchase shares but is
permitted under the current policies of the respective GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the funds
upon 60 days prior notice to the shareholders of such fund and is available only
in states where the exchange may be legally made. Before purchasing shares
through the exercise of the exchange privilege, a shareholder should obtain and
read a copy of the prospectus of the fund to be purchased and should consider
the investment objective(s) of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by the Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days' written notice.
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
exists, as defined by the SEC, which make it not reasonably practicable for the
Fund to dispose of its portfolio securities or fairly to determine the value of
its assets, or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the Fund's
net assets at the beginning of such period. This election is irrevocable so long
as Rule 18f-1 remains in effect, unless the SEC by order upon application
permits the withdrawal of such election.
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
TAXES
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GENERAL
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"), the Fund
must distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. These requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from options, Futures or Forward Contracts) derived with respect to its
business of investing in securities or those currencies ("Income Requirement");
(2) the Fund must derive less than 30% of its gross income each taxable year
from the sale or other disposition of securities, or any of the following, that
were held for less than three months -- options or Futures (other than those on
foreign currencies), or foreign currencies (or options, Futures or Forward
Contracts thereon) that are not directly related to the Fund's principal
business of investing in securities (or options and Futures with respect to
securities) ("Short-Short Limitation"); (3) at the close of each quarter of the
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. government securities, securities of
other RICs, and other securities, with these other securities limited, in
respect of any one issuer, to an amount that does not exceed 5% of the value of
the Fund's total assets and that does not represent more than 10% of the
issuer's outstanding voting securities; and (4) at the close of each quarter of
the Fund's taxable year, not more than 25% of the value of its total assets may
be invested in securities (other than U.S. government securities or the
securities of other RICs) of any one issuer.
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
("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
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
taxes paid by it. Pursuant to the election, the 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 those taxes, (2)
treat his share of those taxes and of any dividend paid by the Fund that
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
represents income from foreign and U.S. possessions sources as his own income
from those sources, and (3) either deduct the taxes deemed paid by him in
computing his taxable income or, alternatively, use the foregoing information in
calculating the foreign tax credit against his federal income tax. The Fund will
report to its shareholders shortly after each taxable year their respective
shares of the Fund's income from sources within, and taxes paid to, foreign
countries and U.S. possessions if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund will be subject to
federal income tax on a portion of any "excess distribution" received, on or of
any gain from the disposition of, stock of a PFIC (collectively "PFIC income"),
plus interest thereon, even if the Fund distributed the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income will be included in
the Fund's investment company taxable income and, accordingly, will not be
taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and to avoid imposition of the Excise Tax -- even if those earnings
and gain were not received by the Fund from the QEF. In most instances it will
be very difficult, if not impossible, to make this election because of certain
requirements thereof.
Pursuant to proposed regulations, an open-end RICs such as the Fund, would be
entitled to elect to "mark-to-market" its stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. Distributions of net capital gain are not
subject to withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, those distributions ordinarily will be subject to
U.S. income tax at a rate of 30% (or lower treaty rate) if the individual is
physically present in the United States for more than 182 days during the
taxable year and the distributions are attributable to a fixed place of business
maintained by the individual in the United States.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
options, Futures and Forward Contracts derived by the Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement. However, income from the
disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities (or options and futures with respect thereto) also will be subject to
the Short-Short Limitation if they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all those transactions. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts and/or foreign currency positions beyond the time
when it otherwise would be advantageous to do so, in order for the Fund to
continue to qualify as a RIC.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign currency-denominated debt securities and options, Futures and Forward
Contracts 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. The
Fund attempts to monitor section 988 transactions to minimize any adverse tax
impact.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
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ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust, 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), in Tokyo; LGT Asset
Management Pte. Ltd., formerly G.T. Management (Singapore) PTE Ltd., in
Singapore; LGT Asset Management Ltd., formerly G.T. Management (Australia) Ltd.,
in Sydney; and LGT Asset Management GmbH, formerly BIL Asset Management GmbH, in
Frankfurt.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. will conduct an
annual audit of the Fund, assist in the preparation of the Fund's federal and
state income tax returns and consult with the Company and the Fund as to matters
of accounting, regulatory filings, and federal and state income taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of 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"
names and has reserved the right to withdraw its consent to the use of such
names by the Company and/or the Fund at any time, or to grant the use of such
names to any other company.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
STANDARDIZED RETURNS
The Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), are calculated
separately for Class A, Class B and Advisor Class shares of the 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 $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 Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
EMERGING EMERGING EMERGING
MARKETS MARKETS MARKETS
FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- ---------------------------------------------------------------------------------- ----------- ----------- ---------------
<S> <C> <C> <C>
Fiscal year ended October 31, 1996................................................ -1.93% -2.51% 3.60%
June 1, 1995 (commencement of operations) through October 31, 1996................ n/a n/a -1.63 %
April 1, 1993 (commencement of operations) through October 31, 1996............... n/a 6.88 % n/a
May 18, 1992 (commencement of operations) through October 31, 1996................ 5.56 % n/a n/a
</TABLE>
NON-STANDARDIZED RETURNS
In addition to Standardized Returns, the 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 the 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 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 sales 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 Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
EMERGING EMERGING EMERGING
MARKETS MARKETS MARKETS
FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (ADVISOR CLASS)
- ---------------------------------------------------------------------------------- ----------- ----------- ---------------
<S> <C> <C> <C>
April 1, 1993 (commencement of operations) through October 31, 1996............... n/a 29.92% n/a
May 18, 1992 (commencement of operations) through October 31, 1996................ 33.63 % n/a n/a
June 1, 1995 (commencement of operations) through October 31, 1996................ n/a n/a -2.31 %
</TABLE>
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO EMERGING EQUITY AND BOND MARKETS
Information relating to foreign market performance, diversification and market
capitalization is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or the Manager. The authors and publishers of such material are not to be
considered as "experts" under the Securities Act of 1933 on account of the
inclusion of such information herein. Stocks chosen by Morgan Stanley Capital
International or the IFC for inclusion in its various international market
indicies may not necessarily constitute a representative cross-section of the
particular markets.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT Global believes that information relating to foreign market performance and
market capitalization may be useful to investors considering whether and to what
extent to diversify their investments through the purchase of mutual funds
investing in securities on a global basis. However, this data is not a
representation of the past performance of the Fund, nor is it a prediction of
such performance. The performance of the Fund will differ from the historical
performance of such indices. The performance of indices does not take expenses
into account, while the Fund incurs expenses in its operations which will reduce
performance. Moreover, the Fund is actively managed, i.e. the Manager as the
Fund's investment manager actively purchases and sells securities in seeking the
Fund's investment objective; this will cause the performance of the Fund to
differ from indices.
The Fund and GT Global may from time to time compare the Fund with, but not
limited to, the following:
(1) The Salomon Brothers Non-U.S. Dollars Indices, which are measures of
the total return performance of high quality non-U.S. dollar denominated
securities in major sectors of the worldwide bond markets.
(2) The Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's Investors Service,
Inc. ("Moody's") or BBB by Standard & 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) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Company Service ("CDA/Wiesenberger"), Morningstar Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard the Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger, Morningstar and/or other
firms as applicable, or to specific funds or groups of funds within or
without such peer group. Morningstar is a mutual fund rating service that
also rates mutual funds on the basis of risk-adjusted performance.
Morningstar ratings are calculated from a fund's three, five and ten year
average annual returns with appropriate fee adjustments and a risk factor
that reflects fund performance relative to the three-month U.S. Treasury
bill monthly returns. Ten percent of the funds in an investment category
receive five stars and 22.5% receive four stars. The ratings are subject to
change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and Gross National Product ("GNP") weighted
index, beginning in 1975. The returns are broken down by local market and
currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) Standard & Poor's "500" Index which is a widely recognized index
composed of the capitalization-weighted average of the price of 500 of the
largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-back
fixed income securities.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies in Europe, Australia and the Far East.
(13) International Finance Corporation (IFC) Emerging Markets Data Base
which provides detailed statistics on stock markets in developing countries.
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
(14) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(15) The World Bank Publication of Trends in Developing Countries (TIDE)
provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(16) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(17) Datastream and Worldscope an on-line database retrieval service for
information including but not limited to international financial and
economic data.
(18) International Financial Statistics, which is produced by the
International Monetary Fund.
(19) Various publications and annual reports such as the World
Development Report, produced by the World Bank and its affiliates.
(20) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(21) Various publications including but not limited to ratings agencies
such as Moody's, S&P and Fitch.
(22) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(23) Various publications from the Organization for Economic Cooperation
and Development (OECD).
Indices, economic and financial data prepared by the research departments of
various financial organizations, such as Salomon Brothers, Inc., Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan
Stanley, Smith Barney, S.G. Warburg, Jardine Flemming, The Bank for
International Settlements, Asian Development Bank, Bloomberg, L.P. and Ibbottson
Associates may be used as well as information reported by the Federal Reserve
and the respective Central Banks of various nations. In addition, GT Global may
use performance rankings, ratings and commentary reported periodically in
national financial publications, included but not limited to, Money Magazine,
Mutual Fund Magazine, Smart Money, Global Finance, EuroMoney, Financial World,
Forbes, Fortune, Business Week, Latin Finance, the Wall Street Journal, Emerging
Markets Weekly, Kiplinger's Guide To Personal Finance, Barron's, The Financial
Times, USA Today, The New York Times, Far Eastern Economic Review, The Economist
and Investors Business Digest. Each Fund may compare its performance to that of
other compilations or indices of comparable quality to those listed above and
other indices which may be developed and made available.
GT Global believes the Fund is an appropriate investment for long-term
investment goals including but not limited to funding retirement, paying for
education or purchasing a house. The Fund does not represent a complete
investment program and investors should consider the Fund as appropriate for a
portion of their overall investment portfolio with regard to their long-term
investment goals.
GT Global believes that a growing number of consumer products, including but not
limited to home appliances, automobiles and clothing, purchased by Americans are
manufactured abroad. GT Global believes that investing globally in the companies
that produce products for U.S. consumers can help U.S. investors seek protection
of the value of their assets against the potentially increasing costs of foreign
manufactured goods. Of course, there can be no assurance that there will be any
correlation between global investing and the costs of such foreign goods unless
there is a corresponding change in value of the U.S. dollar to foreign
currencies. From time to time, GT Global may refer to or advertise the names of
such companies although there can be no assurance that any GT Global Mutual Fund
may own the securities of these companies.
From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.
The Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above which may be developed and made
available in the future. The Fund may be compared in advertising to Certificates
of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan statistical areas, or other investments
issued by banks. The Fund differs from bank investments in several respects. The
Fund may offer greater liquidity or higher
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
potential returns than CDs; but unlike CDs, the Fund will have a fluctuating
share price and return and is not FDIC insured.
The Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
GT Global Mutual Funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the Fund. Ibbotson
calculates total returns in the same method as the Funds. The Fund may also
compare performance to that of other compilations or indices that may be
developed and made available in the future.
In advertising materials, GT Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the Fund may quote Morningstar,Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, the Fund may quote financial or
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of GT Global Mutual Funds to one another in appropriate categories
over specific periods of time may also be quoted in advertising.
The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviation and R(2) in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns compared
to those of a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
The Fund may be available for purchase through retirement plans of other
programs offering deferral of or exemption from income taxes, which may produce
superior after tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Mutual Funds through various retirement plans that
offer deferral of income taxes on investment earnings and may also enable you to
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
make pre-tax contributions. Because of their advantages, these retirement plans
may produce returns superior to comparable non-retirement investments. The Fund
may also discuss these plans which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): 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) if less, 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 ("SEP" or "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh-type plans or 401(k) plans, but with fewer administrative requirements and
therefore potential lower annual administration expenses.
CODE SECTION 403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other not-for-profit corporations can make pre-tax salary reduction
contributions to these accounts.
PROFIT SHARING (INCLUDING 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 methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.
From time to time, the Fund and GT Global will quote data regarding individual
countries, regions, world stock exchanges, and economic and demographic
statistics from sources GT Global deems reliable, including 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 Industry
Indices and IFC.
3) The number of listed companies: IFC, G.T. Guide to World Equity Markets,
Salomon Brothers, Inc. and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, 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.
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
12) Age distribution within populations: Organization for Economic Cooperation
and Development 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, G.T. Guide to World
Equity Markets, Salomon Brothers Inc. and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
17) Countries restructuring their debt, including those under the Brady Plan:
the Manager.
18) Political and economic structure of countries: Economist Intelligence Unit.
19) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
20) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
21) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to, electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 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 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.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1" "Prime-2" and "Prime-3" to indicate
commercial paper having the highest capacity for timely repayment. Issuers rated
Prime-1 have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protections; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2 have a strong
capacity for repayment of short-term promissory obligations. This will
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained. Issuers rated Prime-3 have an acceptable ability for repayment of
senior short-term promissory obligations. The effect of industry characteristics
and market composition may be more pronounced. Variability in earnings and
profitability may result in changes in the level of debt protection measurements
and may require relatively high financial leverage. Adequate alternate liquidity
is maintained.
S&P rates commercial paper in four categories ranging from "A-1" for the highest
quality obligations to "D" for the lowest. A-1 -- This highest category
indicates that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics will be
denoted with a plus sign (+) designation. A-2 -- Capacity for timely payment on
issues with this designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1." A-3 -- Issues carrying
this designation have adequate capacity for timely payment. They are, however,
more vulnerable to the adverse effects of changes in circumstances than
obligations carrying the higher designations. B -- Issues rated "B" are regarded
as having only speculative capacity for timely payment. C -- This rating is
assigned to short-term debt obligations with a doubtful capacity for payment. D
- -- Debt rated "D" is in payment default. The "D" rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment grade ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risk appear somewhat
greater.
A -- Upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Speculative grade ratings are as follows:
Ba -- These Bonds are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate, and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- These bonds generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa -- These bonds are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Ca -- These bonds represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C -- These bonds are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reason unrelated to the quality of the
issue.
Should no rating be assigned, the reasons may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the Company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the long-term securities debt of various entities in categories
ranging from "AAA" to "D" according to quality. Investment grade ratings are as
follows:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change
in circumstances and economic conditions, than debt in higher rated
categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
Speculative grade ratings are as follows:
BB -- Have less near-term vulnerability to default than other
speculative issues. However, these bonds face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
This rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied 'BBB-'rating.
B -- Have greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. This rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied 'BB' or 'BB-' rating.
CCC -- Have currently identifiable vulnerability to default and are
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, these bonds are not
likely to have the capacity to pay interest and repay principal. The 'CCC'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'B' or 'B-' rating.
CC -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' rating.
C -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC-' debt rating. This rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.
CI -- This rating is reserved for income bonds on which no interest is
being paid.
D -- Are in payment default. This rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. This rating also will be
used up on filing of a bankruptcy petition if debt service payments are
jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Fund as of October 31, 1996 and for the
fiscal year then ended appear on the following pages.
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of GT Global Emerging Markets Fund and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of GT
Global Emerging Markets Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1996, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the four years in the period
then ended and for the period from May 18, 1992 (commencement of operations) to
October 31, 1992. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 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 GT
Global Emerging Markets Fund as of October 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the four years in the period then ended and for the period from May 18, 1992
(commencement of operations) to October 31, 1992, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 13, 1996
F1
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (28.2%)
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} .................................................. PAN 282,600 $ 14,765,850 3.3
OTHER FINANCIAL
HSBC Holdings PLC ......................................... HK 600,000 12,222,409 2.8
BANKS-MONEY CENTER
State Bank of India Ltd.-/- ............................... IND 1,455,650 9,451,474 2.1
BANKS-REGIONAL
Uniao Bancos Brasileiras "A" Preferred-/- ................. BRZL 331,440,000 9,195,016 2.1
BANKS-MONEY CENTER
Peregrine Investment Holdings Ltd. ........................ HK 5,000,000 8,051,269 1.8
INVESTMENT MANAGEMENT
National Mutual Asia-/- ................................... HK 9,500,000 7,986,601 1.8
INSURANCE-BROKER
Tai Cheug Holdings Co., Ltd. .............................. HK 9,000,000 7,333,445 1.7
REAL ESTATE
Alpha Credit Bank-/- ...................................... GREC 101,660 6,496,666 1.5
BANKS-REGIONAL
Ergo Bank S.A. ............................................ GREC 100,230 5,884,852 1.3
BANKS-REGIONAL
Banco Bradesco S.A. Preferred-/- .......................... BRZL 655,789,125 5,592,050 1.3
BANKS-MONEY CENTER
Bank Gdanski S.A. - GDR{\/} ............................... POL 337,600 5,148,400 1.2
BANKS-REGIONAL
Kookmin Bank-/- ........................................... KOR 249,835 4,982,753 1.1
BANKS-MONEY CENTER
Industrial Finance Corporation of Thailand - Foreign-/- ... THAI 1,435,200 4,222,832 1.0
BANKS-MONEY CENTER
Cho Hung Bank ............................................. KOR 378,660 4,113,102 0.9
BANKS-REGIONAL
Commercial Bank of Korea-/- ............................... KOR 403,350 3,475,467 0.8
BANKS-MONEY CENTER
Korea Exchange Bank ....................................... KOR 341,345 3,443,587 0.8
BANKS-MONEY CENTER
Banco Totta & Acores "B" - Registered-/- .................. PORT 168,400 3,058,716 0.7
BANKS-MONEY CENTER
Banco Ganadero S.A. - ADR{\/} ............................. COL 150,000 2,962,500 0.7
BANKS-REGIONAL
Ayala Land, Inc. "B" ...................................... PHIL 2,680,000 2,859,756 0.6
REAL ESTATE
PSIL Bangkok Bank Co., Ltd. (Entitlement
Certificates){\/} ........................................ THAI 236,000 1,767,640 0.4
OTHER FINANCIAL
Shinhan Bank .............................................. KOR 49,510 986,925 0.2
BANKS-REGIONAL
Finance One Co., Ltd. - Foreign ........................... THAI 126,100 356,187 0.1
SECURITIES BROKER
Housing Development Finance Corp.-/- ...................... IND 272 17,954 --
OTHER FINANCIAL
HDFC Bank Ltd. - Subscription Shares-/- ................... IND 500 532 --
BANKS-MONEY CENTER
------------
124,375,983
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (16.4%)
Companhia Energetica de Minas Gerais (CEMIG): ............. BRZL -- $ -- 3.1
ELECTRICAL & GAS UTILITIES
Preferred-/- ............................................ -- 235,000,000 7,480,288 --
ADR-/- {\/} ............................................. -- 199,300 6,228,125 --
Petroleo Brasileiro S.A. (Petrobras) Preferred-/- ......... BRZL 73,100,000 9,463,935 2.1
OIL
China Light & Power Co., Ltd. ............................. HK 1,700,000 7,893,478 1.8
ELECTRICAL & GAS UTILITIES
Benton Oil & Gas Co.-/- ................................... US 313,100 7,670,950 1.7
OIL
Czeske Energeticke Zavody (CEZ AS)-/- ..................... CZCH 204,860 7,313,436 1.6
ELECTRICAL & GAS UTILITIES
C.A. La Electricidad de Caracas-/- ........................ VENZ 6,318,778 6,936,554 1.6
ELECTRICAL & GAS UTILITIES
Sasol Ltd. ................................................ SAFR 557,700 6,809,197 1.5
ENERGY SOURCES
Empresa Nacional de Electricidad S.A. - ADR{\/} ........... CHLE 220,800 4,057,200 0.9
ELECTRICAL & GAS UTILITIES
LUKoil Holding - ADR-/- {\/} .............................. RUS 91,000 3,503,500 0.8
GAS PRODUCTION & DISTRIBUTION
Gazprom - 144A ADR{.} {\/} ................................ RUS 123,400 2,313,750 0.5
GAS PRODUCTION & DISTRIBUTION
Centrais Electricas Brasileiras S.A. (Electrobras)-/- ..... BRZL 6,000,000 1,863,136 0.4
ELECTRICAL & GAS UTILITIES
Electricidad de Argentina S.A.(.) -/- {\/} ................ ARG 100,000 1,360,000 0.3
ELECTRICAL & GAS UTILITIES
Pakistan State Oil Co., Ltd. .............................. PAK 42,400 366,029 0.1
OIL
Madras Refineries Ltd.-/- ................................. IND 199,500 189,665 --
OIL
------------
73,449,243
------------
Materials/Basic Industry (13.8%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 758,400 14,657,357 3.3
PAPER/PACKAGING
General Mining Union Corp. (Gencor) ....................... SAFR 4,161,900 14,467,683 3.3
METALS - NON-FERROUS
Industrias Penoles S.A. "CP"-/- ........................... MEX 2,217,000 8,818,242 2.0
METALS - NON-FERROUS
Pohang Iron & Steel Co., Ltd. ............................. KOR 98,529 6,344,000 1.4
METALS - STEEL
Eregli Demir Ve Lelik Fabrik T.A.S. ....................... TRKY 54,158,851 6,332,887 1.4
METALS - STEEL
PT Tambang Timah - Foreign ................................ INDO 1,846,000 2,774,986 0.6
METALS - STEEL
Cemex, S.A. de C.V. "B" ................................... MEX 720,125 2,590,475 0.6
CEMENT
Perlis Plantations ........................................ MAL 830,000 2,382,225 0.5
CHEMICALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Ashanti Goldfields Co., Ltd. - GDR{\/} .................... GHNA 127,800 $ 2,092,725 0.5
GOLD
Associated Cement Cos., Ltd.-/- ........................... IND 13,536 583,097 0.1
CEMENT
Gujarat Ambuja Cements - GDR-/- {\/} ...................... IND 60,000 465,000 0.1
CEMENT
Engro Chemicals Pakistan Ltd. ............................. PAK 650 2,222 --
CHEMICALS
------------
61,510,899
------------
Consumer Non-Durables (9.1%)
Delta Corp.-/- ............................................ ZBBW 3,500,000 10,916,824 2.5
BEVERAGE-ALCOHOLIC
Companhia Cervejaria Brahma Preferred ..................... BRZL 17,254,543 10,665,468 2.4
BEVERAGES - ALCOHOLIC
Panamerican Beverages, Inc. "A"{\/} ....................... MEX 125,100 5,457,488 1.2
BEVERAGES - NON-ALCOHOLIC
Gruma S.A. "B"-/- ......................................... MEX 1,057,000 4,876,434 1.1
FOOD
Sun Brewing Ltd. - 144A GDR{.} -/- {\/} {::} .............. RUS 500,000 4,750,000 1.1
BEVERAGES - ALCOHOLIC
Hellenic Bottling Co. S.A. ................................ GREC 58,115 1,871,604 0.4
BEVERAGES - NON-ALCOHOLIC
Companhia Tecidos Norte de Mina Preferred ................. BRZL 3,210,000 1,078,020 0.2
TEXTILES & APPAREL
Guinness Malaysia ......................................... MAL 241,000 620,150 0.1
BEVERAGES - ALCOHOLIC
Dhan Fibres Ltd.-/- ....................................... PAK 4,805,000 485,536 0.1
TEXTILES & APPAREL
Mahavir Spinning Mills Ltd.-/- ............................ IND 30 46 --
TEXTILES & APPAREL
Dewan Salman Fibre Ltd.-/- ................................ PAK 4 3 --
TEXTILES & APPAREL
------------
40,721,573
------------
Services (5.0%)
Berjaya Sports Toto Bhd. .................................. MAL 2,610,000 9,815,914 2.2
CONSUMER SERVICES
SPT Telecom-/- ............................................ CZCH 58,510 6,264,188 1.4
TELEPHONE NETWORKS
Amway Asia Pacific Ltd.{\/} ............................... HK 107,900 3,870,913 0.9
WHOLESALE & INTERNATIONAL TRADE
Pakistan Telecommunications Co., Ltd. - GDR-/- {\/} ....... PAK 22,150 1,661,250 0.4
TELEPHONE NETWORKS
Gran Cadena de Almacenes Colombianos S.A. ................. COL 327,960 297,460 0.1
RETAILERS-OTHER
Keppel Philippine Holdings, Inc. "B"-/- ................... PHIL 488,491 81,912 --
TRANSPORTATION - SHIPPING
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Indian Hotels Co., Ltd.-/- ................................ IND 3,000 $ 55,141 --
LEISURE & TOURISM
------------
22,046,778
------------
Multi-Industry/Miscellaneous (4.8%)
Jardine Strategic Holdings Ltd.{\/} ....................... HK 2,215,500 7,222,530 1.6
CONGLOMERATE
Koor Industries Ltd. - ADR{\/} ............................ ISRL 374,900 6,513,888 1.5
CONGLOMERATE
Banco Comercial Portgues "A", Convertible Preferred, 8%
till 6/30/03{\/} ......................................... PORT 99,900 5,082,912 1.1
MISCELLANEOUS
KEC International Ltd.-/- ................................. IND 481,500 922,310 0.2
MISCELLANEOUS
Alarko Holding A.S. ....................................... TRKY 4,357,000 769,868 0.2
MULTI-INDUSTRY
BPL Ltd.-/- ............................................... IND 624,200 641,783 0.1
MISCELLANEOUS
Nicholas Piramel India Ltd.-/- ............................ IND 80,000 250,704 0.1
MISCELLANEOUS
Grasim Industries Ltd. .................................... IND 6,500 76,764 --
MULTI-INDUSTRY
------------
21,480,759
------------
Capital Goods (4.1%)
ECI Telecommunications Ltd.{\/} ........................... ISRL 475,000 9,500,000 2.1
TELECOM EQUIPMENT
Tata Engineering and Locomotive Co., Ltd.-/- .............. IND 532,460 6,164,537 1.4
MACHINERY & ENGINEERING
Netas Telekomunik ......................................... TRKY 8,823,920 2,132,379 0.5
TELECOM EQUIPMENT
Gujarat Telephone Cables-/- ............................... IND 1,417,900 489,275 0.1
TELECOM EQUIPMENT
------------
18,286,191
------------
Health Care (3.5%)
Teva Pharmaceutical Industries Ltd. - ADR{\/} ............. ISRL 256,400 10,736,750 2.4
PHARMACEUTICALS
Ranbaxy Laboratories Ltd.-/- .............................. IND 225,200 3,931,485 0.9
MEDICAL TECHNOLOGY & SUPPLIES
EGIS RT-/- ................................................ HGRY 10,573 652,516 0.2
PHARMACEUTICALS
Core Healthcare-/- ........................................ IND 50 73 --
PHARMACEUTICALS
------------
15,320,824
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (0.1%)
Himachal Telematics Ltd.-/- ............................... IND 750,000 $ 401,408 0.1
TELECOM TECHNOLOGY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $359,658,653) ................ 377,593,658 85.0
------------ -----
<CAPTION>
PRINCIPAL % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (0.7%)
Malaysia (0.4%)
Aokam Perdana Bhd., Convertible Bond, 3.5% due
6/13/04 ................................................ USD 2,650,000 1,848,375 0.4
Thailand (0.3%)
Bangkok Land Ltd., 3.125% due 3/31/01 ................... CHF 3,250,000 1,158,691 0.3
------------
Total Corporate Bonds (cost $3,095,275) ..................... 3,007,066
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $3,095,275) ............ 3,007,066 0.7
------------ -----
TOTAL INVESTMENTS (cost $362,753,928) * .................... 380,600,724 85.7
Other Assets and Liabilities ................................ 63,505,545 14.3
------------ -----
NET ASSETS .................................................. $444,106,269 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{::} See Note 5 of Notes to Financial Statements.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
(.) Restricted securities. At October 31, 1996, the Fund owned the
following restricted security constituting 0.3% of net assets which
may not be publicly sold without registration under the Securities
Act of 1933 (Note 1). Additional information on the restricted
security is as follows:
<TABLE>
<CAPTION>
MARKET
VALUE
PER
DESCRIPTION ACQUISITION DATE SHARES COST SHARE
----------------------------------------------- ----------------- ------ ----------- ------
<S> <C> <C> <C> <C>
Electricidad de Argentina S.A.................. 12/23/93 100,000 $ 1,750,000 $13.60
</TABLE>
* For Federal income tax purposes, cost is $362,948,481 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 46,560,858
Unrealized depreciation: (28,908,615)
-------------
Net unrealized appreciation: $ 17,652,243
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL EMERGING MARKETS 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) .................. 0.3 0.3
Brazil (BRZL/BRL) .................... 11.6 11.6
Chile (CHLE/CLP) ..................... 0.9 0.9
Colombia (COL/COP) ................... 0.8 0.8
Czech Republic (CZCH/CSK) ............ 3.0 3.0
Ghana (GHNA/GHC) ..................... 0.5 0.5
Greece (GREC/GRD) .................... 3.2 3.2
Hong Kong (HK/HKD) ................... 12.4 12.4
Hungary (HGRY/HUF) ................... 0.2 0.2
India (IND/INR) ...................... 5.2 5.2
Indonesia (INDO/IDR) ................. 0.6 0.6
Israel (ISRL/ILS) .................... 6.0 6.0
Korea (KOR/KRW) ...................... 5.2 5.2
Malaysia (MAL/MYR) ................... 2.8 0.4 3.2
Mexico (MEX/MXN) ..................... 8.2 8.2
Pakistan (PAK/PKR) ................... 0.6 0.6
Panama (PAN/PND) ..................... 3.3 3.3
Philippines (PHIL/PHP) ............... 0.6 0.6
Poland (POL/PLZ) ..................... 1.2 1.2
Portugal (PORT/PTE) .................. 1.8 1.8
Russia (RUS/SUR) ..................... 2.4 2.4
South Africa (SAFR/ZAR) .............. 4.8 4.8
Thailand (THAI/THB) .................. 1.5 0.3 1.8
Turkey (TRKY/TRL) .................... 2.1 2.1
United States & Other (US/USD) ....... 1.7 14.3 16.0
Venezuela (VENZ/VEB) ................. 1.6 1.6
Zimbabwe (ZBBW/ZWD) .................. 2.5 2.5
------ --- ----- -----
Total ............................... 85.0 0.7 14.3 100.0
------ --- ----- -----
------ --- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $444,106,269.
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $362,753,928) (Note 1).......................... $380,600,724
U.S. currency................................................................. $1,483,057
Foreign currencies (cost $21,506,397)......................................... 21,125,366 22,608,423
----------
Receivable for Fund shares sold........................................................... 30,516,050
Receivable for securities sold............................................................ 24,089,405
Dividends receivable...................................................................... 520,951
Interest receivable....................................................................... 46,642
Unamortized organizational costs (Note 1)................................................. 16,342
Miscellaneous receivable.................................................................. 239
Cash held as collateral for securities loaned (Note 1).................................... 18,390,625
-----------
Total assets............................................................................ 476,789,401
-----------
Liabilities:
Payable for securities purchased.......................................................... 10,019,556
Payable for Fund shares repurchased....................................................... 3,230,169
Payable for investment management and administration fees (Note 2)........................ 374,250
Payable for service and distribution expenses (Note 2).................................... 286,400
Payable for transfer agent fees (Note 2).................................................. 158,743
Payable for printing and postage expenses................................................. 122,207
Payable for professional fees............................................................. 41,737
Payable for custodian fees (Note 1)....................................................... 33,448
Payable for fund accounting fees (Note 2)................................................. 8,886
Payable for registration and filing fees.................................................. 4,773
Payable for Directors' fees and expenses (Note 2)......................................... 2,200
Other accrued expenses.................................................................... 10,138
Collateral for securities loaned (Note 1)................................................. 18,390,625
-----------
Total liabilities....................................................................... 32,683,132
-----------
Net assets.................................................................................. $444,106,269
-----------
-----------
Class A:
Net asset value and redemption price per share ($224,963,980 DIVIDED BY 15,772,254 shares
outstanding)............................................................................... $ 14.26
-----------
-----------
Maximum offering price per share (100/95.25 of $14.26) *.................................... $ 14.97
-----------
-----------
Class B:+
Net asset value and offering price per share ($216,003,768 DIVIDED BY 15,410,508 shares
outstanding)............................................................................... $ 14.02
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($3,138,521
DIVIDED BY 218,221 shares outstanding)..................................................... $ 14.38
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $466,990,479
Undistributed net investment income....................................................... 41,480
Accumulated net realized loss on investments and foreign currency transactions............ (40,434,003)
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies............................................................................... (338,483)
Net unrealized appreciation of investments................................................ 17,846,796
-----------
Total -- representing net assets applicable to capital shares outstanding................... $444,106,269
-----------
-----------
<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.
F8
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $410,700)............................... $10,681,651
Interest income............................................................................ 2,931,654
----------
Total investment income.................................................................. 13,613,305
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 4,883,626
Transfer agent fees (Note 2)............................................................... 1,930,507
Service and distribution expenses: (Note 2)
Class A...................................................................... $1,301,360
Class B...................................................................... 2,387,891 3,689,251
----------
Custodian fees (Note 1).................................................................... 504,841
Printing and postage expenses.............................................................. 232,032
Fund accounting fees (Note 2).............................................................. 125,349
Audit fees................................................................................. 80,560
Registration and filing fees............................................................... 65,825
Amortization of organization costs (Note 1)................................................ 30,067
Legal fees................................................................................. 19,222
Directors' fees and expenses (Note 2)...................................................... 11,712
Other expenses............................................................................. 45,337
----------
Total expenses before reductions......................................................... 11,618,329
----------
Expense reductions (Notes 1 & 6)....................................................... (633,461)
----------
Total net expenses....................................................................... 10,984,868
----------
Net investment income........................................................................ 2,628,437
----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized loss on investments............................................... (3,746,398)
Net realized loss on foreign currency transactions............................. (1,782,560)
----------
Net realized loss during the year........................................................ (5,528,958)
Net change in unrealized depreciation on translation of assets and liabilities
in foreign currencies......................................................... 31,246
Net change in unrealized appreciation of investments........................... 22,530,391
----------
Net unrealized appreciation during the year.............................................. 22,561,637
----------
Net realized and unrealized gain on investments and foreign currencies....................... 17,032,679
----------
Net increase in net assets resulting from operations......................................... $19,661,116
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
------------- ------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income..................................................... $ 2,628,437 $ 3,715,528
Net realized loss on investments and foreign currency transactions........ (5,528,958) (39,959,384)
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................. 31,246 (337,162)
Net change in unrealized appreciation (depreciation) of investments....... 22,530,391 (117,020,037)
------------- ------------
Net increase (decrease) in net assets resulting from operations......... 19,661,116 (153,601,055)
------------- ------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (15,193,744)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (12,477,553)
------------- ------------
Total distributions..................................................... -- (27,671,297)
------------- ------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......................... 1,443,673,824 550,507,913
Decrease from capital shares repurchased.................................. (1,499,221,358) (597,853,943)
------------- ------------
Net decrease from capital share transactions............................ (55,547,534) (47,346,030)
------------- ------------
Total decrease in net assets................................................ (35,886,418) (228,618,382)
Net assets:
Beginning of year......................................................... 479,992,687 708,611,069
------------- ------------
End of year............................................................... $ 444,106,269* $479,992,687**
------------- ------------
------------- ------------
<FN>
- --------------
* Includes undistributed net investment income of $41,480.
** Includes undistributed net investment income of $40,513.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------------
MAY 18, 1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
---------------------------------------------- TO OCTOBER 31,
1996 (D) 1995 (D) 1994 1993 1992
---------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.85 $ 18.81 $ 14.42 $ 11.10 $ 11.43
---------- ---------- ---------- ---------- ---------------
Income from investment operations:
Net investment income (loss).......... 0.11 0.13 (0.02) 0.02* * 0.07* *
Net realized and unrealized gain
(loss) on investments................ 0.30 (4.32) 4.68 3.38 (0.40)
---------- ---------- ---------- ---------- ---------------
Net increase (decrease) from
investment operations.............. 0.41 (4.19) 4.66 3.40 (0.33)
---------- ---------- ---------- ---------- ---------------
Distributions to shareholders:
From net investment income............ -- -- (0.01) (0.08) --
From net realized gain on
investments.......................... -- (0.77) (0.26) -- --
---------- ---------- ---------- ---------- ---------------
Total distributions................. -- (0.77) (0.27) (0.08) --
---------- ---------- ---------- ---------- ---------------
Net asset value, end of period.......... $ 14.26 $ 13.85 $ 18.81 $ 14.42 $ 11.10
---------- ---------- ---------- ---------- ---------------
---------- ---------- ---------- ---------- ---------------
Total investment return (c)............. 2.96% (23.04)% 32.58% 30.9% (2.9)% (a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 224,964 $ 252,457 $ 417,322 $ 187,808 $ 84,558
Ratio of net investment income (loss) to
average net assets..................... 0.76% 0.89% (0.11)% 0.1%** 1.7% **(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 1.96% 2.12% 2.06% 2.4%** 2.4% **(b)
Without expense reductions............ 2.08% 2.14% --%* --%* --%
Portfolio turnover rate++++............. 104% 114% 100% 99% 32% (b)
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0040 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.
++ 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.
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
* * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02 for the year ended October 31, 1993,
and for the period from May 18, 1992, to October 31, 1992,
respectively. Without such reimbursements, the expense ratios would
have been 2.61% and 2.91% and the ratio of net investment income to
average not assets would have been 0.36% and 1.21% for the year ended
October 31, 1993, and for the period from May 18, 1992, to October 31,
1992, respectively (See Note 2).
* * * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02. Without such reimbursements, the
expense ratio would have been 3.63% and the ratio of net investment
income to average net assets would have been (0.76%) (See Note 2).
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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>
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 1993 1996 (D) 1995
-------------- ---------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.68 $ 18.68 $ 14.39 $ 11.47 $ 13.88 $ 14.71
-------------- ---------- ---------- ----------- ----------- ------------
Income from investment operations:
Net investment income (loss).......... 0.04 0.06 (0.12) 0.00 * * 0.18 0.08
Net realized and unrealized gain
(loss) on investments................ 0.30 (4.29) 4.67 2.92 0.32 (0.91)
-------------- ---------- ---------- ----------- ----------- ------------
Net increase (decrease) from
investment operations.............. 0.34 (4.23) 4.55 2.92 0.50 (0.83)
-------------- ---------- ---------- ----------- ----------- ------------
Distributions to shareholders:
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... -- (0.77) (0.26) -- -- --
-------------- ---------- ---------- ----------- ----------- ------------
Total distributions................. -- (0.77) (0.26) -- -- --
-------------- ---------- ---------- ----------- ----------- ------------
Net asset value, end of period.......... $ 14.02 $ 13.68 $ 18.68 $ 14.39 $ 14.38 $ 13.88
-------------- ---------- ---------- ----------- ----------- ------------
-------------- ---------- ---------- ----------- ----------- ------------
Total investment return (c)............. 2.49 % (23.37)% 31.77% 25.5%(a) 3.60% (5.71)%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 216,004 $ 225,861 $ 291,289 $ 32,318 $ 3,139 $ 1,675
Ratio of net investment income (loss) to
average net assets..................... 0.26 % 0.39% (0.61)% (0.4)%***(b) 1.26% 1.39 %(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 2.46 % 2.62% 2.56% 2.9%***(b) 1.46% 1.62 %(b)
Without expense reductions............ 2.58 % 2.64% --%* --%* 1.58% 1.64 %(b)
Portfolio turnover rate++++............. 104 % 114% 100% 99% 104% 114 %
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0040 N/A N/A N/A $ 0.0040 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
* * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02 for the year ended October 31, 1993,
and for the period from May 18, 1992, to October 31, 1992,
respectively. Without such reimbursements, the expense ratios would
have been 2.61% and 2.91% and the ratio of net investment income to
average not assets would have been 0.36% and 1.21% for the year ended
October 31, 1993, and for the period from May 18, 1992, to October 31,
1992, respectively (See Note 2).
* * * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02. Without such reimbursements, the
expense ratio would have been 3.63% and the ratio of net investment
income to average net assets would have been (0.76%) (See Note 2).
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Emerging Markets Fund ("Fund") is a separate series of GT Investment
Funds, Inc. ("Company"). The Company is organized as a Maryland corporation and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a diversified, open-end management investment company. The Company has twelve
series of shares in operation, each series corresponding to a distinct portfolio
of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective service and distribution expenses, and
may differ in its transfer agent, registration, and certain other class-specific
fees and expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
the financial statements may include certain estimates made by management.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or in the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued , or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (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.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records are maintained in U.S. dollars. The market values of
foreign securities, currency holdings, and other assets and liabilities are
recorded in the books and records of the Fund after translation to U.S. dollars
based on the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are translated at
prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss
F13
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
equal to the difference between the value at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of the contract or if the value of the
currency changes unfavorably. The Fund may enter into Forwards Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. If an option expires on its
stipulated expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Fund can write options only on a covered
basis, which, for a call, requires that the Fund hold the underlying securities
and, for a put, requires the Fund to set aside cash, U.S. government securities,
or other liquid, high grade debt securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund may use options to manage its exposure to the
stock market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund would realize a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund would
realize a gain or loss, depending on whether proceeds from the closing sale
transaction are greater or less than the cost of the option. If the Fund
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund exercises a
put option, it realizes a gain or loss from the sale of the underlying security,
and the proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1996, stocks with an aggregate value of approximately $17,458,140
were on loan to brokers. The loans were secured by cash collateral of
$18,390,625 received by the Fund. For international securities, cash collateral
is received by the Fund against loaned securities in an amount at least equal to
105% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 103% of the market value of
the loaned securities during the period of the loan. For domestic securities,
cash collateral is received by the Fund against loaned securities in the amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the year ended October 31, 1996, the Fund received fees of $114,161 which were
used to reduce the Fund's custodian fees.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any
F14
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
excise tax under Section 4982 of the Code. Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held, and excise tax on income and capital gains. The Fund currently
has a capital loss carryforward of $40,222,829, of which $35,800,955 expires in
2003 and $4,421,874 expires in 2004.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $150,006. These
expenses are being amortized on a straightline basis over a five-year period.
(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's 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. The Fund 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 the Fund's expenses (exclusive of brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses)
exceed the most stringent limits prescribed by the laws or regulations of any
state in which the Fund's shares are offered for sale, based on the average
total net asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. 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 $118,254
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $17,532 for the year ended October 31, 1996. 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 Fund's current
prospectus. For the year ended October 31, 1996, GT Global collected CDSCs in
the amount of $1,269,740. 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 Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for 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, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for 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
F15
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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 the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40% 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of 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 Fund. 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 Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the 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.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1996, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$543,620,761 and $644,841,661, respectively. There were no purchases or sales of
U.S. government obligations by the Fund for the year ended October 31, 1996.
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, 200,000,000 were
classified as shares of the 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; 400,000,000 were classified as shares of GT Global
Telecommunications 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 Fund were as follows:
F16
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
CAPITAL SHARE TRANSACTIONS
<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............................. 75,574,030 $1,106,260,084 26,517,243 $ 389,593,563
Shares issued in connection with
reinvestment of distributions......... -- -- 788,804 13,204,560
----------- ------------- ----------- -------------
75,574,030 1,106,260,084 27,306,047 402,798,123
Share repurchased....................... (78,034,654) (1,146,692,253) (31,260,135) (469,990,809)
----------- ------------- ----------- -------------
Net decrease............................ (2,460,624) $ (40,432,169) (3,954,088) $ (67,192,686)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 22,439,885 $ 323,192,109 9,004,842 $ 135,163,005
Shares issued in connection with
reinvestment of distributions......... -- -- 637,782 10,599,912
----------- ------------- ----------- -------------
22,439,885 323,192,109 9,642,624 145,762,917
Share repurchased....................... (23,539,619) (339,644,019) (8,726,345) (127,721,360)
----------- ------------- ----------- -------------
Net increase (decrease)................. (1,099,734) $ (16,451,910) 916,279 $ 18,041,557
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
YEAR ENDED SHARES) TO OCTOBER 31,
OCTOBER 31, 1996 1995
-------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 966,362 $ 14,221,631 130,495 $ 1,946,873
Share repurchased....................... (868,859) (12,885,086) (9,777) (141,774)
----------- ------------- ----------- -------------
Net increase............................ 97,503 $ 1,336,545 120,718 $ 1,805,099
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1996, amounted to $4,750,000,
at value.
Transactions with affiliated companies are as follows:
<TABLE>
<CAPTION>
PURCHASES NET REALIZED DIVIDEND
AFFILIATES COST SALES COST GAIN INCOME
- ---------------------------------------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Compania Boliviana de Energia
Electrica............................. $ -- $7,000,800 $4,166,500 $ 113,771
Sun Brewing Ltd. - 144A GDR............. -- -- -- --
</TABLE>
6. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1996, the Fund's expenses
were reduced by $519,300 under these arrangements.
F17
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL MUTUAL
FUND, 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 for U.S. investors by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA 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
Invests in global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in a portfolio of emerging market debt securities
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
NO DEALER, SALES REPRESENATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GT
GLOBAL EMERGING MARKETS FUND, G.T. INVESTMENT FUNDS, INC., CHANCELLOR LGT
ASSET MANAGEMENT, INC. OR GT GLOBAL, INC. THIS STATEMENT OF ADDITIONAL
INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
EMESX703MC
<PAGE>
G.T. INVESTMENT FUNDS, INC.
PART C: OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS -- The following audited financial statements as of
October 31, 1996, and for the fiscal year then ended, for Class A, Class B, and
Advisor Class of the GT Global Income Funds (consisting of GT Global Strategic
Income Fund, GT Global Government Income Fund and GT Global High Income Fund),
GT Global Theme Funds (consisting of GT Global Telecommunications Fund, GT
Global Health Care Fund, GT Global Financial Services Fund, GT Global
Infrastructure Fund, GT Global Natural Resources Fund and GT Global Consumer
Products and Services Fund), GT Global Growth & Income Fund, GT Global Emerging
Markets Fund and GT Global Latin America Growth Fund, each a series of
Registrant, are included in the Funds' Statements of Additional Information and
are filed herewith:
-- Reports of Independent Accountants
-- Portfolios of Investments
-- Statements of Assets and Liabilities
-- Statements of Operations
-- Statements of Changes in Net Assets
-- Financial Highlights
-- Notes to Financial Statements
(b) EXHIBITS REQUIRED BY PART C, ITEM 24 OF FORM N-1A.
(1)(a) The Registrant's Articles of Incorporation dated October 27,
1987 (4).
(1)(b) Articles Supplementary to Registrant's Articles of
Incorporation dated December 18, 1987 (4).
(1)(c) Articles Supplementary to Registrant's Articles of
Incorporation dated February 17, 1988 (4).
(1)(d) Articles of Amendment to Registrant's Articles of
Incorporation dated March 29, 1988 (4).
(1)(e) Articles Supplementary to Registrant's Articles of
Incorporation dated April 27, 1989 (4).
(1)(f) Articles Supplementary to Registrant's Articles of
Incorporation dated July 18, 1991 (4).
(1)(g) Articles Supplementary to Registrant's Articles of
Incorporation dated July 31, 1991 (4).
(1)(h) Articles Supplementary to Registrant's Articles of
Incorporation dated December 31, 1991 (4).
(1)(i) Articles Supplementary to Registrant's Articles of
Incorporation dated March 11, 1992 (4).
(1)(j) Articles Supplementary to Registrant's Articles of
Incorporation dated August 31, 1992 (4).
(1)(k) Articles of Amendment to Registrant's Articles of
Incorporation dated January 25, 1993 (4).
(1)(l) Articles Supplementary to Registrant's Articles of
Incorporation dated November 15, 1993 (4).
(1)(m) Articles Supplementary to Registrant's Articles of
Incorporation dated January 26, 1994 (4).
(1)(n) Articles Supplementary to Registrant's Articles of
Incorporation dated January 26, 1994 (4).
(1)(o) Articles Supplementary to Registrant's Articles of
Incorporation dated September 23, 1994 (4).
(1)(p) Articles Supplementary to Registrant's Articles of
Incorporation dated January 30, 1995 (2).
C-1
<PAGE>
<TABLE>
<S> <C>
(2) Registrant's By-Laws (4).
(3) Voting Trust Agreement. Not applicable.
(4) Instruments defining the rights of holders of the
Registrant's share of beneficial interest -- filed herewith.
(5)(a) Investment Management and Administration Contract dated
April 19, 1989 (4).
(5)(b) Investment Management and Administration Contract Fee Letter
relating to:
</TABLE>
(i) GT Global Growth & Income Fund (4).
(ii) GT Global Latin America Growth Fund and GT Global Small
Companies Fund (4).
(iii) GT Global Telecommunications Fund (4).
(iv) Withdrawn
(v) GT Global Emerging Markets Fund (4).
(5)(c) Administration Contract relating to:
(i) GT Global High Income Fund (4).
(ii) (Form of Administration Contract) GT Global
Infrastructure Fund, GT Global Natural Resources Fund and
GT Global Financial Services Fund (4).
(5)(d) Administration Contract Fee Letter relating to the GT Global
Consumer Products and Services Fund (2).
(6)(a) Distribution Agreement relating to Class A shares (4).
(6)(b) Distribution Agreement relating to Class B shares (4).
(6)(c) Distribution Agreement relating to Advisor Class shares --
filed herewith.
(7) Not applicable.
(8) The Custodian Agreement between the Registrant and State
Street Bank and Trust Company (4).
(9)(a) The Transfer Agent Contract dated May 25, 1990 (4).
(9)(b) Other material contracts:
(i) Broker/dealer sales contract (4).
(ii) Bank sales contract (4).
(iii) Agency sales contract (4).
(iv) Foreign sales contract (4).
(10)(a) Opinion and consent of counsel relating to GT Global
Government Income Fund and GT Global Strategic Income Fund
(formerly G.T. Global Bond Fund) (4).
(10)(b) Opinion and consent of counsel relating to GT Global Health
Care Fund (4).
(10)(c) Opinion and consent of counsel relating to GT Global Growth
& Income Fund (4).
(10)(d) Opinion and consent of counsel relating to GT Global Latin
America Growth Fund and GT Global Small Companies Fund (4).
(10)(e) Opinion and consent of counsel relating to GT Global
Telecommunications Fund and GT Global Financial Services
Fund (4).
(10)(f) Opinion and consent of counsel relating to GT Global
Emerging Markets Fund (4).
C-2
<PAGE>
<TABLE>
<S> <C>
(10)(g) Opinion and consent of counsel relating to GT Global High
Income Fund (4).
(10)(h) Opinion and consent of counsel relating to GT Global
Infrastructure Fund and GT Global Natural Resources Fund
(4).
(10)(i) Opinion and consent of counsel relating to GT Global
Consumer Products and Services Fund and GT Global Financial
Services Fund (4).
(11)(a) Consents of Coopers & Lybrand L.L.P., Independent
Accountants, relating to:
</TABLE>
(i) 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, GT Global Telecommunications Fund -- filed herewith.
(ii) GT Global Government Income Fund, GT Global Strategic
Income Fund and GT Global High Income Fund -- filed
herewith.
(iii) GT Global Growth & Income Fund -- filed herewith.
(iv) GT Global Latin America Growth Fund and GT Global Emerging
Markets Fund -- filed herewith.
(12) Not applicable.
(13) Not applicable.
(14) Model retirement plan -- GT Global Individual Retirement
Account Disclosure Statement and Application -- filed
herewith.
(15)(a) Distribution Plan adopted pursuant to Rule 12b-1 relating to
Class A Shares (4).
(15)(b) Distribution Plan adopted pursuant to Rule 12b-1 relating to
Class B Shares (4).
(16) Schedules of Computation of Performance Data relating to the
Class A, Class B and Advisor Class shares of:
(i) GT Global Government Income Fund (5).
(ii) GT Global Strategic Income Fund (5).
(iii) GT Global Health Care Fund (5).
(iv) GT Global Growth & Income Fund (5).
(v) GT Global Latin America Growth Fund (5).
(vi) GT Global Telecommunications Fund (5).
(vii) GT Global Emerging Markets Fund (5).
(viii) GT Global High Income Fund (5).
(ix) GT Global Financial Services Fund (5).
(x) GT Global Infrastructure Fund (5).
(xi) GT Global Natural Resources Fund (5).
(xii) GT Global Consumer Products and Services Fund (5).
(17) Financial Data Schedules -- filed herewith.
(18) Multiple Class Plan adopted pursuant to Rule 18f-3 -- filed
herewith.
C-3
<PAGE>
Other Exhibits:
(a) Power of Attorney -- superseded.
(b) Power of Attorney -- superseded.
(c) Powers of Attorney for Helge K. Lee, Peter R. Guarino and
David J. Thelander for G.T. Investment Funds, Inc. and
Global Investment Portfolio(2).
(d) Powers of Attorney for Helge K. Lee, Peter R. Guarino and
David J. Thelander for Global High Income Portfolio(3).
(e) Power of Attorney for David J. Thelander, Daniel R. Waltcher
and Matthew M. O'Toole for G.T. Investment Funds, Inc. --
filed herewith.
(f) Power of Attorney for David J. Thelander, Daniel R. Waltcher
and Matthew M. O'Toole for the Global Investment Portfolio
-- filed herewith.
(g) Power of Attorney for David J. Thelander, Daniel R. Waltcher
and Matthew M. O'Toole for the Global High Income Portfolio
-- filed herewith.
(h) Power of Attorney for David J. Thelander, Daniel R. Waltcher
and Matthew M. O'Toole for G.T. Investment Funds, Inc. --
filed herewith.
(i) Power of Attorney for David J. Thelander, Daniel R. Waltcher
and Matthew M. O'Toole for Global Investment Portfolio --
filed herewith.
(j) Power of Attorney for David J. Thelander, Daniel R. Waltcher
and Matthew M. O'Toole for Global High Income Portfolio --
filed herewith.
- ------------------------
(1) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 16 to the Registration Statement on Form N-1A,
filed on January 17, 1992.
(2) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 42 to the Registration Statement on Form N-1A,
filed on June 30, 1995.
(3) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 43 to the Registration Statement on Form N-1A,
filed on December 29, 1995.
(4) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 46 to the Registration Statement on Form N-1A,
filed on December 30, 1996.
(5) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 44 to the Registration Statement on Form N-1A,
filed on February 28, 1996.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT
None.
C-4
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of January 24, 1997:
<TABLE>
<CAPTION>
NUMBER OF RECORD
TITLE OF CLASS HOLDERS
- ------------------------------------------------------------------------------------ ----------------
<S> <C>
Capital Stock, $.0001 par value, of:
GT Global Growth & Income Fund Class A........................................ 20,835
GT Global Growth & Income Fund Class B........................................ 30,137
GT Global Growth & Income Fund Advisor Class.................................. 225
GT Global Strategic Income Fund Class A....................................... 11,886
GT Global Strategic Income Fund Class B....................................... 22,170
GT Global Strategic Income Fund Advisor Class................................. 73
GT Global Government Income Fund Class A...................................... 15,446
GT Global Government Income Fund Class B...................................... 9,993
GT Global Government Income Fund Advisor Class................................ 46
GT Global High Income Fund Class A............................................ 8,491
GT Global High Income Fund Class B............................................ 13,855
GT Global High Income Fund Advisor Class...................................... 248
GT Global Health Care Fund Class A............................................ 41,573
GT Global Health Care Fund Class B............................................ 12,673
GT Global Health Care Fund Advisor Class...................................... 184
GT Global Latin America Growth Fund Class A................................... 24,759
GT Global Latin America Growth Fund Class B................................... 20,443
GT Global Latin America Growth Fund Advisor Class............................. 165
GT Global Telecommunications Fund Class A..................................... 117,923
GT Global Telecommunications Fund Class B..................................... 108,577
GT Global Telecommunications Fund Advisor Class............................... 308
GT Global Financial Services Fund Class A..................................... 1,257
GT Global Financial Services Fund Class B..................................... 1,667
GT Global Financial Services Fund Advisor Class............................... 23
GT Global Infrastructure Fund Class A......................................... 5,970
GT Global Infrastructure Fund Class B......................................... 7,568
GT Global Infrastructure Fund Advisor Class................................... 119
GT Global Natural Resources Fund Class A...................................... 7,681
GT Global Natural Resources Fund Class B...................................... 8,735
GT Global Natural Resources Fund Advisor Class................................ 238
GT Global Emerging Markets Fund Class A....................................... 30,011
GT Global Emerging Markets Fund Class B....................................... 32,259
GT Global Emerging Markets Fund Advisor Class................................. 346
GT Global Currency Fund....................................................... 1
GT Global Small Companies Fund................................................ 1
GT Global Consumer Products and Services Fund
Class A...................................................................... 10,360
GT Global Consumer Products and Services Fund
Class B...................................................................... 9,188
GT Global Consumer Products and Services Fund
Advisor Class................................................................ 228
</TABLE>
C-5
<PAGE>
ITEM 27. INDEMNIFICATION
Article VII(g) of the Registrant's Articles of Incorporation provides for
indemnification of certain persons acting on behalf of the Fund.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended ("1933 Act") may be permitted to Directors, officers and
controlling persons by the Registrant's Articles of Incorporation, By-Laws, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission ("Commission") such indemnification is against public
policy as expressed in the 1933 Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a Director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such Director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issues.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See the material under the heading "Management" included in Part A
(Prospectus) of this Amendment and the material appearing under the headings
"Directors and Officers" and "Management" included in Part B (Statement of
Additional Information) of this Amendment. Information as to the Directors and
Officers of the Adviser is included in its Form ADV (File No. 801-10254), filed
with the Commission, which is incorporated herein by reference thereto.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) GT Global, Inc. is also the principal underwriter for the following
other investment companies: G.T. Global Growth Series (which includes the
following funds: GT Global America Value Fund, GT Global America Small Cap
Growth Fund, GT Global America Mid Cap Growth Fund, GT Global Europe Growth
Fund, GT Global International Growth Fund, GT Global Japan Growth Fund, GT
Global New Pacific Growth Fund and GT Global Worldwide Growth Fund); G.T.
Investment Portfolios, Inc. (which includes one fund: GT Global Dollar Fund);
G.T. Global Variable Investment Series (which includes five funds in operation:
GT Global Variable New Pacific Fund, GT Global Variable Europe Fund, GT Global
Variable America Fund, GT Global Variable International Fund and GT Global Money
Market Fund); and GT Global Variable Investment Trust (which includes seven
funds in operation: GT Global Variable Latin America Fund, GT Global Variable
Telecommunications Fund, GT Global Variable Growth & Income Fund, GT Global
Variable Strategic Income Fund, GT Global Variable Emerging Markets Fund, GT
Global Variable Global Government Income Fund and GT Global Variable U.S.
Government Income Fund).
C-6
<PAGE>
(b) Directors and Officers of GT Global, Inc.
Unless otherwise indicated, the business address of each person listed is 50
California Street, San Francisco, CA 94111.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
William J. Guilfoyle President and Director Chairman of the Board of Directors
and President
James R. Tufts Senior Vice President -- Finance Vice President, Treasurer and
and Administration and Director Principal Financial Officer
Helge K. Lee Senior Vice President and General Vice President and Secretary
Counsel
Raymond R. Cunningham Senior Vice President -- National None
Bank Sales and Director
Richard Healey Senior Vice President -- Retail None
Marketing
Philip D. Edelstein Senior Vice President None
9 Huntly Circle
Palm Beach Gardens, FL 33418
Stephen A. Maginn Senior Vice President -- Regional None
519 S. Juanita Sales Manager
Redondo Beach, CA 90277
David J. Thelander Vice President and Assistant Assistant Secretary
General Counsel
David P. Anderson, Jr. Vice President None
1012 William
Plymouth, MI 48170
Jon Burke Vice President None
31 Darlene Drive
Southboro, MA 01772
Phil Christopher Vice President None
3621 59th Avenue, SW
Seattle, WA 98116
Anthony DiBacco Vice President None
30585 Via Lindosa Way
Laguna Niguel, CA 92677
Stephen Duffy Vice President None
1120 Gables Drive
Atlanta, GA 30319
Jon Fessel Vice President None
1781 Pine Harrier Circle
Sarasota, FL 34231
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Ned E. Hammond Vice President None
5901 McFarland Ct.
Plano, TX 75093
Campbell Judge Vice President None
4312 Linden Hills Blvd., #202
Minneapolis, MN 55410
Richard Kashnowski Vice President None
1454 High School Drive
Brentwood, MO 63144
Allen M. Kuhn Vice President None
7220 Garfield Street
New Orleans, LA 70118
Jeffrey S. Kulik Vice President None
6540 Autumn Wind Circle
Clarksville, MD 21029
Steven C. Manns Vice President None
3025 Caswell Drive
Troy, MI 48084
C. David Matthews Vice President None
2445 Pebblebrook
Westlake, OH 44145
Wayne F. Meyer Vice President None
2617 Sun Meadow Drive
Chesterfield, MO 63005
Dean Phillips Vice President None
3406 Bishop Park Drive, #428
Winter Park, FL 32792
Anthony R. Rogers Vice President None
100 Southbank Drive
Cary, NC 27511
James Sandidge Vice President None
16437 W. First Ave.
Golden, CO 80401
Philip Schertz Vice President None
25 Ivy Place
Wayne, NJ 07470
Peter Sykes Vice President None
1655 E. Sherman Ave.
Salt Lake City, UT 84105
Lance Vetter Vice President None
10915 La Salinas Circle
Boca Raton, FL 33428
Tommy D. Wells Vice President None
25 Crane Drive
San Anselmo, CA 94960
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Todd H. Westby Vice President None
3405 Goshen Road
Newtown Square, PA 19073
Brian A. Williams Vice President None
874 Lincoln Ave.
Winnetka, IL 60093
Eric T. Zeigler Vice President None
3100 The Strand
Manhattan Beach, CA 90266
</TABLE>
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other records required by Rules 31a-1 and 31a-2 under
the Investment Company Act of 1940, as amended, are maintained and held in the
offices of the Registrant and its investment manager, Chancellor LGT Asset
Management, Inc., 50 California Street, 27th Floor, San Francisco, California
94111.
Records covering stockholder accounts and portfolio transactions are also
maintained and kept by the Registrant's Transfer Agent, GT Global Investor
Services, Inc., 2121 N. California Boulevard, Suite 450, Walnut Creek, CA,
94596, and by the Registrant's Custodian, State Street Bank and Trust Company,
225 Franklin Street, Boston, Massachusetts 02110.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
None.
C-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant hereby certifies
that it meets all of the requirements for effectiveness of this Amendment
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Post-Effective Amendment to this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of San
Francisco, and the State of California, on the 26th day of February, 1997.
G.T. INVESTMENT FUNDS, INC.
By: William J. Guilfoyle*
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement of G.T. Investment Funds,
Inc. has been signed below by the following persons in the capacities indicated
on the 26th day of February, 1997.
President, Director and
William J. Guilfoyle* Chairman of the Board
(Principal Executive Officer)
/s/ JAMES R. TUFTS Vice President, Treasurer
- ---------------------------------------- and Principal Financial
James R. Tufts Officer
/s/ KENNETH W. CHANCEY
- ---------------------------------------- Vice President and Principal
Kenneth W. Chancey Accounting Officer
C. Derek Anderson* Director
Arthur C. Patterson* Director
Frank S. Bayley* Director
Ruth H. Quigley* Director
Robert G. Wade, Jr.* Director
*By: /s/ MATTHEW M. O'TOOLE
-----------------------------------
Matthew M. O'Toole
Attorney-in-Fact, pursuant to
Power of Attorney filed herewith
C-10
<PAGE>
SIGNATURES
Global Investment Portfolio has duly caused this Post-Effective Amendment of
G.T. Investment Funds, Inc. to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of San Francisco, and the State of
California, on the 26th day of February, 1997.
GLOBAL INVESTMENT PORTFOLIO
By: William J. Guilfoyle*
President
This Post-Effective Amendment to the Registration Statement of G.T.
Investment Funds, Inc. has been signed below by the following persons in the
capacities indicated on the 26th day of February, 1997.
President, Trustee and
William J. Guilfoyle* Chairman of the Board
(Principal Executive Officer)
/s/ JAMES R. TUFTS Vice President, Treasurer
- ---------------------------------------- and Principal Financial
James R. Tufts Officer
/s/ KENNETH W. CHANCEY
- ---------------------------------------- Vice President and Principal
Kenneth W. Chancey Accounting Officer
C. Derek Anderson* Trustee
Arthur C. Patterson* Trustee
Frank S. Bayley* Trustee
Ruth H. Quigley* Trustee
Robert G. Wade, Jr.* Trustee
*By: /s/ MATTHEW M. O'TOOLE
-----------------------------------
Matthew M. O'Toole
Attorney-in-Fact, pursuant to
Power of Attorney filed herewith
C-11
<PAGE>
SIGNATURES
Global High Income Portfolio has duly caused this Post-Effective Amendment
of G.T. Investment Funds, Inc. to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of San Francisco, and the State of
California, on the 26th day of February, 1997.
GLOBAL HIGH INCOME PORTFOLIO
By: William J. Guilfoyle*
President
This Post-Effective Amendment to the Registration Statement of G.T.
Investment Funds, Inc. has been signed below by the following persons in the
capacities indicated on the 26th day of February, 1997.
President, Trustee and
William J. Guilfoyle* Chairman of the Board
(Principal Executive Officer)
/s/ JAMES R. TUFTS Vice President, Treasurer
- ---------------------------------------- and Principal Financial
James R. Tufts Officer
/s/ KENNETH W. CHANCEY
- ---------------------------------------- Vice President and Principal
Kenneth W. Chancey Accounting Officer
C. Derek Anderson* Trustee
Arthur C. Patterson* Trustee
Frank S. Bayley* Trustee
Ruth H. Quigley* Trustee
Robert G. Wade, Jr.* Trustee
*By: /s/ MATTHEW M. O'TOOLE
-----------------------------------
Matthew M. O'Toole
Attorney-in-Fact, pursuant to
Power of Attorney filed herewith
C-12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 121
<NAME> GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 161030
<INVESTMENTS-AT-VALUE> 170293
<RECEIVABLES> 2751
<ASSETS-OTHER> 33
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 173077
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 826
<TOTAL-LIABILITIES> 826
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 155329
<SHARES-COMMON-STOCK> 3666
<SHARES-COMMON-PRIOR> 280
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7659
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9263
<NET-ASSETS> 172251
<DIVIDEND-INCOME> 359
<INTEREST-INCOME> 287
<OTHER-INCOME> 0
<EXPENSES-NET> (1453)
<NET-INVESTMENT-INCOME> (807)
<REALIZED-GAINS-CURRENT> 8472
<APPREC-INCREASE-CURRENT> 8874
<NET-CHANGE-FROM-OPS> 16539
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (217)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6142
<NUMBER-OF-SHARES-REDEEMED> (2770)
<SHARES-REINVESTED> 14
<NET-CHANGE-IN-ASSETS> 165046
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1516
<AVERAGE-NET-ASSETS> 100884
<PER-SHARE-NAV-BEGIN> 14.59
<PER-SHARE-NII> (.22)
<PER-SHARE-GAIN-APPREC> 7.13
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.52)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.98
<EXPENSE-RATIO> 2.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 122
<NAME> GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 161030
<INVESTMENTS-AT-VALUE> 170293
<RECEIVABLES> 2751
<ASSETS-OTHER> 33
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 173077
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 826
<TOTAL-LIABILITIES> 826
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 155329
<SHARES-COMMON-STOCK> 4229
<SHARES-COMMON-PRIOR> 204
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7659
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9263
<NET-ASSETS> 172251
<DIVIDEND-INCOME> 359
<INTEREST-INCOME> 287
<OTHER-INCOME> 0
<EXPENSES-NET> (1453)
<NET-INVESTMENT-INCOME> (807)
<REALIZED-GAINS-CURRENT> 8472
<APPREC-INCREASE-CURRENT> 8874
<NET-CHANGE-FROM-OPS> 16539
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (180)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5690
<NUMBER-OF-SHARES-REDEEMED> (1675)
<SHARES-REINVESTED> 10
<NET-CHANGE-IN-ASSETS> 165046
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1516
<AVERAGE-NET-ASSETS> 100884
<PER-SHARE-NAV-BEGIN> 14.53
<PER-SHARE-NII> (.31)
<PER-SHARE-GAIN-APPREC> 7.09
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.52)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.79
<EXPENSE-RATIO> 2.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 123
<NAME> GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 161030
<INVESTMENTS-AT-VALUE> 170293
<RECEIVABLES> 2751
<ASSETS-OTHER> 33
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 173077
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 826
<TOTAL-LIABILITIES> 826
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 155329
<SHARES-COMMON-STOCK> 352
<SHARES-COMMON-PRIOR> 11
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7659
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9263
<NET-ASSETS> 172251
<DIVIDEND-INCOME> 359
<INTEREST-INCOME> 287
<OTHER-INCOME> 0
<EXPENSES-NET> (1453)
<NET-INVESTMENT-INCOME> (807)
<REALIZED-GAINS-CURRENT> 8472
<APPREC-INCREASE-CURRENT> 8874
<NET-CHANGE-FROM-OPS> 16539
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (6)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 589
<NUMBER-OF-SHARES-REDEEMED> (248)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 165046
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1516
<AVERAGE-NET-ASSETS> 100884
<PER-SHARE-NAV-BEGIN> 14.64
<PER-SHARE-NII> (.13)
<PER-SHARE-GAIN-APPREC> 7.16
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.52)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.15
<EXPENSE-RATIO> 1.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 091
<NAME> GT GLOBAL FINANCIAL SERVICES FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 15074
<INVESTMENTS-AT-VALUE> 16473
<RECEIVABLES> 930
<ASSETS-OTHER> 33
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17436
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 176
<TOTAL-LIABILITIES> 176
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14559
<SHARES-COMMON-STOCK> 514
<SHARES-COMMON-PRIOR> 477
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1301
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1400
<NET-ASSETS> 17260
<DIVIDEND-INCOME> 299
<INTEREST-INCOME> 82
<OTHER-INCOME> 0
<EXPENSES-NET> (362)
<NET-INVESTMENT-INCOME> 19
<REALIZED-GAINS-CURRENT> 1764
<APPREC-INCREASE-CURRENT> 609
<NET-CHANGE-FROM-OPS> 2392
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (56)
<DISTRIBUTIONS-OF-GAINS> (9)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 900
<NUMBER-OF-SHARES-REDEEMED> (867)
<SHARES-REINVESTED> 4
<NET-CHANGE-IN-ASSETS> 6994
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 511
<AVERAGE-NET-ASSETS> 14602
<PER-SHARE-NAV-BEGIN> 11.92
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 2.36
<PER-SHARE-DIVIDEND> (0.12)
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.20
<EXPENSE-RATIO> 2.32
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 092
<NAME> GT GLOBAL FINANCIAL SERVICES FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 15074
<INVESTMENTS-AT-VALUE> 16473
<RECEIVABLES> 930
<ASSETS-OTHER> 33
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17436
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 176
<TOTAL-LIABILITIES> 176
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14559
<SHARES-COMMON-STOCK> 703
<SHARES-COMMON-PRIOR> 384
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1301
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1400
<NET-ASSETS> 17260
<DIVIDEND-INCOME> 299
<INTEREST-INCOME> 82
<OTHER-INCOME> 0
<EXPENSES-NET> (362)
<NET-INVESTMENT-INCOME> 19
<REALIZED-GAINS-CURRENT> 1764
<APPREC-INCREASE-CURRENT> 609
<NET-CHANGE-FROM-OPS> 2392
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (38)
<DISTRIBUTIONS-OF-GAINS> (8)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 597
<NUMBER-OF-SHARES-REDEEMED> (281)
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 6994
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 511
<AVERAGE-NET-ASSETS> 14602
<PER-SHARE-NAV-BEGIN> 11.83
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 2.34
<PER-SHARE-DIVIDEND> (0.09)
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.06
<EXPENSE-RATIO> 2.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 093
<NAME> GT GLOBAL FINANCIAL SERVICES FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 15074
<INVESTMENTS-AT-VALUE> 16473
<RECEIVABLES> 930
<ASSETS-OTHER> 33
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17436
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 176
<TOTAL-LIABILITIES> 176
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14559
<SHARES-COMMON-STOCK> 5
<SHARES-COMMON-PRIOR> 3
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1301
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1400
<NET-ASSETS> 17260
<DIVIDEND-INCOME> 299
<INTEREST-INCOME> 82
<OTHER-INCOME> 0
<EXPENSES-NET> (362)
<NET-INVESTMENT-INCOME> 19
<REALIZED-GAINS-CURRENT> 1764
<APPREC-INCREASE-CURRENT> 609
<NET-CHANGE-FROM-OPS> 2392
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4
<NUMBER-OF-SHARES-REDEEMED> (1)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6994
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 511
<AVERAGE-NET-ASSETS> 14602
<PER-SHARE-NAV-BEGIN> 11.95
<PER-SHARE-NII> 0.12
<PER-SHARE-GAIN-APPREC> 2.36
<PER-SHARE-DIVIDEND> (0.16)
<PER-SHARE-DISTRIBUTIONS> (0.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.26
<EXPENSE-RATIO> 1.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 031
<NAME> GT GLOBAL HEALTH CARE FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 502577
<INVESTMENTS-AT-VALUE> 564718
<RECEIVABLES> 31950
<ASSETS-OTHER> 21362
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 618030
<PAYABLE-FOR-SECURITIES> 18052
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23344
<TOTAL-LIABILITIES> 41396
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 472932
<SHARES-COMMON-STOCK> 19823
<SHARES-COMMON-PRIOR> 19527
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 41249
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 62453
<NET-ASSETS> 576634
<DIVIDEND-INCOME> 4282
<INTEREST-INCOME> 1727
<OTHER-INCOME> 138
<EXPENSES-NET> (10656)
<NET-INVESTMENT-INCOME> (4509)
<REALIZED-GAINS-CURRENT> 176890
<APPREC-INCREASE-CURRENT> (53940)
<NET-CHANGE-FROM-OPS> 118441
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (54405)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 84410
<NUMBER-OF-SHARES-REDEEMED> (86124)
<SHARES-REINVESTED> 2010
<NET-CHANGE-IN-ASSETS> 78975
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5495
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10873
<AVERAGE-NET-ASSETS> 568731
<PER-SHARE-NAV-BEGIN> 21.84
<PER-SHARE-NII> (.17)
<PER-SHARE-GAIN-APPREC> 4.79
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (2.86)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.60
<EXPENSE-RATIO> 1.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 032
<NAME> GT GLOBAL HEALTH CARE FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 502577
<INVESTMENTS-AT-VALUE> 564718
<RECEIVABLES> 31950
<ASSETS-OTHER> 21362
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<TOTAL-ASSETS> 618030
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<TOTAL-LIABILITIES> 41396
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 472932
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<SHARES-COMMON-PRIOR> 3281
<ACCUMULATED-NII-CURRENT> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 62453
<NET-ASSETS> 576634
<DIVIDEND-INCOME> 4282
<INTEREST-INCOME> 1727
<OTHER-INCOME> 138
<EXPENSES-NET> (10656)
<NET-INVESTMENT-INCOME> (4509)
<REALIZED-GAINS-CURRENT> 176890
<APPREC-INCREASE-CURRENT> (53940)
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<EQUALIZATION> 0
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<NUMBER-OF-SHARES-SOLD> 6741
<NUMBER-OF-SHARES-REDEEMED> (5784)
<SHARES-REINVESTED> 411
<NET-CHANGE-IN-ASSETS> 78975
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5495
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10873
<AVERAGE-NET-ASSETS> 568731
<PER-SHARE-NAV-BEGIN> 21.56
<PER-SHARE-NII> (.27)
<PER-SHARE-GAIN-APPREC> 4.72
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (2.86)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.15
<EXPENSE-RATIO> 2.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 033
<NAME> GT GLOBAL HEALTH CARE FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 502577
<INVESTMENTS-AT-VALUE> 564718
<RECEIVABLES> 31950
<ASSETS-OTHER> 21362
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<TOTAL-ASSETS> 618030
<PAYABLE-FOR-SECURITIES> 18052
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23344
<TOTAL-LIABILITIES> 41396
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 472932
<SHARES-COMMON-STOCK> 48
<SHARES-COMMON-PRIOR> 25
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 41249
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 62453
<NET-ASSETS> 576634
<DIVIDEND-INCOME> 4282
<INTEREST-INCOME> 1727
<OTHER-INCOME> 138
<EXPENSES-NET> (10656)
<NET-INVESTMENT-INCOME> (4509)
<REALIZED-GAINS-CURRENT> 176890
<APPREC-INCREASE-CURRENT> (53940)
<NET-CHANGE-FROM-OPS> 118441
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (69)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1142
<NUMBER-OF-SHARES-REDEEMED> (1122)
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 78975
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5495
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10873
<AVERAGE-NET-ASSETS> 568731
<PER-SHARE-NAV-BEGIN> 21.88
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> 4.80
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (2.86)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.77
<EXPENSE-RATIO> 1.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> GT GLOBAL INFRASTRUCTURE FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 81825
<INVESTMENTS-AT-VALUE> 92024
<RECEIVABLES> 676
<ASSETS-OTHER> 27
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 92727
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 308
<TOTAL-LIABILITIES> 308
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 77643
<SHARES-COMMON-STOCK> 2663
<SHARES-COMMON-PRIOR> 2992
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4576
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10200
<NET-ASSETS> 92419
<DIVIDEND-INCOME> 1455
<INTEREST-INCOME> 249
<OTHER-INCOME> 0
<EXPENSES-NET> (2126)
<NET-INVESTMENT-INCOME> (422)
<REALIZED-GAINS-CURRENT> 5308
<APPREC-INCREASE-CURRENT> 9497
<NET-CHANGE-FROM-OPS> 14383
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2175
<NUMBER-OF-SHARES-REDEEMED> (2504)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5780
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2225
<AVERAGE-NET-ASSETS> 91030
<PER-SHARE-NAV-BEGIN> 12.11
<PER-SHARE-NII> (.03)
<PER-SHARE-GAIN-APPREC> 2.34
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.42
<EXPENSE-RATIO> 2.14
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> GT GLOBAL INFRASTRUCTURE FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 81825
<INVESTMENTS-AT-VALUE> 92024
<RECEIVABLES> 676
<ASSETS-OTHER> 27
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 92727
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 308
<TOTAL-LIABILITIES> 308
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 77643
<SHARES-COMMON-STOCK> 3768
<SHARES-COMMON-PRIOR> 4171
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4576
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10200
<NET-ASSETS> 92419
<DIVIDEND-INCOME> 1455
<INTEREST-INCOME> 249
<OTHER-INCOME> 0
<EXPENSES-NET> (2126)
<NET-INVESTMENT-INCOME> (422)
<REALIZED-GAINS-CURRENT> 5308
<APPREC-INCREASE-CURRENT> 9497
<NET-CHANGE-FROM-OPS> 14383
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 903
<NUMBER-OF-SHARES-REDEEMED> (1306)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5780
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2225
<AVERAGE-NET-ASSETS> 91030
<PER-SHARE-NAV-BEGIN> 12.03
<PER-SHARE-NII> (.09)
<PER-SHARE-GAIN-APPREC> 2.30
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.24
<EXPENSE-RATIO> 2.64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> GT GLOBAL INFRASTRUCTURE FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 81825
<INVESTMENTS-AT-VALUE> 92024
<RECEIVABLES> 676
<ASSETS-OTHER> 27
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 92727
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 308
<TOTAL-LIABILITIES> 308
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 77643
<SHARES-COMMON-STOCK> 24
<SHARES-COMMON-PRIOR> 18
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4576
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10200
<NET-ASSETS> 92419
<DIVIDEND-INCOME> 1455
<INTEREST-INCOME> 249
<OTHER-INCOME> 0
<EXPENSES-NET> (2126)
<NET-INVESTMENT-INCOME> (422)
<REALIZED-GAINS-CURRENT> 5308
<APPREC-INCREASE-CURRENT> 9497
<NET-CHANGE-FROM-OPS> 14383
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11
<NUMBER-OF-SHARES-REDEEMED> (5)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5780
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2225
<AVERAGE-NET-ASSETS> 91030
<PER-SHARE-NAV-BEGIN> 12.14
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 2.34
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.52
<EXPENSE-RATIO> 1.64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 111
<NAME> GT GLOBAL NATURAL RESOURCES FUND -CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 96266
<INVESTMENTS-AT-VALUE> 112049
<RECEIVABLES> 2205
<ASSETS-OTHER> 27
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 114281
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2302
<TOTAL-LIABILITIES> 2302
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 92455
<SHARES-COMMON-STOCK> 2795
<SHARES-COMMON-PRIOR> 1101
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3740
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15784
<NET-ASSETS> 111979
<DIVIDEND-INCOME> 280
<INTEREST-INCOME> 103
<OTHER-INCOME> 0
<EXPENSES-NET> (1438)
<NET-INVESTMENT-INCOME> (1055)
<REALIZED-GAINS-CURRENT> 7317
<APPREC-INCREASE-CURRENT> 14975
<NET-CHANGE-FROM-OPS> 21237
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (47)
<DISTRIBUTIONS-OF-GAINS> (10)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9220
<NUMBER-OF-SHARES-REDEEMED> (7530)
<SHARES-REINVESTED> 4
<NET-CHANGE-IN-ASSETS> 85308
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1500
<AVERAGE-NET-ASSETS> 81546
<PER-SHARE-NAV-BEGIN> 11.44
<PER-SHARE-NII> (.24)
<PER-SHARE-GAIN-APPREC> 6.28
<PER-SHARE-DIVIDEND> (.04)
<PER-SHARE-DISTRIBUTIONS> (.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.43
<EXPENSE-RATIO> 2.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 112
<NAME> GT GLOBAL NATURAL RESOURCES FUND -CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 96266
<INVESTMENTS-AT-VALUE> 112049
<RECEIVABLES> 2205
<ASSETS-OTHER> 27
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 114281
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2302
<TOTAL-LIABILITIES> 2302
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 92455
<SHARES-COMMON-STOCK> 3340
<SHARES-COMMON-PRIOR> 1230
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3740
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15784
<NET-ASSETS> 111979
<DIVIDEND-INCOME> 280
<INTEREST-INCOME> 103
<OTHER-INCOME> 0
<EXPENSES-NET> (1438)
<NET-INVESTMENT-INCOME> (1055)
<REALIZED-GAINS-CURRENT> 7317
<APPREC-INCREASE-CURRENT> 14975
<NET-CHANGE-FROM-OPS> 21237
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (10)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4289
<NUMBER-OF-SHARES-REDEEMED> (2179)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 85308
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1500
<AVERAGE-NET-ASSETS> 81546
<PER-SHARE-NAV-BEGIN> 11.36
<PER-SHARE-NII> (.31)
<PER-SHARE-GAIN-APPREC> 6.25
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.29
<EXPENSE-RATIO> 2.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 113
<NAME> GT GLOBAL NATURAL RESOURCES FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 96266
<INVESTMENTS-AT-VALUE> 112049
<RECEIVABLES> 2205
<ASSETS-OTHER> 27
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 114281
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2302
<TOTAL-LIABILITIES> 2302
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 92455
<SHARES-COMMON-STOCK> 315
<SHARES-COMMON-PRIOR> 8
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3740
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15784
<NET-ASSETS> 111979
<DIVIDEND-INCOME> 280
<INTEREST-INCOME> 103
<OTHER-INCOME> 0
<EXPENSES-NET> (1438)
<NET-INVESTMENT-INCOME> (1055)
<REALIZED-GAINS-CURRENT> 7317
<APPREC-INCREASE-CURRENT> 14975
<NET-CHANGE-FROM-OPS> 21237
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 663
<NUMBER-OF-SHARES-REDEEMED> (356)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 85308
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1500
<AVERAGE-NET-ASSETS> 81546
<PER-SHARE-NAV-BEGIN> 11.47
<PER-SHARE-NII> (.17)
<PER-SHARE-GAIN-APPREC> 6.28
<PER-SHARE-DIVIDEND> (.10)
<PER-SHARE-DISTRIBUTIONS> (.01)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.47
<EXPENSE-RATIO> 1.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 061
<NAME> GT GLOBAL TELECOMMUNICATIONS FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 2058887
<INVESTMENTS-AT-VALUE> 2167065
<RECEIVABLES> 66368
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2460992
<PAYABLE-FOR-SECURITIES> 2479
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 245487
<TOTAL-LIABILITIES> 247966
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1928892
<SHARES-COMMON-STOCK> 72151
<SHARES-COMMON-PRIOR> 82458
<ACCUMULATED-NII-CURRENT> 5
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 171567
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 112563
<NET-ASSETS> 2213027
<DIVIDEND-INCOME> 20581
<INTEREST-INCOME> 1721
<OTHER-INCOME> 0
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<NET-INVESTMENT-INCOME> (26499)
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<NUMBER-OF-SHARES-SOLD> 161135
<NUMBER-OF-SHARES-REDEEMED> (174818)
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<NET-CHANGE-IN-ASSETS> (252896)
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<GROSS-EXPENSE> 50144
<AVERAGE-NET-ASSETS> 2480662
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<EXPENSE-RATIO> 1.74
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 062
<NAME> GT GLOBAL TELECOMMUNICATIONS FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 2058887
<INVESTMENTS-AT-VALUE> 2167065
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<TOTAL-LIABILITIES> 247966
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<PAID-IN-CAPITAL-COMMON> 1928892
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<ACCUMULATED-NII-CURRENT> 5
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<ACCUMULATED-NET-GAINS> 171567
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 112563
<NET-ASSETS> 2213027
<DIVIDEND-INCOME> 20581
<INTEREST-INCOME> 1721
<OTHER-INCOME> 0
<EXPENSES-NET> (48800)
<NET-INVESTMENT-INCOME> (26499)
<REALIZED-GAINS-CURRENT> 230490
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<NET-CHANGE-FROM-OPS> 176372
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
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<NUMBER-OF-SHARES-SOLD> 15366
<NUMBER-OF-SHARES-REDEEMED> (25320)
<SHARES-REINVESTED> 2883
<NET-CHANGE-IN-ASSETS> (252896)
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<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50144
<AVERAGE-NET-ASSETS> 2480662
<PER-SHARE-NAV-BEGIN> 16.20
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<PER-SHARE-NAV-END> 16.37
<EXPENSE-RATIO> 2.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 063
<NAME> GT GLOBAL TELECOMMUNICATIONS FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 2058887
<INVESTMENTS-AT-VALUE> 2167065
<RECEIVABLES> 66368
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<TOTAL-ASSETS> 2460992
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<TOTAL-LIABILITIES> 247966
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1928892
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<SHARES-COMMON-PRIOR> 41
<ACCUMULATED-NII-CURRENT> 5
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 171567
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 112563
<NET-ASSETS> 2213027
<DIVIDEND-INCOME> 20581
<INTEREST-INCOME> 1721
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<EXPENSES-NET> (48800)
<NET-INVESTMENT-INCOME> (26499)
<REALIZED-GAINS-CURRENT> 230490
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<NET-CHANGE-FROM-OPS> 176372
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (33)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1229
<NUMBER-OF-SHARES-REDEEMED> (1217)
<SHARES-REINVESTED> 2
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<ACCUMULATED-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50144
<AVERAGE-NET-ASSETS> 2480662
<PER-SHARE-NAV-BEGIN> 16.46
<PER-SHARE-NII> (.05)
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<PER-SHARE-DISTRIBUTIONS> (.82)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.81
<EXPENSE-RATIO> 1.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> GT GLOBAL GOVERNMENT INCOME FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 384301
<INVESTMENTS-AT-VALUE> 395805
<RECEIVABLES> 39334
<ASSETS-OTHER> 92155
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<TOTAL-ASSETS> 527294
<PAYABLE-FOR-SECURITIES> 16534
<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 119685
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 552445
<SHARES-COMMON-STOCK> 27560
<SHARES-COMMON-PRIOR> 43759
<ACCUMULATED-NII-CURRENT> 365
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (155061)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9860
<NET-ASSETS> 407609
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 39936
<OTHER-INCOME> 0
<EXPENSES-NET> (8133)
<NET-INVESTMENT-INCOME> 31803
<REALIZED-GAINS-CURRENT> (1897)
<APPREC-INCREASE-CURRENT> 1198
<NET-CHANGE-FROM-OPS> 31104
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (15505)
<DISTRIBUTIONS-OF-GAINS> (8183)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19127
<NUMBER-OF-SHARES-REDEEMED> (36970)
<SHARES-REINVESTED> 1644
<NET-CHANGE-IN-ASSETS> (213407)
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3673
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8383
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<PER-SHARE-NAV-BEGIN> 8.81
<PER-SHARE-NII> .57
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<PER-SHARE-DIVIDEND> (.57)
<PER-SHARE-DISTRIBUTIONS> (.10)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.74
<EXPENSE-RATIO> 1.34
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> GT GLOBAL GOVERNMENT INCOME FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 384301
<INVESTMENTS-AT-VALUE> 395805
<RECEIVABLES> 39334
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<TOTAL-ASSETS> 527294
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<TOTAL-LIABILITIES> 119685
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 552445
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<SHARES-COMMON-PRIOR> 26744
<ACCUMULATED-NII-CURRENT> 365
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<ACCUMULATED-NET-GAINS> (155061)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9860
<NET-ASSETS> 407609
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 39936
<OTHER-INCOME> 0
<EXPENSES-NET> (8133)
<NET-INVESTMENT-INCOME> 31803
<REALIZED-GAINS-CURRENT> (1897)
<APPREC-INCREASE-CURRENT> 1198
<NET-CHANGE-FROM-OPS> 31104
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<DISTRIBUTIONS-OF-INCOME> (9165)
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<NUMBER-OF-SHARES-SOLD> 23047
<NUMBER-OF-SHARES-REDEEMED> (31689)
<SHARES-REINVESTED> 957
<NET-CHANGE-IN-ASSETS> (213407)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3673
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8383
<AVERAGE-NET-ASSETS> 449972
<PER-SHARE-NAV-BEGIN> 8.80
<PER-SHARE-NII> .51
<PER-SHARE-GAIN-APPREC> .04
<PER-SHARE-DIVIDEND> (.51)
<PER-SHARE-DISTRIBUTIONS> (.10)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.74
<EXPENSE-RATIO> 1.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 023
<NAME> GT GLOBAL GOVERNMENT INCOME FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 384301
<INVESTMENTS-AT-VALUE> 395805
<RECEIVABLES> 39334
<ASSETS-OTHER> 92155
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<TOTAL-ASSETS> 527294
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<TOTAL-LIABILITIES> 119685
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 552445
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<SHARES-COMMON-PRIOR> 15
<ACCUMULATED-NII-CURRENT> 365
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<ACCUMULATED-NET-GAINS> (155061)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9860
<NET-ASSETS> 407609
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 39936
<OTHER-INCOME> 0
<EXPENSES-NET> (8133)
<NET-INVESTMENT-INCOME> 31803
<REALIZED-GAINS-CURRENT> (1897)
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<DISTRIBUTIONS-OF-INCOME> (8)
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<NUMBER-OF-SHARES-SOLD> 106
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<PER-SHARE-NAV-BEGIN> 8.80
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<PER-SHARE-NAV-END> 8.73
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 081
<NAME> GT GLOBAL HIGH INCOME FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 406057
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<NUMBER-OF-SHARES-REDEEMED> (26423)
<SHARES-REINVESTED> 607
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<GROSS-EXPENSE> 8259
<AVERAGE-NET-ASSETS> 425516
<PER-SHARE-NAV-BEGIN> 11.70
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<PER-SHARE-DISTRIBUTIONS> (.10)
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<PER-SHARE-NAV-END> 14.85
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 082
<NAME> GT GLOBAL HIGH INCOME FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
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<PAID-IN-CAPITAL-COMMON> 398451
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<ACCUMULATED-NET-GAINS> 5154
<OVERDISTRIBUTION-GAINS> 0
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<EXPENSES-NET> (8423)
<NET-INVESTMENT-INCOME> 37117
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<NUMBER-OF-SHARES-REDEEMED> (16794)
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<GROSS-EXPENSE> 8259
<AVERAGE-NET-ASSETS> 425516
<PER-SHARE-NAV-BEGIN> 11.69
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<PER-SHARE-DISTRIBUTIONS> (.09)
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<PER-SHARE-NAV-END> 14.83
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 083
<NAME> GT GLOBAL HIGH INCOME FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
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<EXPENSES-NET> (8423)
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8259
<AVERAGE-NET-ASSETS> 425516
<PER-SHARE-NAV-BEGIN> 11.71
<PER-SHARE-NII> 1.34
<PER-SHARE-GAIN-APPREC> 3.05
<PER-SHARE-DIVIDEND> (1.16)
<PER-SHARE-DISTRIBUTIONS> (.11)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.83
<EXPENSE-RATIO> 1.34
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> GT GLOBAL STRATEGIC INCOME FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 479069
<INVESTMENTS-AT-VALUE> 511275
<RECEIVABLES> 23953
<ASSETS-OTHER> 47379
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 582607
<PAYABLE-FOR-SECURITIES> 12311
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51513
<TOTAL-LIABILITIES> 63824
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 598322
<SHARES-COMMON-STOCK> 15748
<SHARES-COMMON-PRIOR> 18225
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (110862)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31323
<NET-ASSETS> 518783
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 49795
<OTHER-INCOME> 0
<EXPENSES-NET> (9508)
<NET-INVESTMENT-INCOME> 40287
<REALIZED-GAINS-CURRENT> 36676
<APPREC-INCREASE-CURRENT> 29709
<NET-CHANGE-FROM-OPS> 106671
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (16844)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (852)
<NUMBER-OF-SHARES-SOLD> 15025
<NUMBER-OF-SHARES-REDEEMED> (18332)
<SHARES-REINVESTED> 829
<NET-CHANGE-IN-ASSETS> (27676)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3808
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9616
<AVERAGE-NET-ASSETS> 511090
<PER-SHARE-NAV-BEGIN> 10.32
<PER-SHARE-NII> .89
<PER-SHARE-GAIN-APPREC> 1.44
<PER-SHARE-DIVIDEND> (.82)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (.07)
<PER-SHARE-NAV-END> 11.76
<EXPENSE-RATIO> 1.38
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> GT GLOBAL STRATEGIC INCOME FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 479069
<INVESTMENTS-AT-VALUE> 511275
<RECEIVABLES> 23953
<ASSETS-OTHER> 47379
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 582607
<PAYABLE-FOR-SECURITIES> 12311
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51513
<TOTAL-LIABILITIES> 63824
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 598322
<SHARES-COMMON-STOCK> 28314
<SHARES-COMMON-PRIOR> 34647
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (110862)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31323
<NET-ASSETS> 518783
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 49795
<OTHER-INCOME> 0
<EXPENSES-NET> (9508)
<NET-INVESTMENT-INCOME> 40287
<REALIZED-GAINS-CURRENT> 36676
<APPREC-INCREASE-CURRENT> 29709
<NET-CHANGE-FROM-OPS> 106671
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (22201)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (1947)
<NUMBER-OF-SHARES-SOLD> 12779
<NUMBER-OF-SHARES-REDEEMED> (20318)
<SHARES-REINVESTED> 1206
<NET-CHANGE-IN-ASSETS> (27676)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3808
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9616
<AVERAGE-NET-ASSETS> 511090
<PER-SHARE-NAV-BEGIN> 10.33
<PER-SHARE-NII> .82
<PER-SHARE-GAIN-APPREC> 1.44
<PER-SHARE-DIVIDEND> (.75)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (.07)
<PER-SHARE-NAV-END> 11.77
<EXPENSE-RATIO> 2.03
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 013
<NAME> GT GLOBAL STRATEGIC INCOME FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 479069
<INVESTMENTS-AT-VALUE> 511275
<RECEIVABLES> 23953
<ASSETS-OTHER> 47379
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 582607
<PAYABLE-FOR-SECURITIES> 12311
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51513
<TOTAL-LIABILITIES> 63824
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 598322
<SHARES-COMMON-STOCK> 41
<SHARES-COMMON-PRIOR> 43
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (110862)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31323
<NET-ASSETS> 518783
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 49795
<OTHER-INCOME> 0
<EXPENSES-NET> (9508)
<NET-INVESTMENT-INCOME> 40287
<REALIZED-GAINS-CURRENT> 36676
<APPREC-INCREASE-CURRENT> 29709
<NET-CHANGE-FROM-OPS> 106671
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (47)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (4)
<NUMBER-OF-SHARES-SOLD> 279
<NUMBER-OF-SHARES-REDEEMED> (285)
<SHARES-REINVESTED> 4
<NET-CHANGE-IN-ASSETS> (27676)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3808
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9616
<AVERAGE-NET-ASSETS> 511090
<PER-SHARE-NAV-BEGIN> 10.33
<PER-SHARE-NII> .93
<PER-SHARE-GAIN-APPREC> 1.44
<PER-SHARE-DIVIDEND> (.86)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (.07)
<PER-SHARE-NAV-END> 11.77
<EXPENSE-RATIO> 1.03
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 041
<NAME> GT GLOBAL GROWTH & INCOME FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 512624
<INVESTMENTS-AT-VALUE> 647454
<RECEIVABLES> 28049
<ASSETS-OTHER> 109706
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 785209
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 111955
<TOTAL-LIABILITIES> 111955
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 544529
<SHARES-COMMON-STOCK> 40256
<SHARES-COMMON-PRIOR> 44717
<ACCUMULATED-NII-CURRENT> 755
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8515)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 136485
<NET-ASSETS> 673254
<DIVIDEND-INCOME> 15065
<INTEREST-INCOME> 15830
<OTHER-INCOME> 0
<EXPENSES-NET> (12719)
<NET-INVESTMENT-INCOME> 18175
<REALIZED-GAINS-CURRENT> 15732
<APPREC-INCREASE-CURRENT> 64193
<NET-CHANGE-FROM-OPS> 98101
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9964)
<DISTRIBUTIONS-OF-GAINS> (1767)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 21196
<NUMBER-OF-SHARES-REDEEMED> (27157)
<SHARES-REINVESTED> 1500
<NET-CHANGE-IN-ASSETS> 31445
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6282
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13146
<AVERAGE-NET-ASSETS> 642544
<PER-SHARE-NAV-BEGIN> 6.35
<PER-SHARE-NII> .22
<PER-SHARE-GAIN-APPREC> .82
<PER-SHARE-DIVIDEND> (.24)
<PER-SHARE-DISTRIBUTIONS> (.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.11
<EXPENSE-RATIO> 1.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 042
<NAME> GT GLOBAL GROWTH & INCOME FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 512624
<INVESTMENTS-AT-VALUE> 647454
<RECEIVABLES> 28049
<ASSETS-OTHER> 109706
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 785209
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 111955
<TOTAL-LIABILITIES> 111955
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 544529
<SHARES-COMMON-STOCK> 53994
<SHARES-COMMON-PRIOR> 56150
<ACCUMULATED-NII-CURRENT> 755
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8515)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 136485
<NET-ASSETS> 673254
<DIVIDEND-INCOME> 15065
<INTEREST-INCOME> 15830
<OTHER-INCOME> 0
<EXPENSES-NET> (12719)
<NET-INVESTMENT-INCOME> 18175
<REALIZED-GAINS-CURRENT> 15732
<APPREC-INCREASE-CURRENT> 64193
<NET-CHANGE-FROM-OPS> 98101
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10895)
<DISTRIBUTIONS-OF-GAINS> (2226)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9562
<NUMBER-OF-SHARES-REDEEMED> (13374)
<SHARES-REINVESTED> 1656
<NET-CHANGE-IN-ASSETS> 31445
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6282
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13146
<AVERAGE-NET-ASSETS> 642544
<PER-SHARE-NAV-BEGIN> 6.35
<PER-SHARE-NII> .17
<PER-SHARE-GAIN-APPREC> .82
<PER-SHARE-DIVIDEND> (.20)
<PER-SHARE-DISTRIBUTIONS> (.03)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.11
<EXPENSE-RATIO> 2.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 043
<NAME> GT GLOBAL GROWTH & INCOME FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 512624
<INVESTMENTS-AT-VALUE> 647454
<RECEIVABLES> 28049
<ASSETS-OTHER> 109706
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 785209
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 111955
<TOTAL-LIABILITIES> 111955
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 544529
<SHARES-COMMON-STOCK> 434
<SHARES-COMMON-PRIOR> 149
<ACCUMULATED-NII-CURRENT> 755
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8515)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 136485
<NET-ASSETS> 673254
<DIVIDEND-INCOME> 15065
<INTEREST-INCOME> 15830
<OTHER-INCOME> 0
<EXPENSES-NET> (12719)
<NET-INVESTMENT-INCOME> 18175
<REALIZED-GAINS-CURRENT> 15732
<APPREC-INCREASE-CURRENT> 64193
<NET-CHANGE-FROM-OPS> 98101
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (65)
<DISTRIBUTIONS-OF-GAINS> (6)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1417
<NUMBER-OF-SHARES-REDEEMED> (1142)
<SHARES-REINVESTED> 10
<NET-CHANGE-IN-ASSETS> 31445
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6282
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13146
<AVERAGE-NET-ASSETS> 642544
<PER-SHARE-NAV-BEGIN> 6.35
<PER-SHARE-NII> .23
<PER-SHARE-GAIN-APPREC> .82
<PER-SHARE-DIVIDEND> (.26)
<PER-SHARE-DISTRIBUTIONS> (.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.10
<EXPENSE-RATIO> 1.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 051
<NAME> GT GLOBAL LATIN AMERICA GROWTH FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 272965
<INVESTMENTS-AT-VALUE> 311514
<RECEIVABLES> 22870
<ASSETS-OTHER> 17199
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 351583
<PAYABLE-FOR-SECURITIES> 2093
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 33898
<TOTAL-LIABILITIES> 35991
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 377749
<SHARES-COMMON-STOCK> 9881
<SHARES-COMMON-PRIOR> 11864
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (100673)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38516
<NET-ASSETS> 315592
<DIVIDEND-INCOME> 7792
<INTEREST-INCOME> 814
<OTHER-INCOME> 0
<EXPENSES-NET> (7728)
<NET-INVESTMENT-INCOME> 878
<REALIZED-GAINS-CURRENT> (4965)
<APPREC-INCREASE-CURRENT> 64093
<NET-CHANGE-FROM-OPS> 60006
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (843)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (381)
<NUMBER-OF-SHARES-SOLD> 76365
<NUMBER-OF-SHARES-REDEEMED> (78415)
<SHARES-REINVESTED> 67
<NET-CHANGE-IN-ASSETS> (1766)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3365
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7951
<AVERAGE-NET-ASSETS> 339074
<PER-SHARE-NAV-BEGIN> 15.38
<PER-SHARE-NII> .09
<PER-SHARE-GAIN-APPREC> 2.59
<PER-SHARE-DIVIDEND> (.08)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (.03)
<PER-SHARE-NAV-END> 17.95
<EXPENSE-RATIO> 2.03
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 052
<NAME> GT GLOBAL LATIN AMERICA GROWTH FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 272965
<INVESTMENTS-AT-VALUE> 311514
<RECEIVABLES> 22870
<ASSETS-OTHER> 17199
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 351583
<PAYABLE-FOR-SECURITIES> 2093
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 33898
<TOTAL-LIABILITIES> 35991
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 377749
<SHARES-COMMON-STOCK> 7726
<SHARES-COMMON-PRIOR> 8843
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (100673)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38516
<NET-ASSETS> 315592
<DIVIDEND-INCOME> 7792
<INTEREST-INCOME> 814
<OTHER-INCOME> 0
<EXPENSES-NET> (7728)
<NET-INVESTMENT-INCOME> 878
<REALIZED-GAINS-CURRENT> (4965)
<APPREC-INCREASE-CURRENT> 64093
<NET-CHANGE-FROM-OPS> 60006
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (93)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (42)
<NUMBER-OF-SHARES-SOLD> 13504
<NUMBER-OF-SHARES-REDEEMED> (14628)
<SHARES-REINVESTED> 7
<NET-CHANGE-IN-ASSETS> (1766)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3365
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7951
<AVERAGE-NET-ASSETS> 339074
<PER-SHARE-NAV-BEGIN> 15.21
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 2.59
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (.01)
<PER-SHARE-NAV-END> 17.78
<EXPENSE-RATIO> 2.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 053
<NAME> GT GLOBAL LATIN AMERICA GROWTH FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 272965
<INVESTMENTS-AT-VALUE> 311514
<RECEIVABLES> 22870
<ASSETS-OTHER> 17199
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 351583
<PAYABLE-FOR-SECURITIES> 2093
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 33898
<TOTAL-LIABILITIES> 35991
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 377749
<SHARES-COMMON-STOCK> 46
<SHARES-COMMON-PRIOR> 24
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (100673)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38516
<NET-ASSETS> 315592
<DIVIDEND-INCOME> 7792
<INTEREST-INCOME> 814
<OTHER-INCOME> 0
<EXPENSES-NET> (7728)
<NET-INVESTMENT-INCOME> 878
<REALIZED-GAINS-CURRENT> (4965)
<APPREC-INCREASE-CURRENT> 64093
<NET-CHANGE-FROM-OPS> 60006
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (2)
<NUMBER-OF-SHARES-SOLD> 932
<NUMBER-OF-SHARES-REDEEMED> (911)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1766)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3365
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7951
<AVERAGE-NET-ASSETS> 339074
<PER-SHARE-NAV-BEGIN> 15.40
<PER-SHARE-NII> .17
<PER-SHARE-GAIN-APPREC> 2.58
<PER-SHARE-DIVIDEND> (.14)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (.07)
<PER-SHARE-NAV-END> 17.94
<EXPENSE-RATIO> 1.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 071
<NAME> GT GLOBAL EMERGING MARKETS FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 362754
<INVESTMENTS-AT-VALUE> 380601
<RECEIVABLES> 55173
<ASSETS-OTHER> 41015
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 476789
<PAYABLE-FOR-SECURITIES> 10020
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22663
<TOTAL-LIABILITIES> 32683
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 466990
<SHARES-COMMON-STOCK> 15772
<SHARES-COMMON-PRIOR> 18233
<ACCUMULATED-NII-CURRENT> 42
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (40434)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17508
<NET-ASSETS> 444106
<DIVIDEND-INCOME> 10681
<INTEREST-INCOME> 2931
<OTHER-INCOME> 0
<EXPENSES-NET> (10985)
<NET-INVESTMENT-INCOME> 2628
<REALIZED-GAINS-CURRENT> (5529)
<APPREC-INCREASE-CURRENT> 22562
<NET-CHANGE-FROM-OPS> 19661
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 75574
<NUMBER-OF-SHARES-REDEEMED> (78035)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (35886)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4884
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11618
<AVERAGE-NET-ASSETS> 445113
<PER-SHARE-NAV-BEGIN> 13.85
<PER-SHARE-NII> .11
<PER-SHARE-GAIN-APPREC> .30
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.26
<EXPENSE-RATIO> 1.96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 072
<NAME> GT GLOBAL EMERGING MARKETS FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 362754
<INVESTMENTS-AT-VALUE> 380601
<RECEIVABLES> 55173
<ASSETS-OTHER> 41015
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 476789
<PAYABLE-FOR-SECURITIES> 10020
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22663
<TOTAL-LIABILITIES> 32683
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 466990
<SHARES-COMMON-STOCK> 15411
<SHARES-COMMON-PRIOR> 16510
<ACCUMULATED-NII-CURRENT> 42
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (40434)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17508
<NET-ASSETS> 444106
<DIVIDEND-INCOME> 10681
<INTEREST-INCOME> 2931
<OTHER-INCOME> 0
<EXPENSES-NET> (10985)
<NET-INVESTMENT-INCOME> 2628
<REALIZED-GAINS-CURRENT> (5529)
<APPREC-INCREASE-CURRENT> 22562
<NET-CHANGE-FROM-OPS> 19661
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 22440
<NUMBER-OF-SHARES-REDEEMED> (23540)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (35886)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4884
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11618
<AVERAGE-NET-ASSETS> 445113
<PER-SHARE-NAV-BEGIN> 13.68
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> .30
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.02
<EXPENSE-RATIO> 2.46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 073
<NAME> GT GLOBAL EMERGING MARKETS FUND - ADVISOR CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 362754
<INVESTMENTS-AT-VALUE> 380601
<RECEIVABLES> 55173
<ASSETS-OTHER> 41015
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 476789
<PAYABLE-FOR-SECURITIES> 10020
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22663
<TOTAL-LIABILITIES> 32683
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 466990
<SHARES-COMMON-STOCK> 218
<SHARES-COMMON-PRIOR> 121
<ACCUMULATED-NII-CURRENT> 42
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (40434)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17508
<NET-ASSETS> 444106
<DIVIDEND-INCOME> 10681
<INTEREST-INCOME> 2931
<OTHER-INCOME> 0
<EXPENSES-NET> (10985)
<NET-INVESTMENT-INCOME> 2628
<REALIZED-GAINS-CURRENT> (5529)
<APPREC-INCREASE-CURRENT> 22562
<NET-CHANGE-FROM-OPS> 19661
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 966
<NUMBER-OF-SHARES-REDEEMED> (869)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (35886)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4884
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11618
<AVERAGE-NET-ASSETS> 445113
<PER-SHARE-NAV-BEGIN> 13.88
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> .32
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.38
<EXPENSE-RATIO> 1.46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
G.T. INVESTMENT FUNDS, INC.
Exhibit 4
---------
Sections V(d), V(e)1. and V(e)2. of the Registrant's Articles of
Incorporation provide as follows:
Section V(d) As used in these Articles of Incorporation, a "series" of
shares represent interests in the same assets, liabilities, income, earnings
and profits of the Corporation; each "class" of shares of a series represents
interests in the same underlying assets, liabilities, income, earnings and
profits, but may differ from other classes of such series with respect to
fees, expenses, other liabilities, dividends, distributions, liquidation
preferences, voting rights, redemption rights, or such other matters as shall
be established by the Board of Directors. Initially, the shares of capital
stock of the Corporation shall be all of one class and series. The Board of
Directors shall have authority to classify and reclassify any authorized but
unissued shares of capital stock from time to time by setting or changing in
any one or more respects the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications or terms or
conditions of redemption of the capital stock. Subject to the provisions of
Section (e) of this Article V and applicable law, the power of the Board of
Directors to classify or reclassify any of the shares of capital stock shall
include, without limitation, authority to classify or reclassify any such
stock into one or more series of capital stock and to divide and classify
shares of any series into one or more classes of such series, by determining,
fixing or altering one or more of the following:
1. The distinctive designation of such class or series and the number
of shares to constitute such class or series; provided that, unless
otherwise prohibited by the terms of such class or series, the number of
shares of any class or series may be decreased by the Board of Directors in
connection with any classification or reclassification of unissued shares
and the number of shares of such class or series may be increased by the
Board of Directors in connection with any such classification or
reclassification, and any shares of any class or series which have been
redeemed, purchased or otherwise acquired by the Corporation shall remain
part of the authorized capital stock and be subject to classification and
reclassification as provided herein;
2. Whether and, if so, the rates, amounts and times at which, and the
condition under which, dividends shall be payable on shares of such class
or series;
3. Whether shares of such class or series shall have voting rights in
addition to any general voting rights provided by law and the charter of
the Corporation and, if so, the terms of such additional voting rights;
4. The rights of the holders of shares of such class or series upon the
liquidation, dissolution or winding up of the affairs of, or upon any
distribution of the assets of, the Corporation.
<PAGE>
Section V(e) Shares of capital stock of the Corporation shall have the
following preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption:
1. ASSETS BELONGING TO A CLASS OR SERIES.
All consideration received by the Corporation for the issue or sale of
stock of any class or series of capital stock, together with all assets
in which such consideration is invested and reinvested, income, earnings,
profits and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation, thereof, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to the class or series of shares of capital
stock with respect to which such assets, payments or funds were received
by the Corporation for all purposes subject only to the rights of
creditors, and shall be so recorded upon the books of account of the
Corporation. Such consideration, assets, income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale, exchange
or liquidation thereof, and any assets derived from any reinvestment of
such proceeds in whatever form, are herein referred to as "assets
belonging to" such class or series. Any assets, income, earnings,
profits, and proceeds thereof, funds or payment which are not readily
attributable to any particular class or series shall be allocable among
any one or more of the classes or series in such manner and on such basis
as the Board of Directors, in its sole discretion, shall deem fair and
equitable; and each such allocation by the Board of Directors shall be
conclusive and binding upon the shareholders of all classes and series
for all purposes.
2. LIABILITIES BELONGING TO A CLASS OR SERIES.
The assets belonging to each particular class or series shall be charged
with the liabilities of the Corporation in respect of that class or
series and with all expenses, costs, charges, and reserves attributable
to that class or series, and shall be so recorded upon the books of
account of the Corporation. Such liabilities, expenses, costs, charges and
reserves, together with any items allocated to that class or series as
provided in the following sentence, so charged to that class or series
are herein referred to as "liabilities belonging to" that class or
series. The Board of Directors shall allocate and charge any general
liabilities, expenses, costs, charges or reserves of the Corporation that
are not readily identifiable as belonging to any particular class or
series to and among any one or more of the classes or series created from
time to time in such manner and on such basis as the Board of Directors
in its sole discretion deems fair and equitable; and each such allocation
by the Board of Directors shall be conclusive and binding upon the
shareholders of all classes and series for all purposes.
<PAGE>
DISTRIBUTION CONTRACT
Advisor Class Shares
between G.T. INVESTMENT FUNDS, INC.
and G.T. GLOBAL FINANCIAL SERVICES, INC.
This distribution contract, dated as of June 1, 1995, between G.T.
INVESTMENT FUNDS, INC., a Maryland corporation ("Company"), and G.T. GLOBAL
FINANCIAL SERVICES, INC., a California corporation ("G.T. Global"), is made with
reference to the following facts:
A. The Company is an open-end management investment company.
B. G.T. Global has the facilities to sell and distribute the Advisor
Class shares of common stock of the various series established from time to time
by the Company ("Funds").
C. The Company's Board of Directors ("Board") has established Class A,
Class B and Advisor Class shares of each Fund.
D. The Company and G.T. Global have entered into a separate distribution
contract with respect to the Class A and Class B shares of the Funds.
E. The Company and G.T. Global desire to enter into a distribution
contract with respect to the Advisor Class shares of the Funds.
NOW, THEREFORE, parties agree as follows:
1. G.T. Global shall be the exclusive principal underwriter for the sale
of Advisor Class shares of each Fund, except as otherwise provided pursuant to
paragraph 19 hereof. The terms "Advisor Class shares of the Fund" or "Advisor
Class shares" as used herein shall mean Advisor Class shares of common stock
issued by the funds.
2. In the sale of Advisor Class shares of each Fund, G.T. Global shall
act as agent of the Company except in any transaction in which G.T. Global sells
such Advisor Class shares as a dealer, in which event G.T. Global shall act as
principal for its own account.
3. The Company shall sell Advisor Class shares only through G.T. Global
except that the Company may at any time:
(a) Issue Advisor Class shares to any corporation, association,
trust, partnership, or other organization, or its, or their,
security holders, beneficiaries, or members, in connection with a
merger, consolidation, or reorganization to which the Company is
a party, or in connection with the
-1-
<PAGE>
acquisition of all or substantially all the property and assets
of such corporation, association, trust, partnership, or other
organization;
(b) Issue Advisor Class shares of a Fund at net asset value to the
holders of Advisor Class shares of the other Funds or Advisor
Class shares of other investment companies managed by LGT Asset
Management, Inc., pursuant to any exchange or reinvestment option
made available as described in the current Prospectus of the
Fund;
(c) Issue Advisor Class shares at net asset value to a Fund's
shareholders in connection with the reinvestment of dividends and
other distributions paid by the Fund;
(d) Issue Advisor Class shares of a Fund at net asset value to the
sponsor organization, custodian or depository of a periodic or
single payment plan, or similar plan for the purchase of Advisor
Class shares of the Fund, purchasing for such plan;
(c) Issue Advisor Class shares of a Fund in the course of any other
transaction specifically provided for in the Prospectus of the
Fund, or upon obtaining the written consent of G.T. Global
thereto; or
(f) Sell Advisor Class shares outside of the North American
continent, Hawaii and Puerto Rico through such other principal
underwriter or principal underwriters as may be designated from
time to time by the Company, pursuant to paragraph 19 hereof.
4. G.T. Global shall devote its best efforts to the sale of Advisor Class
shares of the Funds. G.T. Global shall maintain a sales organization suited to
the sale of Advisor Class shares of the Funds and shall use its best efforts to
effect such sales in countries as to which the Company shall have expressly
waived in writing its right to designate another principal underwriter pursuant
to paragraph 19 hereof, and shall effect and maintain appropriate qualification
to do so in all those jurisdictions in which it sells or offers Advisor Class
shares for sale and in which qualification is required. G.T. Global shall use
its best efforts to ensure that sales of Advisor Class shares are made to
investors eligible to invest in Advisor Class shares, as defined in the
Prospectuses of the Funds.
5. Advisor Class shares of a Fund sold to dealers shall be for resale by
such dealers only at the public offering price set forth in the effective
Prospectus relating to the Fund which is part of the Company's Registration
Statement in effect under the Securities Act of 1933, as amended ("1933 Act"),
at the time of such offer or sale (herein, the "Prospectus").
6. In its sales to dealers, G.T. Global shall use its best efforts to
determine that such dealers are appropriately qualified to transact business in
securities under applicable laws, rules
-2-
<PAGE>
and regulations promulgated by such national, state, local or other government
or quasi-governmental authorities as may in a particular instance have
jurisdiction.
7. The applicable public offering price of Advisor Class shares of a Fund
shall be the price which is equal to the net asset value per Advisor Class
share. Net asset value per Advisor Class share shall be determined for a Fund
in the manner and at the time or times set forth in and subject to the
provisions of its Prospectus.
8. All orders for Advisor Class shares received by G.T. Global shall,
unless rejected by G.T. Global or the Company, be accepted by G.T. Global
immediately upon receipt and confirmed at an offering price determined in
accordance with the provisions of the Prospectus and the Investment Company Act
of 1940, as amended ("1940 Act"), and applicable rules in effect thereunder.
G.T. Global shall not hold orders subject to acceptance nor otherwise delay
their execution. In conformity with the rules of the NASD, G.T. Global shall
not accept conditional orders. The provisions of this paragraph shall not be
construed to restrict the right of the Company to withhold Advisor Class shares
of the Funds from sale under paragraph 16 hereof.
9. The Company or its transfer agent shall be promptly advised of all
orders received, and shall cause shares of Funds to be issued upon payment
received in accord with policies established by the Company and G.T. Global.
10. G.T. Global shall adopt and follow procedures as approved by the
officers of the Company for the confirmation of sales to dealers, the collection
of amounts payable by dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the NASD
and the 1940 Act, as such requirements may from time to time exist.
11. G.T. Global shall receive no compensation for its services as a
principal underwriter under this Contract.
12. The Company agrees to use its best efforts to maintain its
registration as an open-end management investment company under the 1940 Act.
13. The Company agrees to use its best efforts to maintain an effective
prospectus relating to each Fund under the 1933 Act, and warrants that such
prospectus will contain all statements required by and will conform with the
requirements of the 1933 Act and the rules and regulations thereunder, and that
no part of any such prospectus, at the time the Registration Statement of which
is a part is ordered effective, will contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein not misleading. G.T. Global agrees and
warrants that it will not in the sale of Advisor Class shares of the Funds use
any prospectus, advertising or sales literature not approved by the Company or
its officers nor make any untrue statement of a material fact nor omit the
stating of a material fact necessary in order to make the statements made, in
the light of the circumstances under which they are made, not misleading. G.T.
Global agrees to indemnify and hold the Company harmless from any and all loss,
expense, damage and liability resulting from a
-3-
<PAGE>
breach by G.T. Global of the agreements and warranties in this paragraph, or
from the use of any sales literature, information, statistics or other aid or
device employed in connection with the sale of Advisor Class shares not approved
by the Company and its officers.
14. The expense of each printing of each Prospectus and each revision
thereof or addition thereto ("Printing Costs") deemed necessary by the Company's
officers to meet the requirements of applicable laws shall be divided between
the Company. G.T. Global and any other principal underwriter of the Advisor
Class shares of the Funds as set forth in this Paragraph 14. G.T. Global shall
pay the Printing Costs for each Prospectus of the Funds except that the Funds
will be responsible for the payment of the Printing Costs for each Prospectus
provided to existing shareholders of Advisor Class shares.
15. The Company agrees to use its best efforts to qualify and maintain the
qualification of an appropriate number of the Advisor Class shares of each Fund
for sale under the securities laws of such states as G.T. Global and the Company
may approve. Any such qualifications may be withheld, terminated or withdrawn by
the Company at any time in its discretion. The expense of qualification and
maintenance of qualification shall be borne by the Company, but G.T. Global
shall furnish such information and other materials relating to its affairs and
activities as may be required by the Company or its counsel in connection with
such qualification.
16. The Company and G.T. Global acknowledge that each has the right to
reject any order for the purchase of Advisor Class shares for any reason. In
addition, the Company may withhold Advisor Class shares from sale in any state
or country temporarily or permanently if, in the opinion of its counsel, such
offer or sale would be contrary to law or if the Board of Directors or the
President or any Vice President of the Company determines that such offer or
sale is not in the best interest of the Company. The Company will give prompt
notice to G.T. Global of any withholding and will indemnify it against any loss
suffered by G.T. Global as a result of such withholding by reason of
non-delivery of Fund Advisor Class shares after a good faith confirmation by
G.T. Global of sales thereof prior to receipt of notice of such withholding.
17. (a) With respect to any Fund, this Contract may be terminated at any
time, without payment of any penalty, by the Company on thirty (30) days written
notice to G.T. Global, or by G.T. Global on like notice to the Company.
Termination of this Contract with respect to Advisor Class shares of one Fund
shall not affect its continued effectiveness with respect to Advisor Class
shares of any other Fund.
(b) This Contract may be terminated by either party upon five (5) days
written notice to the other party in the event that the Securities and Exchange
Commission has issued an order or obtained an injunction or other court order
suspending effectiveness of the Registration Statement covering the Advisor
Class shares of the Funds.
(c) This Contract may also be terminated by the Company upon five (5) days
written notice to G.T. Global, should the NASD expel G.T. Global or suspend its
membership in that organization.
-4-
<PAGE>
(d) G.T. Global shall inform the Company promptly of the institution of
any proceedings against it by the Securities and Exchange Commission, the NASD
or any state regulatory authority.
18. This Contract shall automatically terminate in the event of its
assignment. The terms "assignment" shall have the meaning defined in the 1940
Act.
19. With respect to any Fund, upon sixty (60) days written notice to G.T.
Global, the Company may from time to time designate other principal underwriters
of Advisor Class shares with respect to areas other than the North American
continent, Hawaii, Puerto Rico and such countries as to which the Company may
have expressly waived in writing its right to make such designation. In the
event of such designation, the right of G.T. Global under this Contract to sell
Advisor Class shares in the areas so designated shall terminate, but this
Contract shall remain otherwise in full effect until terminated in accordance
with the provisions of paragraphs 17 and 18 hereof.
20. No provisions of this Contract shall protect or purport to protect
G.T. Global against any liability to the Company or holders of Advisor Class
shares of the Funds for which G.T. Global would otherwise be liable by reason of
willful misfeasance, bad faith or negligence.
21. Unless sooner terminated in accordance with the provisions of
paragraphs 17 or 18 hereof, this Contract shall continue in effect with respect
to each Fund for periods of up to one year, but only so long as such continuance
is specifically approved at least annually (i) by vote of a majority of the
Directors of the Company who are not parties to this Contract or interested
persons of any such party as defined by the 1940 Act, cast in person at a
meeting called for the purpose of voting on such approval; and (ii) either the
Board of Directors of the Company or a vote of a majority of the outstanding
voting securities of the Advisor Class shares of the Company as defined by the
1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their officers thereunder duly authorized as
of the day and year first written above.
Attest: G.T. INVESTMENT FUNDS, INC.
/s/ Peter R. Guarino By: /s/ Helge Krist Lee
- ----------------------- -----------------------
Peter R. Guarino Helge Krist Lee
Assistant Secretary Vice President and Secretary
Attest: G.T. GLOBAL FINANCIAL SERVICES, INC.
/s/ Peter R. Guarino By: /s/ William J. Guilfoyle
- ----------------------- ------------------------
Peter R. Guarino William J. Guilfoyle
Assistant Secretary Senior Vice President
-5-
<PAGE>
EXHIBIT 99.11(a)(i)
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
G.T. Investment Funds, Inc.:
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
GT Global Telecommunications Fund
We consent to the inclusion in Post Effective Amendment No. 47 to the
Registration Statement of G.T. Investment Funds, Inc. on Form N-1A (File
No. 33-19338) of our report dated December 13, 1996 on our audit of the
financial statements and financial highlights of the above referenced funds
which report is included in the Annual Report to Shareholders for the year
ended October 31, 1996 which is included in the Post Effective Amendment to
the Registration Statement.
We also consent to the reference to our Firm under the caption, "Independent
Accountants."
/s/ COOPERS & LYBRAND L.L.P.
____________________________
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 24, 1997
<PAGE>
EXHIBIT 99.11(a)(ii)
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
G.T. Investment Funds, Inc.:
GT Global Government Income Fund
GT Global Strategic Income Fund
GT Global High Income Fund
We consent to the inclusion in Post Effective Amendment No. 47 to the
Registration Statement of G.T. Investment Funds, Inc. on Form N-1A (File
No. 33-19338) of our report dated December 13, 1996 on our audit of the
financial statements and financial highlights of the above referenced funds
which report is included in the Annual Report to Shareholders for the year
ended October 31, 1996 which is included in the Post Effective Amendment to
the Registration Statement.
We also consent to the reference to our Firm under the caption, "Independent
Accountants."
/s/ COOPERS & LYBRAND L.L.P.
____________________________
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 24, 1997
<PAGE>
EXHIBIT 99.11(a)(iii)
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
G.T. Investment Funds, Inc.:
GT Global Growth & Income Fund
We consent to the inclusion in Post Effective Amendment No. 47 to the
Registration Statement of G.T. Investment Funds, Inc. on Form N-1A (File
No. 33-19338) of our report dated December 13, 1996 on our audit of the
financial statements and financial highlights of the above referenced funds
which report is included in the Annual Report to Shareholders for the year
ended October 31, 1996 which is included in the Post Effective Amendment to
the Registration Statement.
We also consent to the reference to our Firm under the caption, "Independent
Accountants."
/s/ COOPERS & LYBRAND L.L.P.
____________________________
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 24, 1997
<PAGE>
EXHIBIT 99.11(a)(iv)
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
G.T. Investment Funds, Inc.:
GT Global Latin America Growth Fund
GT Global Emerging Markets Fund
We consent to the inclusion in Post Effective Amendment No. 47 to the
Registration Statement of G.T. Investment Funds, Inc. on Form N-1A (File
No. 33-19338) of our report dated December 13, 1996 on our audit of the
financial statements and financial highlights of the above referenced funds
which report is included in the Annual Report to Shareholders for the year
ended October 31, 1996 which is included in the Post Effective Amendment to
the Registration Statement.
We also consent to the reference to our Firm under the caption, "Independent
Accountants."
/s/ COOPERS & LYBRAND L.L.P.
____________________________
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 24, 1997
<PAGE>
----------------
QUESTIONS AND ANSWERS
- ----------------------------------------------------------
Q. AM I ELIGIBLE FOR AN IRA?
A. Any individual who receives earned income from employment (including
self-employment) and who has not reached age 70 1/2 can contribute to an IRA.
Q. HOW MUCH CAN I CONTRIBUTE?
A. Each working individual can contribute up to $2,000 (or 100% of
compensation, whichever is less) per year to an IRA. If you are married, your
employed spouse can also contribute up to $2,000 each year to his or her own
IRA. Even a non-employed spouse can open an IRA: for each year after 1996 you
and your non-employed spouse can contribute a combined total of $4,000* (or 100%
of compensation, whichever is less) to your individual IRAs, provided no more
than $2,000 is invested in any one account.
Q. WHEN MUST I MAKE MY CONTRIBUTION?
A. You can make a contribution for each tax year any time between January 1 of
that year and April 15 of the following year. (If you make a contribution after
December 31 that you wish to be considered as a contribution for the prior year,
you will need to so designate in writing.) You are not required to make a
contribution every year, but you cannot over-contribute in any year to make up
for a year for which you did not contribute at all or made only a partial
contribution.
Q. ARE MY IRA CONTRIBUTIONS TAX-DEDUCTIBLE?
A. Over three-quarters of all Americans are still able to deduct all or part
of their annual IRA contributions. Whether and exactly how much you may deduct
depends on your adjusted gross income (AGI), marital status and whether you are
an "active participant" in an employer-
- --------------
* FOR YEARS PRIOR TO 1997, THE COMBINED MAXIMUM IS $2,250.
** THE IRS SPECIFICALLY DEFINES WHO IS AN "ACTIVE PARTICIPANT" IN AN
EMPLOYER-SPONSORED RETIREMENT PLAN. PLEASE SEE THE GT GLOBAL IRA DISCLOSURE
STATEMENT FOR MORE INFORMATION ON DEDUCTIBILITY.
sponsored retirement plan such as a SEP-IRA, SARSEP-IRA, 401(k), 403(b),
profit-sharing, money purchase or defined benefit plan.** If neither you nor
your spouse are an active participant in a retirement plan where you work, your
entire IRA contribution is tax-deductible. If either you or your spouse are
covered by an employer-sponsored plan and you file jointly, use the table below
to calculate your maximum deduction. You may, of course, contribute to your IRA
even if the contributions are not tax-deductible (subject to the contribution
limits described above).
<TABLE>
<CAPTION>
SINGLE TAXPAYER OR HEAD OF HOUSEHOLD
STATUS MARRIED TAXPAYERS FILING JOINTLY MAXIMUM DEDUCTION
<S> <C> <C>
MODIFIED ADJUSTED GROSS INCOME AT OR MODIFIED ADJUSTED GROSS INCOME AT OR ENTIRE CONTRIBUTION IS TAX DEDUCTIBLE
LESS THAN $25,000 LESS THAN $40,000
MODIFIED ADJUSTED GROSS INCOME $25,000 MODIFIED ADJUSTED GROSS INCOME $40,000 SUBTRACT MODIFIED ADJUSTED GROSS INCOME
TO $35,000 TO $50,000 FROM $35,000 ($50,000 FOR MARRIED
TAXPAYERS FILING JOINTLY) AND MULTIPLY
REMAINDER BY 20%
MODIFIED ADJUSTED GROSS INCOME OVER MODIFIED ADJUSTED GROSS INCOME OVER IRA CONTRIBUTIONS ARE NOT TAX DEDUCTIBLE
$35,000 $50,000
</TABLE>
SOURCE: INTERNAL REVENUE SERVICE, PUBLICATION 590
* GENERALLY, MODIFIED ADJUSTED GROSS INCOME IS ADJUSTED GROSS INCOME AS SHOWN ON
YOUR FEDERAL INCOME TAX RETURN, WITHOUT TAKING INTO ACCOUNT ANY IRA DEDUCTION.
PLEASE CONSULT IRS PUBLICATION 590 OR THE INSTRUCTIONS TO YOUR TAX RETURN FOR
FURTHER DETAILS.
No contributions may be made for the year you become 70 1/2, or thereafter.
[LOGO]
<PAGE>
----------------
GT GLOBAL IRA
Q. WHAT IF MY IRA CONTAINS BOTH DEDUCTIBLE AND NON-DEDUCTIBLE CONTRIBUTIONS?
A. The IRS requires that your deductible and non-deductible contributions be
withdrawn in the same proportion as they exist within your IRA. To avoid tax
penalties at withdrawal, it is therefore important to keep track of your
deductible and non-deductible contributions.
Q. WHEN CAN I WITHDRAW MONEY FROM MY IRA?
A. You can withdraw all or part of your money at any time, but ordinary income
taxes will be due on withdrawals of deductible contributions and earnings in the
year the withdrawals are made. In addition, if you withdraw money prior to
reaching age 59 1/2, you may be subject to a 10% federal penalty on early
withdrawals. After age 59 1/2 you may withdraw money from your IRA without
penalty. Under current law, you must begin withdrawing money by April 1
following the year in which you reach age 70 1/2.
Q. CAN I CONSOLIDATE MY OTHER IRA ASSETS WITH THE ASSETS IN MY GT GLOBAL IRA?
Yes, by using either an IRA Transfer or an IRA Rollover.
Q. WHAT IS THE DIFFERENCE BETWEEN AN IRA TRANSFER AND AN IRA ROLLOVER?
A. An IRA Transfer moves your IRA assets directly from one financial
institution to another. You may, for instance, consolidate your IRA at GT Global
by transferring IRA assets from a bank, trust company, insurance company or
mutual fund; your current custodian will liquidate your IRA assets (if not
currently held in GT Global Mutual Funds) and send the check directly to GT
Global.
An IRA Rollover reinvests IRA assets distributed to you. With a rollover you
can take receipt of your IRA assets for up to 60 days before reinvesting them
(please note that you must reinvest your IRA assets within 60 days to maintain
their tax-deferred status). You may do only one rollover in any 12-month period.
There is no restriction on the number of IRA Transfers you effect in a year.
Q. I AM ELIGIBLE TO RECEIVE A DISTRIBUTION FROM AN EMPLOYER-SPONSORED PLAN.
CAN I ROLL IT OVER AND KEEP IT TAX-DEFERRED?
A. Most any distribution from an employer-sponsored plan may be rolled over to
an IRA, with certain exceptions (e.g., minimum required distributions, annuity
payments, and installments over a period of ten or more years). Your eligible
rollover distribution will be subject to 20% income tax withholding unless you
have the distribution transferred directly to your IRA.
-- If you have your eligible rollover distribution paid directly to your IRA,
you avoid paying current tax (and, potentially, the 10% federal penalty on early
withdrawals) and keep all of your distribution money growing tax-deferred.
-- If, instead, your eligible rollover distribution is paid to you, the
distribution will be subject to 20% withholding and you will receive only 80% of
the payment, all or a portion of which may be rolled over into an IRA within 60
days of receipt. You will avoid paying current tax and penalties on the amount
rolled over into your IRA. (If you want to avoid being taxed on the amount that
was withheld, you will need to find other money to replace the 20% that was
withheld and contribute it to your IRA within the 60-day period.)
Q. WHAT FORMS OR REPORTS DO I FILE FOR MY IRA CONTRIBUTIONS?
A. If your IRA contributions are completely deductible, you file no special
forms with the IRS. If you make non-deductible contributions, you must file Form
8606 with the IRS (and you should keep copies of all IRS Forms 8606 that you
file).
You do not report any interest income, dividends or capital gains or losses
that occur in your IRA.
Q. WHAT FORMS OR REPORTS DOES GT GLOBAL FILE FOR MY IRA?
A. GT Global will report to the IRS: your annual contributions, if any; your
rollover contributions and the market value of your IRA at December 31 of each
year (Form 5498); and any distributions (Form 1099R).
<PAGE>
----------------
[LOGO]
GT GLOBAL INDIVIDUAL RETIREMENT
ACCOUNT
DISCLOSURE STATEMENT AND APPLICATION
- --------------------------------------------------------------------------------
- --------------------------------------------
1. GENERAL
- --------------------------------------------
Internal Revenue Service Regulations require that you be given this Disclosure
Statement for the purpose of informing you of the restrictions and limitations
on how you may use an Individual Retirement Account (IRA). Please read this
Disclosure Statement together with the Custodial Agreement and the
prospectus(es) for the GT Global Mutual Fund(s) in which you are investing. The
provisions of the Custodial Agreement and prospectus(es) must prevail over this
statement in any instance where the statement is incomplete or appears to be in
conflict.
- --------------------------------------------
2. IRREVOCABILITY OF ACCOUNT
- --------------------------------------------
The Internal Revenue Service requires that you receive this disclosure
statement at least 7 days prior to the establishment of your IRA. Because of
this requirement, your application will not be accepted by the Custodian until
at least 7 days after the date you received this disclosure statement, as
indicated by you in the IRA Custodial Agreement. Prior to such acceptance, you
may receive back the entire amount that you have contributed, without reduction
for fees or other expenses. You may request that your contribution be returned
to you by writing to GT Global Investor Services, Inc. (agent for the
Custodian), P.O. Box 7345, San Francisco, CA 94120-7345 or by calling GT Global
toll free at (800) 223-2138 within 7 days of the date you have signed the
Custodial Agreement. All telephone requests must be confirmed in writing. Once
your application for a GT Global IRA is accepted by the Custodian, it cannot be
revoked by you.
- --------------------------------------------
3. ELIGIBLE INDIVIDUAL
- --------------------------------------------
Generally, you may open an IRA at any time; however, you will not be able to
make any contribution in the year you become 70 1/2, or in any year thereafter.
- --------------------------------------------
4. YOUR IRA ACCOUNT
- --------------------------------------------
An Individual Retirement Account is a trust or custodial account created or
organized in the United States for your exclusive benefit or for the benefit of
your beneficiaries. The IRA must be created by written instrument that meets the
following requirements:
(1) The trustee or custodian must be a bank, federally insured credit union,
savings and loan association, or (under federal regulations) another person
eligible to act as trustee or custodian;
(2) Except for rollovers, transfers and certain employer-sponsored plans,
under applicable law, the trustee or custodian will not accept contributions of
more than $2,000 in any tax year. You may make rollover and transfer
contributions in amounts greater than $2,000. All contributions must be in cash.
(3) Your interest in the IRA is nonforfeitable; that is, it is fully vested at
all times;
(4) No part of the trust or custodial funds may be invested in life insurance
contracts or certain collectibles nor may the assets be commingled with other
property except in a common trust fund or common investment fund; and
(5) Your interest in the custodial account must begin to be distributed by
April 1 of the year following the year in which you reach age 70(1)/(2). The
distribution may be made in a single sum, or you may receive periodic
distributions, starting by April 1 of the year following the year in which you
reach age 70(1)/(2), so long as your entire interest in the custodial account is
distributed over one of the following periods:
(a) Your life;
(b) The joint lives of you and your designated beneficiary;
-------
DS-1
<PAGE>
----------------
GT GLOBAL IRA
(c) A specific period not extending beyond your life expectancy; or
(d) A specific period not extending beyond the life expectancy of you and
your designated beneficiary.
If the amount distributed is less than the minimum amount required to be
distributed to you under the Internal Revenue Code, an excise tax will be
imposed on you in an amount equal to 50% of the excess of the amount required to
be distributed to you over the amount you actually receive.
(6) If you die after distributions have begun, your beneficiary must receive
the remaining payments at least as rapidly as under the method of distribution
being used on the date of your death. If you die before distributions have begun
or if your surviving spouse dies before distributions have begun, any interest
remaining must, by December 31 of the calendar year which contains the fifth
anniversary of your death or the death of your surviving spouse, be distributed
in a single sum. If your (or your surviving spouse's) designated beneficiary
wishes to receive an immediate annuity which provides for payments over the
beneficiary's life or over a specific period not exceeding the beneficiary's
life expectancy, the beneficiary must elect to receive such payments by December
31 following the calendar year of your death. Such payments also must begin by
that date. If your designated beneficiary is your spouse, annuity payments need
not commence until December 31 of the year you would have attained 70(1)/(2).
This annuity contract will not allow one's life expectancy to be recalculated.
The election will also apply to beneficiaries who make additional contributions
or rollovers in their own names to the IRA. An amount is not distributed if it
is rolled over into an Individual Retirement Account, annuity, or retirement
bond for the benefit of the beneficiary.
(7) If your surviving spouse is your designated beneficiary, your IRA assets
may be rolled over into his or her own IRA. No rollover from your IRA is
available for a beneficiary other than your surviving spouse, and such
non-spouse beneficiary must take the IRA assets in the form of a taxable
distribution.
- --------------------------------------------
5. TAX DEDUCTIONS
- --------------------------------------------
ELIGIBILITY
If neither you, nor your spouse, is an active participant (see A. below) you
may make a contribution of up to the lesser of $2,000 (or, for years after 1996,
$4,000 in the case of a Spousal IRA) or 100% of compensation and take a
deduction for the entire amount contributed. If you or (in most cases) your
spouse are an active participant but have an adjusted gross income (AGI) below a
certain level (see B. below), you may make a fully deductible contribution as
under current law. If, however, you or (in most cases) your spouse is an active
participant and your combined AGI is above the specified level, the amount of
the deductible contribution you may make to an IRA is phased down and eventually
eliminated.
A. ACTIVE PARTICIPANT. You are an "active participant" for a year if you are
covered by a retirement plan. Generally, you are covered by a "retirement plan"
for a year if your employer or union has a retirement plan under which money is
added to your account or you are eligible to earn retirement credits. For
example, if you are covered under a profit-sharing plan, certain government
plans, a salary reduction arrangement (such as a tax sheltered annuity
arrangement or a 401(k) plan), a simplified employee pension plan (SEP) or a
plan which promises you a retirement benefit which is based upon the number of
years of service you have with the employer (a "defined benefit plan"), you are
likely to be an active participant. Your Form W-2 for the year should indicate
your participation status.
You are an active participant for a year even if you are not yet vested in
your retirement benefit. Also, if you make required contributions or voluntary
employee contributions to a retirement plan, you are an active participant. In
certain plans you may be an active participant even if you were only with the
employer for part of the year. You will be deemed an active participant in your
employer's defined benefit plan even if you do not make required contributions
and even if you elect not to participate or waive participation. In other plans,
however, you will not be deemed an active participant if you elect not to
participate.
You are generally not considered an active participant if you are covered in a
government-
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DS-2
<PAGE>
----------------
GT GLOBAL IRA
sponsored plan only because of your services as 1) an Armed Forces Reservist,
for less than 91 days of active service, or 2) a volunteer firefighter covered
for firefighting service. Of course, if you are covered in any other plan, these
exceptions do not apply.
If you are married but file a separate return, your spouse's active
participation affects your ability to make deductible contributions if you lived
together for any part of the year. If you lived apart from your spouse for the
entire year and you file a separate return, you are treated as unmarried for
purposes of your IRA deductions and thus your spouse's active participation does
not affect your ability to make deductible contributions.
B. MODIFIED ADJUSTED GROSS INCOME (AGI). If you are an active participant, you
must look at your Adjusted Gross Income for the year (if you and your spouse
file a joint tax return you use your combined AGI) to determine whether you can
make deductible IRA contribution. Your tax return will show you how to calculate
your AGI which, for purposes of determining the deductible amount of your IRA
contribution, is calculated without taking into account any IRA deduction, any
foreign earned income or foreign housing exclusion or any excludable series EE
savings bond interest. If you are at or below a certain AGI level, called the
Threshold Level, you are treated as if you were not an active participant and
can make a deductible contribution under the same rules as a person who is not
an active participant.
If you are single (or if you are married, filed separately and lived apart
from your spouse during the entire year), your threshold AGI level is $25,000.
The threshold level if you are married and file a joint tax return is $40,000,
and if you are married but file a separate tax return, the Threshold Level is
$0.
If your AGI is $10,000 or more above your Threshold Level and you are an
active participant, you will not be able to deduct any of your contributions to
your IRA. If your AGI is less than $10,000 above your Threshold Level, you will
still be able to make a deductible contribution but it will be limited in
amount. The amount by which your AGI exceeds your Threshold Level (AGI-Threshold
Level) is called your Excess AGI. The Maximum Allowable Deduction is $2,000 (or
$4,000 for a Spousal IRA). You can calculate your Deduction Limit as follows:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-EXCESS AGI MAXIMUM
$10,000 X ALLOWABLE DEDUCTION = DEDUCTION LIMIT
</TABLE>
You must round up the result to the next highest $10 level (the next highest
number which ends in zero). For example, if the result is $1,525, you must round
it up to $1,530. If the final result is below $200 but above zero, your
Deduction Limit is $200. Your Deduction Limit cannot, in any event, exceed 100%
of your compensation.
EXAMPLE 1: Ms. Smith, a single person, is an active participant and has an AGI
of $31,619. She calculates her deductible IRA contribution as follows:
HER AGI IS $31,619
HER THRESHOLD LEVEL IS $25,000
HER EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($31,619-$25,000)=$6,619
HER MAXIMUM ALLOWABLE DEDUCTION IS $2,000
SO, HER IRA DEDUCTION LIMIT IS:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$6,619
$10,000 X $2,000 = $676 (ROUNDED TO $680)
</TABLE>
EXAMPLE 2: Mr. and Mrs. Young file a joint tax return. Each spouse earns more
than $2,000 and one is an active participant. They have a combined AGI of
$44,255. They may each contribute to an IRA and calculate their deductible
contributions to each IRA as follows:
THEIR AGI IS $44,255
THEIR THRESHOLD LEVEL IS $40,000
THEIR EXCESS AGI IS
(AGI-THRESHOLD LEVEL) OR ($44,255-$40,000)=$4,255
THE MAXIMUM ALLOWABLE DEDUCTION FOR EACH SPOUSE IS $2,000
So, each spouse may compute his or her IRA deduction limit as follows:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$4,255 $1,149 (ROUNDED TO
$10,000 X $2,000 = $1,150)
</TABLE>
EXAMPLE 3: If, in example 2, Mr. Young did not earn any compensation, or
elected to be treated as earning no compensation, Mrs. Young could establish a
Spousal IRA (consisting of an account for herself and one for her husband). The
amount of deductible contributions which could be made to the two IRAs is
calculated using a Maximum Allowable Deduction of $4,000 (for years after 1996)
rather than $2,000.
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$4,255 $2,298 (ROUNDED TO
$10,000 X $4,000 = $2,300)
</TABLE>
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DS-3
<PAGE>
----------------
GT GLOBAL IRA
The $2,300 must then be divided between the two accounts so that each IRA may
receive a deductible contribution of $1,150.
EXAMPLE 4: Mr. Jones, a married person files a separate tax return and lived
with Mrs. Jones during the year and is an active participant. He has $1,500 of
compensation and wishes to make a deductible contribution to an IRA.
HIS AGI IS $1,500.
HIS THRESHOLD LEVEL IS $0.
HIS EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR ($1,500-$0) = $1,500
HIS MAXIMUM ALLOWABLE DEDUCTION IS $2,000.
SO, HIS IRA DEDUCTION LIMIT IS:
<TABLE>
<C> <S>
$10,000-$1,500
$10,000 X $2,000 = $1,700
</TABLE>
Even through his IRA deduction limit under the formula is $1,700, Mr. Jones
may not deduct an amount in excess of his compensation, so, his actual deduction
is limited to $1,500.
EXAMPLE 5: If, in example 2, the Youngs filed separate tax returns but lived
together during any part of the year, Mr. and Mrs. Young are each considered an
active participant, even though only Mrs. Young was the active participant. If
Mr. Young's AGI is $21,000, he may contribute to his IRA and would calculate his
deductible contribution as follows:
HIS AGI IS $21,000.
HIS THRESHOLD LEVEL IS $0.
HIS EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR ($21,000-$0) = $21,000
HIS MAXIMUM ALLOWABLE DEDUCTION IS $2,000.
SO, HIS IRA DEDUCTION LIMIT IS:
<TABLE>
<C> <S>
$10,000-$21,000
$10,000 X $2,000 = $0
</TABLE>
Mr. Young would not be entitled to claim any deduction for an IRA contribution
in these circumstances.
EXAMPLE 6: If, in example 5, Mr. and Mrs. Young lived apart the entire year,
Mr. Young would determine the deductibility of his IRA contribution under the
rules applicable to single persons who are not active participants. Accordingly,
Mr. Young would be entitled to deduct the full amount of his maximum allowable
contribution.
As an alternative, you may determine your Deduction Limit by consulting the
Table found in IRS Publication 590.
SPOUSAL IRAS
As noted in Example 3 above, under the Act you may contribute to a Spousal IRA
even if your spouse has earned some compensation during the year. Provided your
spouse does not make a contribution to an IRA, you may set up a Spousal IRA
consisting of an account for your spouse as well as an account for yourself. The
maximum deductible amount for the Spousal IRA (for years after 1996) is the
lesser of $4,000 or 100% of compensation.
NONDEDUCTIBLE CONTRIBUTIONS TO IRAS
Even if you are above the threshold level and thus may not make a deductible
contribution of $2,000 ($4,000 for a Spousal IRA), you may still contribute up
to the lesser of 100% of compensation or $2,000 to an IRA ($4,000 for a Spousal
IRA). The amount of your contribution which is not deductible will be a
nondeductible contribution to the IRA. You may also choose to make a
contribution nondeductible even if you could have deducted part or all of the
contribution. Interest or other earnings on your IRA contribution whether from
deductible or nondeductible contributions will not be taxed until taken out of
your IRA and distributed to you.
If you make a nondeductible contribution to an IRA you must report the amount
of the nondeductible contribution to the IRS as a part of your tax return for
the year.
You may make a $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, without having to know how
much will be deductible. When you fill out your tax return you may then figure
out how much is deductible.
You may withdraw an IRA contribution made for a year any time before April 15
of the following year. If you do so, you must also withdraw the earnings
attributable to that portion and report the earnings as income for the year for
which the contribution was made. If some portion of your contribution is not
deductible, you may decide either to withdraw the nondeductible amount, or to
leave it in the IRA and designate that portion as a nondeductible contribution
on your tax return.
IRA DISTRIBUTIONS
Because nondeductible IRA contributions are made using income which has
already been taxed (that is, they are not deductible contributions), the portion
of the IRA distributions consisting of nondeductible contributions will not be
taxed again when received by you. If you make any nondeductible IRA
contributions, each distribution from your IRA will consist of a nontaxable
portion (return of nondeductible
-------
DS-4
<PAGE>
----------------
GT GLOBAL IRA
contributions) and a taxable portion (return of deductible contributions, if
any, and account earnings).
Thus, you may not take a distribution which is entirely tax-free if you have
made any deductible contributions. The following formula is used to determine
the nontaxable portion of your distributions for a taxable year:
<TABLE>
<S> <C> <C> <C> <C>
REMAINING
NONDEDUCTIBLE TOTAL NONTAXABLE
CONTRIBUTIONS X DISTRIBUTIONS = DISTRIBUTIONS
YEAR-END TOTAL IRA (FOR THE (FOR THE
ACCOUNT BALANCES YEAR) YEAR)
</TABLE>
To figure the year-end total IRA account balance you treat all of your IRAs as a
single IRA. This includes all regular IRAs, as well as Simplified Employer
Pension (SEP) IRAs, and Rollover IRAs. You also add back the distributions taken
during the year.
EXAMPLE: An individual makes the following contributions to his or her IRAs:
<TABLE>
<CAPTION>
YEAR DEDUCTIBLE NONDEDUCTIBLE
- --------- ----------- --------------
<S> <C> <C>
1992 $ 2,000
1993 1,800
1994 1,000 $ 1,000
1995 600 1,400
----------- -------
$ 5,400 $ 2,400
</TABLE>
<TABLE>
<S> <C>
Deductible Contributions: $ 5,400
Nondeductible Contributions: 2,400
Earnings on IRAs: 1,200
---------
Total Account Balance of IRAs as of
12/31/95: $9,000
(including distributions in 1995)
</TABLE>
In 1995, the individual takes a distribution of $3,000. The total account
balance in the IRAs on 12/31/95, plus 1995 distributions, is $9,000. The
nontaxable portion of the distributions for 1995 is figured as follows:
<TABLE>
<S> <C> <C> <C>
TOTAL NONDEDUCTIBLE CONTRIBUTIONS $2,400
TOTAL ACCOUNT BALANCE IN THE ------ X $3,000 = $800
IRAS PLUS DISTRIBUTIONS $ 9,000
</TABLE>
Thus, $800 of the $3,000 distribution in 1995 will not be included in the
individual's taxable income. The remaining $2,200 will be taxable for 1995.
SIMPLIFIED EMPLOYEE PENSION ACCOUNTS
Your IRA may be used as part of a SEP established by your employer, or by you
if you are self-employed. Generally, your employer, or you if self-employed, may
contribute to your SEP-IRA up to a maximum of 15% of your compensation or
$22,500, whichever is less. If your IRA is used as part of a salary reduction
SEP, you may elect to reduce your compensation, up to a maximum of 15% of your
compensation or $9,500 (adjusted), whichever is less, and have your employer
contribute that amount to your SEP-IRA. If your employer maintains both a salary
reduction SEP and a regular SEP, the contribution limit to both SEPs together is
15% of your compensation or $22,500, whichever is less. It is your and your
employer's responsibility to see that contributions in excess of normal IRA
limits are made under a valid SEP and are, therefore, proper. Generally, under a
SEP, an IRA must be set up for each employee who is (1) at least 21 years old,
(2) has worked for the employer in any of the 3 of the 5 years immediately
preceding the particular tax year and (3) has received from the employer at
least $400 (or other amount resulting from cost-of-living adjustment) in
compensation for the tax year. Certain employees may be excluded from the Plan.
You should review the attached Form 5305-SEP for more information regarding your
Simplified Employee Pension.
- --------------------------------------------
6. TAX-FREE TRANSFER CONTRIBUTIONS
- --------------------------------------------
Transfers allow you to transfer IRA assets directly from one IRA trustee or
custodian to another on a tax-free basis. If you already have an IRA with
another trustee or custodian, you may direct that trustee or custodian to
transfer your IRA assets to your GT Global IRA without tax consequences, in
accordance with the rules of your existing account. You may not take a deduction
for the amount. To authorize the GT Global IRA Custodian to arrange a direct
transfer from your existing IRA, please complete the attached IRA Transfer
Authorization as well as the IRA Application.
- --------------------------------------------
7. TAX-FREE ROLLOVER CONTRIBUTIONS
- --------------------------------------------
Rollover contributions permit you to contribute amounts you are eligible to,
or actually, receive from one retirement program to another without incurring
any income tax liability. The source of a rollover contribution to an IRA is
typically either a distribution from a qualified retirement plan, a
tax-sheltered 403(b) annuity or custodial account, or another IRA. Most
distributions may be rolled over to an IRA without regard to whether it is a
total or a
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DS-5
<PAGE>
----------------
GT GLOBAL IRA
partial distribution, except for certain distributions such as minimum required
distributions, annuity payments, installments over a period of ten or more
years, and certain payments to non-spouse beneficiaries and alternate payees
that are not eligible for rollover treatment.
IF YOU ARE ELIGIBLE TO RECEIVE A DISTRIBUTION FROM A QUALIFIED PLAN OR A
403(B) PROGRAM, you may wish to have your eligible rollover distribution paid
directly to your GT Global IRA in order to avoid 20% withholding on the
distribution (which will be credited against your federal income taxes). If you
have a direct rollover of your eligible distribution, no income tax will be
withheld and your distribution will not be taxed until you take it out of your
IRA. To facilitate a direct rollover, please complete the attached IRA Direct
Rollover Instructions as well as the IRA Application. If, instead, you have your
eligible rollover distribution paid to you, you will receive only 80% of the
payment (because of the required 20% withholding) all or part of which may be
rolled over into a GT Global IRA within 60 days of your receipt of the
distribution. The amount rolled over will not be taxed until you take it out of
your IRA. NOTE that if you want to avoid being taxed on the amount that was
withheld, you will need to find other money to replace the 20% that was withheld
and contribute it to your IRA within the 60-day period.
This mandatory withholding does not apply to distributions you receive from
another IRA. All or part of an eligible distribution from another IRA may be
rolled over, into a GT Global IRA by the 60th day after you receive the benefits
from your first IRA.
Whether you do a direct rollover or a rollover of amounts that are initially
paid to you, you will not be taxed on (nor can you take a deduction for) the
amount you roll over. You will not be taxed on the amount transferred, and you
cannot take a tax deduction for that amount. You will be taxed on the portion of
the distribution, if any, which is not reinvested within 60 days. The following
summarizes some of the other rules applicable to rollover contributions.
Rollovers between individual retirement programs may occur only once in any
12-month period, BUT THIS LIMIT DOES NOT APPLY TO A TRUSTEE-TO-TRUSTEE TRANSFER
DESCRIBED IN SECTION 6 ABOVE.
If property has been received from a retirement program, it may be sold and
the proceeds of the sale rolled over. For example, if you were to receive a
distribution consisting of stock, you could sell the stock and contribute the
money you received from the sale to your IRA within the 60-day period from your
receipt of the stock. If you did not contribute all of the money you received
from the sale, you would be taxed on the portion not rolled over.
In general, you may roll over all or part of a distribution from your
employer's qualified plan or 403(b) program (except the portion, if any,
representing your own employee contributions to the plan) to your new IRA. You
may do this even though you are not otherwise allowed to make deductible
contributions into an IRA.
Tax-free rollover treatment will also apply, in certain circumstances, where
you receive a distribution in a parent-subsidiary or controlled group
relationship. Any amounts distributed from an employer's qualified plan will not
be eligible for five-year forward averaging if part of the distribution is
rolled-over into an IRA.
If you roll over an amount into an IRA from a qualified plan, you may be
allowed at a later date to roll those proceeds back into another qualified plan.
In order to do so, however, the proceeds may not have been mixed with regular
contributions or funds from other sources.
Since many of the rules with respect to rollover situations are rather
complex, you should check with your own tax adviser as to your ability to effect
a rollover in your particular circumstances.
- --------------------------------------------
8. EXCESS CONTRIBUTIONS
- --------------------------------------------
Generally, an excess contribution is the amount of any contributions to your
IRA (other than a proper rollover or transfer contribution) for a taxable year
that exceeds your IRA contribution limit for that year. If you make an excess
contribution, no income tax deduction will be allowed for the excess
contribution, and you may be subject to a 6% excise tax on the amount of the
excess contribution.
The 6% excise tax is imposed with respect to the tax year for which the excess
contribution is made and for each later year until the excess amount is
eliminated. The amount of this excise tax for any year cannot exceed 6% of the
value of the account, determined as of the close of that tax year.
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DS-6
<PAGE>
----------------
GT GLOBAL IRA
If you make a contribution to your IRA for a taxable year which exceeds your
IRA contribution limit, whether deductible or nondeductible, you may be
permitted to designate the contribution as a nondeductible IRA contribution by
the due date for filing your Federal income tax return, not including
extensions. As an alternative, you may withdraw the contribution from your IRA
and the earnings thereon at any time prior to the due date for filing your
Federal income tax return, including extensions, for the taxable year for which
the contribution was made. If this is done, the return of the contribution will
not be includible in your gross income as an IRA distribution, and the
contribution will not be subject to the 6% excise tax on excess contributions
(assuming the contribution is not deducted on your return). However, the
earnings on the contribution will be taxable income in the year for which the
contribution was made, and may possibly be subject to the 10% tax on early
distributions if you are under age 59 1/2 (see Section 10 below).
If you make an excess contribution to your IRA that exceeds your IRA
contribution limit, and you withdraw the excess contribution after the due date
for filing your Federal income tax return (including extensions), the returned
excess contribution will not be includible in your gross income as an IRA
distribution (subject to possible premature distribution penalties) if: (1) your
total IRA contributions for the year were not more than $2,250 ($4,000 for years
after 1996) and (2) you did not deduct the excess contribution on your return
(or if the deduction you claimed was disallowed by the Internal Revenue
Service). However, you must pay the 6% excise tax on the excess contribution for
each taxable year that it is still in your IRA at the end of the following year.
Under this procedure, you are not required to withdraw any earnings attributable
to the excess contribution.
You may also eliminate an excess contribution from your IRA in a subsequent
year by not contributing the maximum amount for that year and applying the
excess contribution to the subsequent year's contribution. You may be entitled
to a deduction for the amount of the excess contribution that is applied in the
subsequent year, provided you did not previously deduct the excess contribution
(or if the deduction you claimed was disallowed by the Internal Revenue
Service). However, if you incorrectly deducted an excess contribution in a
closed taxable year (i.e., one for which the period to assess a deficiency has
expired), the amount of the excess contribution cannot be deducted again in the
subsequent year in which it is applied.
- --------------------------------------------
9. DISTRIBUTIONS
- --------------------------------------------
Taxable distributions from your IRA are taxed as ordinary income regardless of
their source. They are not eligible for capital gains treatment or the special
5-year averaging rules that apply (for tax years beginning prior to 2000) to
lump sum distributions from qualified employer plans.
As provided in Form 5305-A, you may elect to have your IRA distributed in: a
single sum payment; an annuity contract; or equal annual installments over a
specified period not to exceed your life expectancy or the joint life and last
survivor expectancy of you and your designated beneficiary. In general, you must
begin receiving distributions from your IRA no later than April 1 following the
calendar year in which you reach age 70 1/2. There is a prescribed minimum
amount for such distributions and an excise tax may be imposed if the amount
distributed to you is less than the required amount. If you die before your IRA
is completely distributed to you, the remaining balance in your IRA will be
distributed to your beneficiary(ies) either in accordance with the method of
distribution in effect at your death (if on or after the required beginning
date) or as otherwise permitted (if your death occurs prior to the required
beginning date).
You may have to pay an additional 15% excess distribution tax on IRA and
qualified retirement plan distributions that exceed $150,000 (which is an
indexed amount and may be subject to further adjustment). This excise tax is
reduced by any tax you may owe on premature distributions which apply to this
excess distribution. This 15% tax may not apply in certain circumstances. You
should contact your own tax advisor for more information.
- --------------------------------------------
10. PREMATURE DISTRIBUTIONS
- --------------------------------------------
A penalty tax of 10% is imposed on taxable distributions made to you or your
beneficiaries before you attain age 59(1)/(2). No penalty tax will be imposed if
the distribution is (i) a return of nondeductible contributions, (ii) made on
account of your death or disability, (iii) made in substantially equal payments
over life or life
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DS-7
<PAGE>
----------------
GT GLOBAL IRA
expectancy as permitted in accordance with the provisions of Section 72(t)(2) of
the Code and the regulations promulgated thereunder, or (iv) contributed as a
"rollover" within 60 days. In addition, for distributions made after 1996, the
penalty tax does not apply if the distribution is made (i) to pay for medical
expenses in excess of 7.5% of your adjusted gross income or (ii) if you are
unemployed, to pay for medical insurance premiums after you have received
unemployment compensation for a specified period. This tax is in addition to any
tax that is due because you must include the portion of the premature
distribution attributable to deductible contributions and all earnings in your
gross income.
- --------------------------------------------
11. TAXABILITY OF ACCOUNT
- --------------------------------------------
Your IRA is exempt from tax unless you or your beneficiaries engage in a
prohibited transaction under Section 4975 of the Internal Revenue Code. Examples
of prohibited transactions include your borrowing from the IRA or your selling
property to or buying property from the IRA.
If you engage in a prohibited transaction, your IRA will lose its tax exempt
status as of the first day of the tax year in which the prohibited transaction
occurs. Once your IRA loses its exempt status, you must include the fair market
value of its assets in your income for that tax year. You will also be subject
to the 10% penalty tax on premature distributions.
If you use your IRA or any portion thereof as security for a loan, the portion
so used will be treated as distributed to you and will be currently taxable and
subject to the 10% tax on premature distributions.
- --------------------------------------------
12. FINANCIAL DISCLOSURES
- --------------------------------------------
Contributions to your IRA will be invested in shares of a GT Global Mutual
Fund. You may receive earnings on your shares in the form of income dividends or
net realized capital gain distributions. Such earnings will be reinvested in
additional shares of a GT Global Mutual Fund. The growth in value of the IRA is
neither guaranteed nor projected. The gross income received by a GT Global
Mutual Fund is reduced by the fees paid to the manager of the Fund, Chancellor
LGT Asset Management, Inc., and by expenses incurred by the Fund, such as
accounting fees, taxes, interest, trustee fees and brokerage charges. Each
Fund's prospectus contains more complete information including charges,
expenses, the risks of global investing and other matters of interest to a
prospective investor.
- --------------------------------------------
13. MISCELLANEOUS
- --------------------------------------------
You are required to file form 5329 (Return for Individual Retirement Savings
Arrangements) for a taxable year in which you are subject to penalty taxes in
connection with your IRA.
The enclosed agreement has been approved as to form for use in establishing
custodial accounts by the Internal Revenue Service. The Internal Revenue Service
approval is a determination as to form only and does not represent a
determination of the merits of the account.
The proceeds from the custodial account may be used by you as a rollover
contribution to another account or annuity or retirement bond.
- --------------------------------------------
14. ADDITIONAL INFORMATION
- --------------------------------------------
Additional information on Individual Retirement Accounts can be obtained from
any district office of the Internal Revenue Service (IRS Publication 590).
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DS-8
<PAGE>
[CAMERA READY COPY]
DS-9
<PAGE>
ARTICLE VIII
See Exhibit A to Form 5305-A for additional terms applicable to your GT Global
IRA. Exhibit A is incorporated in and made part of your GT Global IRA by this
reference.
DS-10
<PAGE>
----------------
GT GLOBAL IRA
EXHIBIT A TO FORM 5305-A,
ARTICLE VIII
- ----------------------------------------------------------
The following provisions constitute Article VIII of Form 5305-A which is used to
establish your GT Global IRA.
1. The Custodian is under no duty to compel the Depositor to make any
contributions to the Account and shall have no duty to assure that such
contributions are appropriate in amount (except to the extent that no annual
contributions may exceed $2,000 or such other maximum annual level as may be
later authorized by law).
2. The amount of each contribution by a Depositor shall be applied to the
purchase of shares of GT Global Mutual Funds (hereinafter "Funds"). The
Depositor acknowledges receipt of the appropriate current prospectus of the
Funds. All dividends and capital gain distributions received on securities held
in the Custodial Account (the "Account") shall be reinvested in additional
shares of the Funds and credited to the Account. Shares acquired in the Account
will be held beneficially for the Depositor in the name of the Custodian or its
nominee.
3. The Custodian shall deliver to the Depositor all shareholder notices and
reports, prospectuses, financial statements, proxy material and other material
as they are received from the Funds. The Custodian shall vote at all shareholder
meetings of the Funds in accordance with written instructions of the Depositor
which will be secured by the Custodian. If no written instructions are received
from the Depositor, the Depositor's shares shall not be voted.
4. The Custodian may resign upon at least 60 days written notice to the
Depositor and may be removed by the Depositor upon 60 days written notice to the
Custodian. Upon resignation by the Custodian, it shall transfer the assets of
the Account in such a manner as the Depositor shall designate, but in the
absence of such designation, the Custodian will use its best efforts to transfer
the assets of the Account to a successor custodian to be held under an
Individual Retirement Account qualifying under Section 408 of the Internal
Revenue Code. Upon removal of the Custodian by action of the Depositor, the
assets of the Account shall be transferred in accordance with the Depositor's
instructions.
5. If the Depositor does not effectively elect any of the methods of
distribution described above by the April 1 following the calendar year in which
he or she reaches age 70 1/2, the assets of the Account shall be distributed to
the Depositor in equal or substantially equal payments over the Depositor's life
expectancy in accordance with the minimum distribution requirements applicable
to the Account as described in Article IV of Form 5305-A unless the Depositor
effectively elects another method of distribution.
6. By completing the Beneficiary Designation section of the IRA Application,
the Depositor may designate one or more beneficiaries to receive such benefits
in the event of his death. Should the Depositor die without an effective
designation of beneficiary, the assets of the Account shall be distributed to
the Depositor's surviving spouse, or if there is no surviving spouse, to the
Depositor's estate in a single payment, unless another method of distribution
has been elected by such spouse or estate, as applicable.
7. In the event a Depositor's contribution to the Account in any year exceeds
$2,000, such excess amount shall be deemed to be a "rollover contribution"
permitted under Article I of the Account agreement, unless the Depositor
certifies otherwise to the Custodian in a form satisfactory to it.
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DS-11
<PAGE>
----------------
GT GLOBAL IRA
NOTES
- ----------------------------------------------------------
-------
DS-12
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, CA 94120-7345 IRA APPLICATION
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (ACCOUNT NO. ________________________________)
TYPE OF ACCOUNT: / / CONTRIBUTORY / / ROLLOVER / / SIMPLIFIED EMPLOYEE PENSION-IRA
(SEP-IRA)
/ / THIS IS A TRANSFER. I HAVE ATTACHED A COMPLETED IRA TRANSFER AUTHORIZATION.
Telephone Number( ) ____________________________
Name ________________________________ ________________________________________________
Address______________________________ Social Security Number / / or Tax I.D. Number / / (Check
Street applicable box)
________________________________ If more than one owner, social security number or taxpayer
City State Zip Code identification number should be provided for first owner
listed.
Date of Birth______________________________
FUND SELECTION & INITIAL CONTRIBUTION
Enclosed is a check for $ ___________________ made payable to GT Global (as agent for the Custodian) to be invested in the Fund(s)
hereby specified. EACH GT GLOBAL MUTUAL FUND ISSUES THREE CLASSES OF SHARES. CLASS A SHARES ARE SOLD WITH AN INITIAL SALES CHARGE
WHILE CLASS B SHARES ARE SOLD WITHOUT AN INITIAL SALES CHARGE BUT ARE SUBJECT TO HIGHER EXPENSE LEVELS AND TO A CONTINGENT DEFERRED
SALES CHARGE PAYABLE ON CERTAIN REDEMPTIONS. ADVISOR CLASS SHARES ARE SOLD THROUGH A DIFFERENT PROSPECTUS THAN CLASS A AND CLASS B
SHARES, ARE NOT SOLD DIRECTLY TO THE GENERAL PUBLIC AND ARE ONLY AVAILABLE THROUGH CERTAIN EMPLOYEE BENEFIT PLANS, FINANCIAL
INSTITUTIONS AND OTHER ENTITIES THAT HAVE ENTERED INTO SPECIFIC AGREEMENTS WITH GT GLOBAL, INC. PLEASE READ THE PROSPECTUS OF SUCH
FUNDS CAREFULLY BEFORE YOU INVEST. (If this is a transfer from another IRA, please indicate Fund preference and the percentage of
the contribution you wish allocated to each Fund only. Also complete the separate IRA Transfer Authorization Form.)
</TABLE>
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER:
/ / CLASS A SHARES / /CLASS B SHARES (NOT AVAILABLE FOR PURCHASES OF $500,000
OR MORE OR FOR THE GT GLOBAL DOLLAR FUND) OR
/ / ADVISOR CLASS SHARES.
If a class share box is not checked, your investment will be made in Class A
shares.
<TABLE>
<CAPTION>
INITIAL CONTRIBUTION INITIAL CONTRIBUTION
<S> <C> <C> <C>
07 / / GT GLOBAL WORLDWIDE $ ______________ OR 03 / / GT GLOBAL EUROPE GROWTH $ ______________ OR
GROWTH FUND ______________% FUND ______________%
05 / / GT GLOBAL $ ______________ OR 13 / / GT GLOBAL LATIN AMERICA $ ______________ OR
INTERNATIONAL GROWTH FUND ______________% GROWTH FUND ______________%
16 / / GT GLOBAL EMERGING $ ______________ OR 24 / / GT GLOBAL AMERICA SMALL $ ______________ OR
MARKETS FUND ______________% CAP GROWTH FUND ______________%
22 / / GT GLOBAL CONSUMER $ ______________ OR 06 / / GT GLOBAL AMERICA MID $ ______________ OR
PRODUCTS AND SERVICES FUND ______________% CAP GROWTH FUND ______________%
17 / / GT GLOBAL FINANCIAL $ ______________ OR 23 / / GT GLOBAL AMERICA VALUE $ ______________ OR
SERVICES FUND ______________% FUND ______________%
11 / / GT GLOBAL HEALTH CARE $ ______________ OR 04 / / GT GLOBAL JAPAN GROWTH $ ______________ OR
FUND ______________% FUND ______________%
19 / / GT GLOBAL $ ______________ OR 10 / / GT GLOBAL GROWTH & $ ______________ OR
INFRASTRUCTURE FUND ______________% INCOME FUND ______________%
21 / / GT GLOBAL NATURAL $ ______________ OR 08 / / GT GLOBAL STRATEGIC $ ______________ OR
RESOURCES FUND ______________% INCOME FUND ______________%
15 / / GT GLOBAL $ ______________ OR 09 / / GT GLOBAL GOVERNMENT $ ______________ OR
TELECOMMUNICATIONS FUND ______________% INCOME FUND ______________%
02 / / GT GLOBAL NEW PACIFIC $ ______________ OR 18 / / GT GLOBAL HIGH INCOME $ ______________ OR
GROWTH FUND ______________% FUND ______________%
01 / / GT GLOBAL DOLLAR FUND $ ______________ OR TOTAL INITIAL CONTRIBUTION: $ ________________
______________%
CONTRIBUTION YEAR: ________________
</TABLE>
NOTE: Minimum Initial Contribution -- $100 per Fund
Maximum Annual Individual Contribution (except for rollovers and
transfers) -- $2,000
Maximum Annual Individual and Spousal Contribution (except for rollovers
and transfers) -- $4,000 ($2,250 for years prior to 1997, in any
combination, provided no more than $2,000 is invested in any one
account).
Maximum Annual SEP-IRA Contribution -- See Disclosure Statement
TELEPHONE EXCHANGE
I, either directly or through the Authorized Agent, if any, named below, hereby
authorize the Transfer Agent of the GT Global Mutual Fund, to honor any
telephone, telex or telegraphic instructions believed to be authentic for
exchange between any of the Funds distributed by GT Global, Inc. I understand
and agree that the account will be subject to the telephone exchange privilege
described in the applicable GT Global Mutual Fund's current prospectus and
agree that GT Global, Inc., GT Global Mutual Funds and the Funds' Transfer
Agent, their officers and employees, will not be responsible for the
authenticity of any telephone, telex, or telegraphic instructions nor be liable
for any loss arising out of any such telephone, telex or telegraphic
instructions effected including any such loss due to negligence on the part of
such entities.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER OR ADVISOR) ONLY
We hereby submit this IRA Application for the purchase of shares including
shares purchased under a Right of Accumulation or Letter of Intent in
accordance with the terms of our Selling Agreement with GT Global, Inc. and
with the Prospectus(es) for the GT Global Mutual Fund(s). We agree to notify
GT Global, Inc. of any purchases properly made under a Letter of Intent or
Right of Accumulation.
Investment Dealer or Advisor Name_____________________________________________
Main Office Address___________________________________________________________
Branch Number_______ Representative's Number______ Representative's Name______
<TABLE>
<S> <C>
Branch Address ______________________________________________ Telephone Number __________________
For Class A and B shares only:
Investment Dealer's Authorized Signature X __________________ Title _____________________________
For Advisor Class shares only:
We hereby submit this IRA 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 Authorized Signature X ___________________________ Title _____________________________
</TABLE>
DS-13
<PAGE>
<TABLE>
<S> <C> <C>
DESIGNATION OF BENEFICIARY(IES)
If you require more room to name additional beneficiaries, please provide
the necessary information on a separate sheet, and indicate next to each
name whether beneficiary is primary or contingent.
PRIMARY BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest
remaining in my IRA upon my death:
</TABLE>
<TABLE>
<S> <C> <C> <C>
1. Name ________________________________ Address ______________________
Relationship ___________ DOB _________ Social Security Number ______________ Share of Account __%
2. Name ________________________________ Address ______________________
Relationship ___________ DOB _________ Social Security Number ______________ Share of Account __%
CONTINGENT BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my IRA upon my death:
1. Name ________________________________ Address ______________________
Relationship ___________ DOB _________ Social Security Number ______________ Share of Account __%
2. Name ________________________________ Address ______________________
Relationship ___________ DOB _________ Social Security Number ______________ Share of Account __%
Unless otherwise indicated above, the benefit payable hereunder shall be paid
in equal shares to the Primary Beneficiaries who survive the Participant. If
no Primary Beneficiary(ies) survives the Participant, the payment shall be
made in equal shares (or as otherwise indicated above) to the Contingent
Beneficiary(ies) who survive the Participant. The Participant reserves the
right to change the above beneficiary by filing a new Beneficiary Designations
Form with the Custodian. Should no named beneficiary survive the date of
distribution, the account shall be distributed to my surviving spouse, or if
there is no surviving spouse, in a single payment to my estate. ONLY THE MOST
RECENT EXECUTED DESIGNATION OF BENEFICIARY(IES) ON FILE WITH GT GLOBAL
INVESTOR SERVICES, INC. (AS AGENT FOR THE CUSTODIAN) WILL BE HONORED.
CONSENT OF SPOUSE
I consent to the above Beneficiary Designation.
Signature of Spouse:
__________________________________________________________________
Date:
__________________
(Note: May be required in community property states if any person other than
or in addition to Participant's Spouse is designated as Beneficiary.)
REDUCED SALES CHARGES
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES ONLY
/ / I certify that I qualify for the Right of Accumulation sales charge
discount described in the prospectus and statement of additional
information of the Fund(s) purchased.
/ / I own shares of more than one GT Global Mutual Fund. Below is a schedule
showing the numbers of each of my Shareholder Accounts.
/ / The registration of some of my shares differs from that shown on this IRA
Application. Below is a schedule showing the account number(s) and full
registration in each case.
STATEMENT OF INTENTION -- CLASS A SHARES ONLY
I agree to the Statement of Intention set forth in the Prospectus(es) for the
Fund(s) in which I am investing. Although I am not obligated to do so, it is my
intention to invest over a thirteen-month period in Class A shares of the GT
Global Mutual Funds, in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
LIST OF OTHER GT GLOBAL MUTUAL FUND ACCOUNTS:
_______________________________________________ ___________________________
_______________________________________________ ___________________________
_______________________________________________ ___________________________
Account Numbers Account Registrations
AGREEMENT AND SIGNATURE
I acknowledge receipt of the Disclosure Statement and IRA Agreement (IRS Form
5305-A) for the GT Global IRA. I acknowledge receipt of the current
Prospectus(es) of the Fund(s) in which I have directed GT Global Investor
Services, Inc. (as agent for the Custodian) to invest my contribution(s). I
agree to the terms and provisions set forth in this IRA Application including
those contained in the Telephone Exchange section, the Disclosure Statement,
the Individual Retirement Custodial Account Agreement (IRS Form 5305-A) and
the Prospectus(es). AS REQUIRED BY THE INTERNAL REVENUE SERVICE, I CERTIFY,
UNDER PENALTIES OF PERJURY, THAT THE TAXPAYER IDENTIFICATION NUMBER GIVEN ON
THE FACE OF THIS IRA APPLICATION IS CORRECT AND THAT I AM NOT SUBJECT TO
BACKUP WITHHOLDING IN MY IRA(S). THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE
YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS
REQUIRED TO AVOID BACKUP WITHHOLDING.
Signature X_______________________________ Date ______________________________
Individual
DS-14
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, IRA TRANSFER AUTHORIZATION
CA 94120-7345
800/223-2138
</TABLE>
Please complete a separate Transfer Authorization for each Account to be
transferred.
TO EXISTING CUSTODIAN:
Name of Existing Custodian_____________________ Telephone_(________)__________
Address
_______________________________________
Street
_______________________________________
City
____________________
State
____________________
Zip Code
Individual Policy or Account:______________________ in the name of ___________
Account Name Account Number Your Name
Please liquidate/transfer in kind* $________________ or ________________% of
my IRA identified above and transfer those funds by a check,
made payable to
GT Global, for __________________________, IRA Account #______________________
Investor's Name Existing GT Global
Account Number, if applicable
AGE 70 1/2 RESTRICTIONS
(Please complete this section if you will be age 70 1/2 or older in the
transfer year.)
The following transfer restrictions apply to this transaction:
<TABLE>
<S> <C>
1. Required Minimum Distribution. I authorize the Custodian or Trustee named above (select one):
/ / to distribute my required minimum distribution to me prior to transferring my IRA assets.
/ / to segregate and retain minimum distribution amount. Distribute on ________________, 19__.
2. Required Elections. (Complete only if you have reached your required beginning date, i.e.,
April 1, following the year in which you attain age 70 1/2.)
a. My oldest primary beneficiary with respect to the transferring IRA is:
Name _____________________ Birthdate _______________ Relationship ______________________
b. My life expectancy / / was / / was not being recalculated.
c. The life expectancy of my spouse beneficiary / / was / / was not being recalculated
/ / Not Applicable. I am aware that the elections indicated above became irrevocable as of my
required beginning date and will apply to the IRA with the new Custodian indicated below.
</TABLE>
THIS FORM, ALONG WITH ALL CHECK(S) SHOULD BE MAILED TO: GT GLOBAL (AS AGENT
FOR THE CUSTODIAN), P.O. BOX 7345, SAN FRANCISCO, CA 94120-7345.
<TABLE>
<S> <C> <C>
X
____________________ ____________________ ____________________
Investor's Signature Date Signature Guarantee
(if required by
current Custodian)
</TABLE>
* If this IRA currently holds shares of a GT Global Mutual Fund, you may
request a direct transfer of shares.
FOR GT GLOBAL USE ONLY
GT Global Investor Services, Inc. (as agent for the GT Global IRA Custodian)
agrees to accept the transfer described above and upon written receipt will
apply the proceeds to investments as designated by the Investor.
X_____________________________________________________ ____________
Signature of Custodian or its
Agent Date
DS-15
<PAGE>
DS-16
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, IRA DIRECT ROLLOVER
CA 94120-7345 AUTHORIZATION
800/223-2138
</TABLE>
TO CURRENT PLAN ADMINISTRATOR OR 403(b) CUSTODIAN:
Name of Current Plan Administrator or 403(b) Custodian:_____________
Telephone (________)__________________________________________________________
Address:_______________________ ______________________ ___________ ___________
Street City State Zip Code
Plan Account:_________________________________________________________________
Plan Account Name Plan Account Number Name of Plan
Participant
Please pay my entire eligible rollover distribution from the plan identified
above directly to my GT Global IRA Custodian, for
________________________________________________________________________, IRA
Account #_______________________________________________________________
Participant Name (GT Global Account #, if known)
I. ROLLOVER/DIRECT ROLLOVER FROM AN EMPLOYER PLAN
<TABLE>
<S> <C>
A. I certify that my employer's qualified plan, qualified annuity, or 403(b) plan has made
or will make an Eligible Rollover Distribution which is being paid in a Direct Rollover
to the Custodian of my IRA; or
B. This Direct Rollover is not part of a series of payments over my life expectancy(ies )
or over a period of 10 years or more.
C. This Direct Rollover does not include any "after tax" employee contributions made by
me to the employer's plan.
D. This Direct Rollover does not include any required minimum distributions with respect
to the employer's plan.
E. I certify that I am eligible to establish an IRA with this Direct Rollover of an Eligible
Rollover Distribution, and that I am:
/ / 1. the plan participant;
/ / 2. the surviving spouse of the deceased plan participant; or
/ / 3. the spouse or former spouse of the plan participant under a Qualified Domestic Relations Order.
</TABLE>
II. ADDITIONAL INFORMATION FOR ROLLOVERS BEGINNING AT AGE 70 1/2
(Complete the following only if the direct rollover is being made after the
Participant's required beginning date, the April 1st following the calendar
year during which the Participant attained age 70 1/2):
1. My oldest primary beneficiary under the distribution plan is:
__________________________________________________________________
Birthdate _________________________ Relationship _______________________
2. My life expectancy / / was / / was not being recalculated. The life
expectancy of my spouse beneficiary / / was / / was not being recalculated.
III. COMMINGLING AUTHORIZATION
(Check if applicable):
/ / I authorize the Custodian to commingle this direct rollover with my
regular IRA contributions. I understand that commingling regular IRA
contributions with direct rollover contributions from employer plans may
preclude me from rolling over funds in my rollover IRA into another
qualified plan or 403(b) plan. With such knowledge, I authorize and direct
the Custodian to place regular IRA contributions in my rollover IRA or
vice versa.
Please make this direct payment either in the form of a check made payable, or
by wire, to GT Global, for the benefit of my IRA. All checks should be mailed
to GT Global (as agent for the Custodian), P.O. Box 7345, San Francisco, CA
94120-7345.
SIGNATURE OF PARTICIPANT
I hereby irrevocably elect, pursuant to IRS Regulation 1.402(a)(5)-1T to treat
this contribution as a rollover contribution. I understand that this will not
be a valid IRA rollover unless PART I and PART II (and, if applicable, PART
III) are correct statements. I acknowledge that, due to the complexities
involved in the tax treatment of eligible rollover distributions from
qualified plans, qualified annuities, or 403(b) plans and direct rollovers to
IRAs, the Custodian has recommended that I consult with my tax advisor or the
Internal Revenue Service before completing this transaction to make certain
that this transaction qualifies as a rollover and is appropriate in my
individual circumstances. I hereby release the Custodian from any claim for
damages on account of the failure of this transaction to qualify as a valid
rollover.
<TABLE>
<S> <C> <C>
X
______________________________ _____ ______________________________
Participant's Signature Date Signature Guarantee (if
required by current plan)
</TABLE>
FOR GT GLOBAL USE ONLY
GT Global Investor Services, Inc., (as agent for the GT Global IRA Custodian)
agrees to accept the direct rollover described above and upon receipt of such
rollover funds will apply those funds to investments as designated by the
Participant.
X___________________________________________________ _____________
Signature of Custodian or its Agent Date
DS-17
<PAGE>
IRA DIRECT ROLLOVER INSTRUCTIONS
Since the eligible rollover distributions(1) that you take from an
employer-sponsored qualified plan(2) are subject to 20% federal income tax
withholding unless you roll over these assets directly to an IRA or other
eligible retirement plan, you may wish to arrange for a direct rollover to a GT
Global IRA.
TO FACILITATE A DIRECT ROLLOVER TO A GT GLOBAL IRA, PLEASE FOLLOW THESE STEPS:
1. Complete the front portion of this form;
2. Complete the GT Global IRA Application; and
3. Return them to GT Global at P.O. Box 7345, San Francisco, CA 94120-7345.
GT Global will establish an IRA in your name, and provide you and your current
plan administrator or 403(b) custodian with your GT Global IRA account number.
Your current plan administrator or 403(b) custodian can then send the assets
directly to your GT Global IRA (by check or wire), or give you a check made
payable to your GT Global IRA.
(1) An "eligible rollover distribution" subject to 20% withholding is generally
any partial or total distribution, except: (a) substantially equal periodic
payments made for life or joint lives (or life expectancy or joint life
expectancies) or for a specified period of 10 years or more; (b) required
minimum distributions; (c) non-taxable distributions (e.g., after-tax
contributions); and (d) certain DE MINIMIS distributions, corrective
distributions, loans and other distributions specified in the Internal
Revenue Code and applicable regulations. You should verify with the
distributing employer and your tax adviser whether a distribution is an
"eligible rollover distribution."
(2) "Qualified" plans include 401(k), 403(b) and other pension and
profit-sharing plans. Section 457 deferred compensation plans for
government and tax-exempt entity employees are not "qualified." An IRA is
not considered a "qualified" plan, even if the assets held in the IRA
originated from a qualified plan. You may use the IRA Transfer
Authorization to transfer your IRA assets to a GT Global IRA. If you
receive a distribution from another IRA, you may be eligible to roll it
over to a GT Global IRA.
DS-18
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds SUPPLEMENTAL APPLICATION
P.O. Box 7345, San Francisco, CA 94120-7345 FOR AUTOMATIC INVESTMENT PLAN
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
ACCOUNT REGISTRATION
PLEASE NOTE: Automatic Investment Plan may ONLY be used for current year IRA contributions.
Please supply the following information exactly as it appears on the Fund's records.
__________________________________________________ __________________________________________________
Name Account Number
__________________________________________________ __________________________________________________
Address Telephone Number
__________________________________________________ __________________________________________________
City State Zip Code Social Security Number
____________________________________
AUTOMATIC INVESTMENT PLAN Date of Birth
I hereby authorize the Transfer Agent of the GT Global Mutual Funds to debit my personal checking account
on the designated dates in order to purchase shares in the Fund(s) indicated at the applicable public
offering price determined on that day. Please indicate if your purchase is for Class B shares / /. If the
Class B share box is not checked, your purchase will be made in Class A shares.
Fund: ____________ $________ or _____% Fund: ____________ $________ or _____%
Fund: ____________ $________ or _____% Fund: ____________ $________ or _____%
Fund: ____________ $________ or _____% Fund: ____________ $________ or _____%
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select:__________________
(MONTH)
(The request for participation in the Plan must be received by the 1st day of the month in which you wish
investments to begin.)
Amount of each debit (minimum $100) $__________
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic
Investment Plan Application.
</TABLE>
<TABLE>
<S> <C>
[LOGO]
GT Global Mutual Funds
P.O. Box 7345, San Francisco, CA 94120-7345 AUTOMATIC INVESTMENT PLAN
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
BANK AUTHORIZATION
</TABLE>
<TABLE>
<S> <C> <C> <C>
________________________ ____________________________________ ____________
Bank Name Bank Address Bank Account Number
I/we authorize you, the above named bank, to debit my/our account for amounts drawn by the Transfer Agent of the
GT Global Mutual Funds, acting as my agent. I/we agree that your rights in respect to each withdrawal shall be
the same as if it were a check drawn upon you and signed by me/us. This authority shall remain in effect until
I/we revoke it in writing and you receive it. I/we agree that you shall incur no liability when honoring any
such debit.
I/we further agree that you will incur no liability to me/us if you dishonor any such withdrawal. This will be
so even though such dishonor results in the forfeiture of investment.
_______________________________________________________ _______________________________________________________
Account Holder's Name Joint Account Holder's Name
X __________________________ _____________ X _________________________
Account Holder's Signature Date Joint Account Holder's Signature _____________________ ___________
Date
</TABLE>
(OVER)
DS-19
<PAGE>
<TABLE>
<S> <C> <C> <C>
AGREEMENT AND SIGNATURES
The investor certifies and agrees that the certifications,
authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Mutual
Funds receives written notice of any change or revocation. Any
change in these instructions must be in writing with all
signatures guaranteed (if applicable).
__________________________________________
Date
X
__________________________________________
__________________________________________
Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) any U.S. bank; (2) U.S.
trust company; (3) a member firm of a U.S. stock exchange; (4) a
foreign branch of any of the foregoing; or (5) any other
eligible guarantor institution. A notary public is not an
acceptable guarantor. An investor uncertain about the GT Global
Mutual Funds signature guarantee requirement should contact the
Transfer Agent.
</TABLE>
INDEMNIFICATION AGREEMENT
To: Bank Named on the Reverse
In consideration of your compliance with the request and authorization of the
depositor(s) named on the reverse, the Transfer Agent of the GT Global Mutual
Funds hereby agrees:
1. To indemnify and hold you harmless from any loss you may incur because of the
payment by you and of any debit by the Transfer Agent to its own order on the
account of such depositor(s) and received by you in the regular course of
business for payment, or arising out of the dishonor by you of any debit,
provided there are sufficient funds in such account to pay the same upon
presentation.
2. To defend at its own expense any action which might be brought by any
depositor or any other persons because of your actions taken pursuant to the
above mentioned request or in any manner arising by reason of your participation
in connection with such request.
DS-20
<PAGE>
[CAMERA READY COPY]
DS-21
<PAGE>
----------------
GT GLOBAL IRA
NOTES
- ----------------------------------------------------------
-------
DS-22
<PAGE>
----------------
GT GLOBAL IRA
NOTES
- ----------------------------------------------------------
-------
DS-23
<PAGE>
----------------
GT GLOBAL IRA
NOTES
- ----------------------------------------------------------
-------
DS-24
<PAGE>
(For all equations contained within Exhibit 16, the symbol * will denote "raised
to the power of"...)
EXHIBIT 16(I)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: GOVERNMENT INCOME FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class A Shares of the GT Global: Government Income Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1020.26 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1020.26
(T + 1)*1 = (1020.26/$1,000)
T + 1 = (1020.26/$1,000)*1
T = (1020.26/$1,000)*1 - 1
T = 0.0203
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
ERV = ending redeeming value ($1315.87 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*5 = 1315.87
(T + 1)*5 = (1315.87/$1,000)
T + 1 = (1315.87/$1,000)*.2
T = (1315.87/$1,000)*.2 - 1
T = 0.0564
- --------------------------------------------------------------------------------
Time period covered: March 29, 1988 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (3138 / 365 = 8.60)
VOA = ending value of account ($1749.93 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*8.60 = 1749.93
(T + 1)*8.60 = (1749.93/$1,000)
T + 1 = (1749.93/$1,000)* 0.12
T = (1749.93/$1,000)* 0.12 - 1
T = 0.0673
- --------------------------------------------------------------------------------
Time period covered: March 29, 1988 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1749.93 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
T = (1749.93/$1,000) - 1
T = 0.7499
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: GOVERNMENT INCOME FUND
CLASS A SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class A Shares of the GT Global: Government Income Fund
Series of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1071.14, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1071.14
(T + 1)*1 = (1071.14/$1,000)
T + 1 = (1071.14/$1,000)*1
T = (1071.14/$1,000)*1 - 1
T = 0.0711
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
ERV = ending redeeming value ($1381.70, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*5 = 1381.70
(T + 1)*5 = (1381.70/$1,000)
T + 1 = (1381.70/$1,000) * .2
T = (1381.70/$1,000) * .2 - 1
T = 0.0668
- --------------------------------------------------------------------------------
Time period covered: March 29, 1988 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (3138 / 365 = 8.60)
VOA = ending value of account ($1837.20, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*8.60 = 1837.20
(T + 1)*8.60 = (1837.20/$1,000)
T + 1 = (1837.20/$1,000)* 0.12
T = (1837.20/$1,000)* 0.12 - 1
T = 0.0734
- --------------------------------------------------------------------------------
Time period covered: March 29, 1988 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1837.20, which does not take sales charge into
account)
CALCULATION:
T = (1837.20/$1,000) - 1
T = 0.8372
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: GOVERNMENT INCOME FUND
CLASS A SHARES
SEC YIELD
Time period covered: month ended October 31, 1986
FORMULA:
YIELD = 2X(((a - b)/(cd))*6 - 1)
a = dividends and interest earned during the period = $1,636,887.50
b = expenses accrued for the period (net of reimbursement) =
$286,546.00
c = average daily number of shares outstanding during the period that
were entitled to receive dividends = 28,695,745.02
d = maximum offering price per share on the last day of the period =
$9.18
COMPUTATION:
YIELD = 2X(((1,636,887.50 - 286,546.00)/(28,695,745.02 X 9.18))*6 - 1)
YIELD = 6.23%
<PAGE>
EXHIBIT 16(I)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: GOVERNMENT INCOME FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class B Shares of the GT Global: Government Income Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1015.72 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1015.72
(T + 1)*1 = (1015.72/$1,000)
T + 1 = (1015.72/$1,000)*1
T = (1015.72/$1,000)*1 - 1
T = 0.0157
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1470 / 365 = 4.03)
VOA = ending value of account ($1243.73 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*4.03 = 1243.73
(T + 1)*4.03 = (1243.73/$1,000)
T + 1 = (1243.73/$1,000)* 0.25
T = (1243.73/$1,000)* 0.25 - 1
T = 0.0557
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1243.73 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
T = (1243.73/$1,000) - 1
T = 0.2437
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: GOVERNMENT INCOME FUND
CLASS B SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class B Shares of the GT Global: Government Income Fund
Series of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1065.38, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1065.38
(T + 1)*1 = (1065.38/$1,000)
T + 1 = (1065.38/$1,000)*1
T = (1065.38/$1,000)*1 - 1
T = 0.0654
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1470 / 365 = 4.03)
VOA = ending value of account ($1261.44, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*4.03 = 1261.44
(T + 1)*4.03 = (1261.44/$1,000)
T + 1 = (1261.44/$1,000)* 0.25
T = (1261.44/$1,000)* 0.25 - 1
T = 0.0594
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1261.44, which does not take sales charge into
account)
CALCULATION:
T = (1261.44/$1,000) - 1
T = 0.2614
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: GOVERNMENT INCOME FUND
CLASS B SHARES
SEC YIELD
Time period covered: month ended October 31, 1986
FORMULA:
YIELD = 2X(((a-b)/(cd))*6-1)
a = dividends and interest earned during the period = $1,107,720.23
b = expenses accrued for the period (net of reimbursement) =
$287,149.00
c = average daily number of shares outstanding during the period that
were entitled to receive dividends = 19,428,006.88
d = maximum offering price per share on the last day of the period =
$8.74
COMPUTATION:
YIELD = 2X(((1,107,720.23 - 287,149.000))*6-1)
YIELD = 5.87%
<PAGE>
EXHIBIT 16(1)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: GOVERNMENT INCOME FUND
CLASS ADV SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class Adv Shares of the GT Global: Government Income Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1074.92, Class Adv
shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1 = 1074.92
(T + 1)*1 = (1074.92/$1,000)
T + 1 = (1074.92/$1,000)*1
T = (1074.92/$1,000)*1 - 1
T = 0.0749
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (519 / 365 = 1.42)
VOA = ending value of account ($1083.81, Class Adv
shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1.42 = 1083.81
(T + 1)*1.42 = (1083.81/$1,000)
T + 1 = (1083.81/$1,000)* 0.70
T = (1083.81/$1,000)* 0.70 - 1
T = 0.0584
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1083.81, Class Adv
shares have no sales charge)
CALCULATION:
T = (1083.81/$1,000) - 1
T = 0.0838
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: GOVERNMENT INCOME FUND
CLASS ADV SHARES
SEC YIELD
Time period covered: month ended October 31, 1986
FORMULA:
YIELD = 2X(((a - b)/(cd))*6 -1)
a = dividends and interest earned during the period = $549.04
b = expenses accrued for the period (net of reimbursement) = $73.00
c = average daily number of shares outstanding during the period that
were entitled to receive dividends = 9,849.22
d = maximum offering price per share on the last day of the period =
$7.73
COMPUTATION:
YIELD = 2X(((549.04-73.00)/(9,849.22X 7.73))*6 -1)
YIELD = 7.62%
<PAGE>
EXHIBIT 16(II)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: STRATEGIC INCOME FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class A Shares of the GT Global: Strategic Income Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1171.54 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1171.54
(T + 1)*1 = (1171.54/$1,000)
T + 1 = (1171.54/$1,000)*1
T = (1171.54/$1,000)*1 - 1
T = 0.1715
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
ERV = ending redeeming value ($1645.96 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*5 = 1645.96
(T + 1)*5 = (1645.96/$1,000)
T + 1 = (1645.96/$1,000)*.2
T = (1645.96/$1,000)*.2 - 1
T = 0.1048
- --------------------------------------------------------------------------------
Time period covered: March 29, 1988 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (3138 / 365 = 8.60)
VOA = ending value of account ($2090.11 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*8.60 = 2090.11
(T + 1)*8.60 = (2090.11/$1,000)
T + 1 = (2090.11/$1,000)* 0.12
T = (2090.11/$1,000)* 0.12 - 1
T = 0.0896
- --------------------------------------------------------------------------------
Time period covered: March 29, 1988 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($2090.11 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
T = (2090.11/$1,000) - 1
T = 1.0901
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: STRATEGIC INCOME FUND
CLASS A SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class A Shares of the GT Global: Strategic Income Fund
Series of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1229.96, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1229.96
(T + 1)*1 = (1229.96/$1,000)
T + 1 = (1229.96/$1,000)*1
T = (1229.96/$1,000)*1 - 1
T = 0.2300
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
ERV = ending redeeming value ($1728.00, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*5 = 1728.00
(T + 1)*5 = (1728.00/$1,000)
T + 1 = (1728.00/$1,000)*.2
T = (1728.00/$1,000)*.2 - 1
T = 0.1156
- --------------------------------------------------------------------------------
Time period covered: March 29, 1988 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (3138 / 365 = 8.60)
VOA = ending value of account ($2194.34, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*8.60 = 2194.34
(T + 1)*8.60 = (2194.34/$1,000)
T + 1 = (2194.34/$1,000)*0.12
T = (2194.34/$1,000)*0.12 - 1
T = 0.0958
- --------------------------------------------------------------------------------
Time period covered: March 29, 1988 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($2194.34, which does not take sales charge into
account)
CALCULATION:
T = (2194.34/$1,000) - 1
T = 1.1943
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: STRATEGIC INCOME FUND
CLASS A SHARES
SEC YIELD
Time period covered: month ended October 31, 1986
FORMULA:
YIELD = 2X(((a-b)/(cd))*6-1)
a = dividends and interest earned during the period = $1,261,496.90
b = expenses accrued for the period (net of reimbursement) =
$199,182.00
c = average daily number of shares outstanding during the period that
were entitled to receive dividends = 15,904,990.23
d = maximum offering price per share on the last day of the period =
$12.35
COMPUTATION:
YIELD = 2X(((1,261,496.90 - 199,182.00)/(15,904,990.23 x 12.35))*6-1)
YIELD = 6.58%
<PAGE>
EXHIBIT 16(II)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: STRATEGIC INCOME FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class B Shares of the GT Global: Strategic Income Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1171.53 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1171.53
(T + 1)*1 = (1171.53/$1,000)
T + 1 = (1171.53/$1,000)*1
T = (1171.53/$1,000)*1 - 1
T = 0.1715
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1470 / 365 = 4.03)
VOA = ending value of account ($1482.15 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*4.03 = 1482.15
(T + 1)*4.03 = (1482.15/$1,000)
T + 1 = (1482.15/$1,000)* 0.25
T = (1482.15/$1,000)* 0.25 - 1
T = 0.1027
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T = aggregate total return
VOA = ending value of account ($1482.15 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
T = (1482.15/$1,000) - 1
T = 0.4821
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: STRATEGIC INCOME FUND
CLASS B SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class B Shares of the GT Global: Strategic Income Fund
Series of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1221.53, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1221.53
(T + 1)*1 = (1221.53/$1,000)
T + 1 = (1221.53/$1,000)*1
T = (1221.53/$1,000)*1 - 1
T = 0.2215
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1470 / 365 = 4.03)
VOA = ending value of account ($1502.15, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*4.03 = 1502.15
(T + 1)*4.03 = (1502.15/$1,000)
T + 1 = (1502.15/$1,000)* 0.25
T = (1502.15/$1,000)* 0.25 - 1
T = 0.1064
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T= aggregate total return
VOA = ending value of account ($1502.15, which does not take sales charge into
account)
CALCULATION:
T = (1502.15/$1,000) - 1
T = 0.5021
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: STRATEGIC INCOME FUND
CLASS B SHARES
SEC YIELD
Time period covered: month ended October 31, 1986
FORMULA:
YIELD = 2x(((a-b)/(cd))*6 - 1)
a = dividends and interest earned during the period = $2,293,613.70
b = expenses accrued for the period (net of reimbursement) =
$550,103.00
c = average daily number of shares outstanding during the period that
were entitled to receive dividends = 28,908,903.20
d = maximum offering price per share on the last day of the period =
$11.77
COMPUTATION:
YIELD = 2x(((2,293,613.70 - 550,103.00)/(28,908,903.20x11.77))*6 - 1)
YIELD = 6.23%
<PAGE>
EXHIBIT 16(II)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: STRATEGIC INCOME FUND
CLASS ADV SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class Adv Shares of the GT Global: Strategic Income Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1233.94, Class Adv Shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1 = 1233.94
(T + 1)*1 = (1233.94/$1,000)
T + 1 = (1233.94/$1,000)*1
T = (1233.94/$1,000)*1 - 1
T = 0.2339
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time Period Covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (519 / 365 = 1.42)
VOA = ending value of account ($1279.85, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1.42 = 1279.85
(T + 1)*1.42 = (1279.85/$1,000)
T + 1 = (1279.85/$1,000)* 0.70
T = (1279.85/$1,000)* 0.70 - 1
T = 0.1899
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1279.85, Class Adv shares have no sales charge)
CALCULATION:
T = (1279.85/$1,000) - 1
T = 0.2798
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: STRATEGIC INCOME FUND
CLASS ADV SHARES
SEC YIELD
Time period covered: month ended October 31, 1986
FORMULA:
YIELD = 2X(((a-b)/(cd))*6-1)
a = dividends and interest earned during the period = $3,209.76
b = expenses accrued for the period (net of reimbursement) = $366.00
c = average daily number of shares outstanding during the period that
were entitled to receive dividends = 40,469.89
d = maximum offering price per share on the last day of the period =
$11.77
COMPUTATION:
YIELD = 2X(((3,209.76 - 366.00)/(40,469.89 X 11.77))*6-1)
YIELD = 7.27%
<PAGE>
EXHIBIT 16(III)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: HIGH INCOME FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class A Shares of the GT Global: High Income Fund Series of
the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1324.41 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1324.41
(T + 1)*1 = (1324.41/$1,000)
T + 1 = (1324.41/$1,000)*1
T = (1324.41/$1,000)*1 - 1
T = 0.3244
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1470 / 365 = 4.03)
VOA = ending value of account ($1829.72 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*4.03 = 1829.72
(T + 1)*4.03 = (1829.72/$1,000)
T + 1 = (1829.72/$1,000)* 0.25
T = (1829.72/$1,000)* 0.25 - 1
T = 0.1620
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T = aggregate total return
VOA = ending value of account ($1829.72 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
T = (1829.72/$1,000) - 1
T = 0.8297
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: HIGH INCOME FUND
CLASS A SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class A Shares of the GT Global: High Income Fund Series of
the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1390.46, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1390.46
(T + 1)*1 = (1390.46/$1,000)
T + 1 = (1390.46/$1,000)*1
T = (1390.46/$1,000)*1 - 1
T = 0.3905
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1470 / 365 = 4.03)
VOA = ending value of account ($1920.97, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*4.03 = 1920.97
(T + 1)*4.03 = (1920.97/$1,000)
T + 1 = (1920.97/$1,000)* 0.25
T = (1920.97/$1,000)* 0.25 - 1
T = 0.1761
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T= aggregate total return
VOA = ending value of account ($1920.97, which does not take sales charge into
account)
CALCULATION:
T = (1920.97/$1,000) - 1
T = 0.9210
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: HIGH INCOME FUND
CLASS A SHARES
SEC YIELD
Time period covered: month ended October 31, 1986
FORMULA:
YIELD = 2x(((a-b)/(cd))*6 - 1)
a = dividends and interest earned during the period = $1,441,661.79
b = expenses accrued for the period (net of reimbursement) =
$251,646.61
c = average daily number of shares outstanding during the period that
were entitled to receive dividends = 12,753,443.97
d = maximum offering price per share on the last day of the period =
$15.59
COMPUTATION:
YIELD = 2x(((1,441,661.79 - 251,646.61)/(12,753,443.97x15.59))*6 - 1)
YIELD = 7.29%
<PAGE>
EXHIBIT 16(III)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: HIGH INCOME FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class B Shares of the GT Global: High Income Fund Series of
the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1331.56 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1331.56
(T + 1)*1 = (1331.56/$1,000)
T + 1 = (1331.56/$1,000)*1
T = (1331.56/$1,000)*1 - 1
T = 0.3316
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1470 / 365 = 4.03)
VOA = ending value of account ($1850.17 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*4.03 = 1850.17
(T + 1)*4.03 = (1850.17/$1,000)
T + 1 = (1850.17/$1,000)* 0.25
T = (1850.17/$1,000)* 0.25 - 1
T = 0.1652
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T = aggregate total return
VOA = ending value of account ($1850.17 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
T = (1850.17/$1,000) - 1
T = 0.8502
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: HIGH INCOME FUND
CLASS B SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class B Shares of the GT Global: High Income Fund Series of
the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1381.56, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1381.56
(T + 1)*1 = (1381.56/$1,000)
T + 1 = (1381.56/$1,000)*1
T = (1381.56/$1,000)*1 - 1
T = 0.3816
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1470 / 365 = 4.03)
VOA = ending value of account ($1870.17, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*4.03 = 1870.17
(T + 1)*4.03 = (1870.17/$1,000)
T + 1 = (1870.17/$1,000)* 0.25
T = (1870.17/$1,000)* 0.25 - 1
T = 0.1683
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T= aggregate total return
VOA = ending value of account ($1870.17, which does not take sales charge into
account)
CALCULATION:
T = (1870.17/$1,000) - 1
T = 0.8702
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: HIGH INCOME FUND
CLASS B SHARES
SEC YIELD
Time period covered: month ended October 31, 1986
FORMULA:
YIELD = 2x(((a-b)/(cd))*6 - 1)
a = dividends and interest earned during the period = $2,012,908.28
b = expenses accrued for the period (net of reimbursement) =
$497,324.00
c = average daily number of shares outstanding during the period that
were entitled to receive dividends = 17,770,110.50
d = maximum offering price per share on the last day of the period =
$14.83
COMPUTATION:
YIELD = 2x(((2,012,908.28 - 497,324.00)/(17,770,110.50))*6 - 1)
YIELD = 7.00%
<PAGE>
EXHIBIT(III)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: HIGH INCOME FUND
CLASS ADV SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class Adv Shares of the GT Global: High Income Fund Series
of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1393.80, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1 = 1393.80
(T + 1)*1 = (1393.80/$1,000)
T + 1 = (1393.80/$1,000)*1
T = (1393.80/$1,000)*1 - 1
T = 0.3938
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ( $1,000)
T = average annual total return
n = number of years (519 / 365 = 1.42)
VOA = ending value of account ($1484.95, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1.42 = 1484.95
(T + 1)*1.42 = (1484.95/$1,000)
T + 1 = (1484.95/$1,000)* 0.70
T = (1484.95/$1,000)* 0.70 - 1
T = 0.3213
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T= aggregate total return
VOA = ending value of account ($1484.95, Class Adv shares have no sales charge)
CALCULATION:
T = (1484.95/$1,000) - 1
T = 0.4849
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: HIGH INCOME FUND
CLASS ADV SHARES
SEC YIELD
Time period covered: month ended October 31, 1986
FORMULA:
YIELD = 2x(((a-b)/(c-d))*6 - 1)
a = dividends and interest earned during the period = $113,844.51
b = expenses accrued for the period (net of reimbursement) =
$15,212.00
c = average daily number of shares outstanding during the period that
were entitled to receive dividends = 1,008,812.75
d = maximum offering price per share on the last day of the period =
$14.83
COMPUTATION:
YIELD = 2x(((113,844.51 - 15,212.00)/(1,008,812.75x14.83))*6 - 1)
YIELD = 8.04%
<PAGE>
EXHIBIT 16(IV)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: HEALTH CARE FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class A Shares of the GT Global: Health Care Fund Series of
the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1172.95 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1172.95
(T + 1)*1 = (1172.95/$1,000)
T + 1 = (1172.95/$1,000)*1
T = (1172.95/$1,000)*1 - 1
T = 0.1730
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
ERV = ending redeeming value ($1442.72 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*5 = 1442.72
(T + 1)*5 = (1442.72/$1,000)
T + 1 = (1442.72/$1,000)*.2
T = (1442.72/$1,000)*.2 - 1
T = 0.0761
- --------------------------------------------------------------------------------
Time period covered: August 7, 1989 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (2642 / 365 = 7.24)
VOA = ending value of account ($2503.35 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*7.24 = 2503.35
(T + 1)*7.24 = (2503.35/$1,000)
T + 1 = (2503.35/$1,000)* 0.14
T = (2503.35/$1,000)* 0.14 - 1
T = 0.1353
- --------------------------------------------------------------------------------
Time period covered: August 7, 1989 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($2503.35 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
T = (2503.35/$1,000) - 1
T = 1.5034
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: HEALTH CARE FUND
CLASS A SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class A Shares of the GT Global: Health Care Fund Series of
the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1231.45, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1231.45
(T + 1)*1 = (1231.45/$1,000)
T + 1 = (1231.45/$1,000)*1
T = (1231.45/$1,000)*1 - 1
T = 0.2314
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
ERV = ending redeeming value ($1514.78, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*5 = 1514.78
(T + 1)*5 = (1514.78/$1,000)
T + 1 = (1514.78/$1,000)*.2
T = (1514.78/$1,000)*.2 - 1
T = 0.0866
- --------------------------------------------------------------------------------
Time period covered: August 7, 1989 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (2642 / 365 = 7.24)
VOA = ending value of account ($2628.19, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*7.24 = 2628.19
(T + 1)*7.24 = (2628.19/$1,000)
T + 1 = (2628.19/$1,000)*0.14
T = (2628.19/$1,000)*0.14 - 1
T = 0.1429
- --------------------------------------------------------------------------------
Time period covered: August 7, 1989 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T= aggregate total return
VOA = ending value of account ($2628.19, which does not take sales charge into
account)
CALCULATION:
T = (2628.19/$1,000) - 1
T = 1.6282
<PAGE>
EXHIBIT 16(IV)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: HEATH CARE FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class B Shares of the GT Global: Heath Care Fund Series of
the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1175.94 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1175.94
(T + 1)*1 = (1175.94/$1,000)
T + 1 = (1175.94/$1,000)*1
T = (1175.94/$1,000)*1 - 1
T = 0.1759
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1309 / 365 = 3.59)
VOA = ending value of account ($1797.33 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*3.59 = 1797.33
(T + 1)*3.59 = (1797.33/$1,000)
T + 1 = (1797.33/$1,000)* 0.28
T = (1797.33/$1,000)* 0.28 - 1
T = 0.1778
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1797.33 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
T = (1797.33/$1,000) - 1
T = 0.7973
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: HEATH CARE FUND
CLASS B SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class B Shares of the GT Global: Heath Care Fund Series of
the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1225.94, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1225.94
(T + 1)*1 = (1225.94/$1,000)
T + 1 = (1225.94/$1,000)*1
T = (1225.94/$1,000)*1 - 1
T = 0.2259
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1309 / 365 = 3.59)
VOA = ending value of account ($1827.33, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*3.59 = 1827.33
(T + 1)*3.59 = (1827.33/$1,000)
T + 1 = (1827.33/$1,000)*0.28
T = (1827.33/$1,000)*0.28 - 1
T = 0.1832
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1827.33, which does not take sales charge into
account)
CALCULATION:
T = (1827.33/$1,000) - 1
T = 0.8273
<PAGE>
EXHIBIT 16(IV)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: HEATH CARE FUND
CLASS ADV SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class Adv Shares of the GT Global: Heath Care Fund Series
of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1238.25, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1 = 1238.25
(T + 1)*1 = (1238.25/$1,000)
T + 1 = (1238.25/$1,000)*1
T = (1238.25/$1,000)*1 - 1
T = 0.2382
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (519 / 365 = 1.42)
VOA = ending value of account ($1449.93, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1.42 = 1449.93
(T + 1)*1.42 = (1449.93/$1,000)
T + 1 = (1449.93/$1,000)*0.70
T = (1449.93/$1,000)*0.70 - 1
T = 0.2992
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1449.93, Class Adv shares have no sales charge)
CALCULATION:
T = (1449.93/$1,000) - 1
T = 0.4499
<PAGE>
EXHIBIT 16(V)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: GROWTH & INCOME FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class A Shares of the GT Global: Growth & Income Fund Series
of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1112.50 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1112.50
(T + 1)*1 = (1112.50/$1,000)
T + 1 = (1112.50/$1,000)*1
T = (1112.50/$1,000)*1 - 1
T = 0.1125
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (5)
ERV = ending redeeming value ($1615.34 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*5 = 1615.34
(T + 1)*5 = (1615.34/$1,000)
T + 1 = (1615.34/$1,000)*.2
T = (1615.34/$1,000)*.2 - 1
T = 0.1007
- --------------------------------------------------------------------------------
Time period covered: September 25, 1990 (commencement of operations)- October
31, 1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (2228 / 365 = 6.10)
VOA = ending value of account ($1872.48 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*6.10 = 1872.48
(T + 1)*6.10 = (1872.48/$1,000)
T + 1 = (1872.48/$1,000)* 0.16
T = (1872.48/$1,000)* 0.16 - 1
T = 0.1083
- --------------------------------------------------------------------------------
Time period covered: September 25, 1990 (commencement of operations)- October
31, 1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1872.48 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
T = (1872.48/$1,000) - 1
T = 0.8725
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: GROWTH & INCOME FUND
CLASS A SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class A Shares of the GT Global: Growth & Income Fund Series
of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1167.98, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1167.98
(T + 1)*1 = (1167.98/$1,000)
T + 1 = (1167.98/$1,000)*1
T = (1167.98/$1,000)*1 - 1
T = 0.1680
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
ERV = ending redeeming value ($1695.71, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*5 = 1695.71
(T + 1)*5 = (1695.71/$1,000)
T + 1 = (1695.71/$1,000) * .2
T = (1695.71/$1,000) * .2 - 1
T = 0.1114
- --------------------------------------------------------------------------------
Time period covered: September 25, 1990 (commencement of operations)- October
31, 1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (2228 / 365 = 6.10)
VOA = ending value of account ($1965.86, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*6.10 = 1965.86
(T + 1)*6.10 = (1965.86/$1,000)
T + 1 = (1965.86/$1,000)* 0.16
T = (1965.86/$1,000)* 0.16 - 1
T = 0.1172
- --------------------------------------------------------------------------------
Time period covered: September 25, 1990 (commencement of operations)- October
31, 1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1965.86, which does not take sales charge into
account)
CALCULATION:
T = (1965.86/$1,000) - 1
T = 0.9659
<PAGE>
EXHIBIT 16(V)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: GROWTH & INCOME FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class B Shares of the GT Global: Growth & Income Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1110.56 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1110.56
(T + 1)*1 = (1110.56/$1,000)
T + 1 = (1110.56/$1,000)*1
T = (1110.56/$1,000)*1 - 1
T = 0.1106
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1470 / 365 = 4.03)
VOA = ending value of account ($1538.24 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*4.03 = 1538.24
(T + 1)*4.03 = (1538.24/$1,000)
T + 1 = (1538.24/$1,000)* 0.25
T = (1538.24/$1,000)* 0.25 - 1
T = 0.1129
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1538.24 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
T = (1538.24/$1,000) - 1
T = 0.5382
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: GROWTH & INCOME FUND
CLASS B SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class B Shares of the GT Global: Growth & Income Fund
Series of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1160.56, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1160.56
(T + 1)*1 = (1160.56/$1,000)
T + 1 = (1160.56/$1,000)*1
T = (1160.56/$1,000)*1 - 1
T = 0.1606
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA:
P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1470 / 365 = 4.03)
VOA = ending value of account ($1558.24, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*4.03 = 1558.24
(T + 1)*4.03 = (1558.24/$1,000)
T + 1 = (1558.24/$1,000)* 0.25
T = (1558.24/$1,000)* 0.25 - 1
T = 0.1165
- --------------------------------------------------------------------------------
Time period covered: October 22, 1992 (commencement of operations)- October 31,
1996
FORMULA:
T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1558.24, which does not take sales charge into
account)
CALCULATION:
T = (1558.24/$1,000) - 1
T = 0.5582
T
<PAGE>
EXHIBIT 16(V)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: GROWTH & INCOME FUND
CLASS ADV SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class Adv Shares of the GT Global: Growth & Income Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1171.93, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1 = 1171.93
(T + 1)*1 = (1171.93/$1,000)
T + 1 = (1171.93/$1,000)*1
T = (1171.93/$1,000)*1 - 1
T = 0.1719
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (519 / 365 = 1.42)
VOA = ending value of account ($1216.83, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1.42 = 1216.83
(T + 1)*1.42 = (1216.83/$1,000)
T + 1 = (1216.83/$1,000)* 0.70
T = (1216.83/$1,000)* 0.70 - 1
T = 0.1483
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA:
T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1216.83, Class Adv shares have no sales charge)
CALCULATION:
T = (1216.83/$1,000) - 1
T = 0.2168
<PAGE>
EXHIBIT (VI)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: LATIN AMERICA GROWTH
CLASS A SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class A Shares of the GT Global: Latin America Growth Series
of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1119.36 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1119.36
(T + 1)*1 = (1119.36/$1,000)
T + 1 = (1119.36/$1,000)*1
T = (1119.36/$1,000)*1 - 1
T = 0.1194
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
ERV = ending redeeming value ($1235.12 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*5 = 1235.12
(T + 1)*5 = (1235.12/$1,000)
T + 1 = (1235.12/$1,000)*.2
T = (1235.12/$1,000)*.2 - 1
T = 0.0431
- --------------------------------------------------------------------------------
Time period covered: August 13, 1991 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1906 / 365 = 5.22)
VOA = ending value of account ($1421.82 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*5.22 = 1421.82
(T + 1)*5.22 = (1421.82/$1,000)
T + 1 = (1421.82/$1,000)* 0.19
T = (1421.82/$1,000)* 0.19 - 1
T = 0.0698
- --------------------------------------------------------------------------------
Time period covered: August 13, 1991 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1421.82 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
T = (1421.82/$1,000) - 1
T = 0.4218
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: LATIN AMERICA GROWTH
CLASS A SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class A Shares of the GT Global: Latin America Growth Series
of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1175.18, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1175.18
(T + 1)*1 = (1175.18/$1,000)
T + 1 = (1175.18/$1,000)*1
T = (1175.18/$1,000)*1 - 1
T = 0.1752
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
ERV = ending redeeming value ($1296.46, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*5 = 1296.46
(T + 1)*5 = (1296.46/$1,000)
T + 1 = (1296.46/$1,000) * .2
T = (1296.46/$1,000) * .2 - 1
T = 0.0533
- --------------------------------------------------------------------------------
Time period covered: August 13, 1991 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1906 / 365 = 5.22)
VOA = ending value of account ($1492.72, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*5.22 = 1492.72
(T + 1)*5.22 = (1492.72/$1,000)
T + 1 = (1492.72/$1,000)* 0.19
T = (1492.72/$1,000)* 0.19 - 1
T = 0.0798
- --------------------------------------------------------------------------------
Time period covered: August 13, 1991 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1492.72, which does not take sales charge into
account)
CALCULATION:
T = (1492.72/$1,000) - 1
T = 0.4927
<PAGE>
EXHIBIT 16(VI)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: LATIN AMERICA GROWTH
CLASS B SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class B Shares of the GT Global: Latin America Growth Series
of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1120.20 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1120.20
(T + 1)*1 = (1120.20/$1,000)
T + 1 = (1120.20/$1,000)*1
T = (1120.20/$1,000)*1 - 1
T = 0.1202
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1309 / 365 = 3.59)
VOA = ending value of account ($1155.97 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*3.59 = 1155.97
(T + 1)*3.59 = (1155.97/$1,000)
T + 1 = (1155.97/$1,000)*0.28
T = (1155.97/$1,000)*0.28 - 1
T = 0.0413
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1155.97 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
T = (1155.97/$1,000) - 1
T = 0.1560
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: LATIN AMERICA GROWTH
CLASS B SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class B Shares of the GT Global: Latin America Growth Series
of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1170.20, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1170.20
(T + 1)*1 = (1170.20/$1,000)
T + 1 = (1170.20/$1,000)*1
T = (1170.20/$1,000)*1 - 1
T = 0.1702
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1309 / 365 = 3.59)
VOA = ending value of account ($1185.97, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*3.59 = 1185.97
(T + 1)*3.59 = (1185.97/$1,000)
T + 1 = (1185.97/$1,000)*0.28
T = (1185.97/$1,000)*0.28 - 1
T = 0.0487
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996x
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1185.97, which does not take sales charge into
account)
CALCULATION:
T = (1185.97/$1,000) - 1
T = 0.1860
<PAGE>
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: LATIN AMERICA GROWTH
CLASS ADV SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class Adv Shares of the GT Global: Latin America Growth
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1181.56, Class Adv shares have no sales
charge)
CALCULATION:
$1,000 (T + 1)*1 = 1181.56
(T + 1)*1 = (1181.56/$1,000)
T + 1 = (1181.56/$1,000)*1
T = (1181.56/$1,000)*1 - 1
T = 0.1816
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
Formula: P(1 + T)*N = VOA
P = initial investment ( $1,000)
T = average annual total return
n = number of years (519 / 365 = 1.42)
VOA = ending value of account ($1140.82, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1.42 = 1140.82
(T + 1)*1.42 = (1140.82/$1,000)
T + 1 = (1140.82/$1,000)* 0.70
T = (1140.82/$1,000)* 0.70 - 1
T = 0.0973
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1140.82, Class Adv shares have no sales charge)
CALCULATION:
T = (1140.82/$1,000) - 1
T = 0.140
<PAGE>
EXHIBIT 16(VII)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: EMERGING MARKETS
CLASS A SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class A Shares of the GT Global: Emerging Markets Series of
the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($981.41 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*1 = 981.41
(T + 1)*1 = (981.41/$1,000)
T + 1 = (981.41/$1,000)*1
T = (981.41/$1,000)*1 - 1
T = -0.0186
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 18, 1992 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1627 / 365 = 4.46)
VOA = ending value of account ($1272.84 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*4.46 = 1272.84
(T + 1)*4.46 = (1272.84/$1,000)
T + 1 = (1272.84/$1,000)* 0.22
T = (1272.84/$1,000)* 0.22 - 1
T = 0.0556
- --------------------------------------------------------------------------------
Time period covered: May 18, 1992 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1272.84 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
T = (1272.84/$1,000) - 1
T = 0.2728
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: EMERGING MARKETS
CLASS A SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class A Shares of the GT Global: Emerging Markets Series of
the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1030.35, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1030.35
(T + 1)*1 = (1030.35/$1,000)
T + 1 = (1030.35/$1,000)*1
T = (1030.35/$1,000)*1 - 1
T = 0.0303
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 18, 1992 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1627 / 365 = 4.46)
VOA = ending value of account ($1336.32, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*4.46 = 1336.32
(T + 1)*4.46 = (1336.32/$1,000)
T + 1 = (1336.32/$1,000)* 0.22
T = (1336.32/$1,000)* 0.22 - 1
T = 0.0672
- --------------------------------------------------------------------------------
Time period covered: May 18, 1992 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1336.32, which does not take sales charge into
account)
CALCULATION:
T = (1336.32/$1,000) - 1
T = 0.3363
<PAGE>
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: EMERGING MARKETS
CLASS B SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class B Shares of the GT Global: Emerging Markets Series of
the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($974.85 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*1 = 974.85
(T + 1)*1 = (974.85/$1,000)
T + 1 = (974.85/$1,000)*1
T = (974.85/$1,000)*1 - 1
T = -0.0251
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1309 / 365 = 3.59)
VOA = ending value of account ($1269.17 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*3.59 = 1269.17
(T + 1)*3.59 = (1269.17/$1,000)
T + 1 = (1269.17/$1,000)*0.28
T = (1269.17/$1,000)*0.28 - 1
T = 0.0688
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1269.17 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
T = (1269.17/$1,000) - 1
T = 0.2692
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: EMERGING MARKETS
CLASS B SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class B Shares of the GT Global: Emerging Markets Series of
the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1024.85, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1024.85
(T + 1)*1 = (1024.85/$1,000)
T + 1 = (1024.85/$1,000)*1
T = (1024.85/$1,000)*1 - 1
T = 0.0249
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1309 / 365 = 3.59)
VOA = ending value of account ($1299.17, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*3.59 = 1299.17
(T + 1)*3.59 = (1299.17/$1,000)
T + 1 = (1299.17/$1,000)* 0.28
T = (1299.17/$1,000)* 0.28 - 1
T = 0.0758
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1299.17, which does not take sales charge into
account)
CALCULATION:
T = (1299.17/$1,000) - 1
T = 0.2992
<PAGE>
EXHIBIT 16(VII)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: EMERGING MARKETS
CLASS ADV SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class Adv Shares of the GT Global: Emerging Markets Series
of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1036.05, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1 = 1036.05
(T + 1)*1 = (1036.05/$1,000)
T + 1 = (1036.05/$1,000)*1
T = (1036.05/$1,000)*1 - 1
T = 0.0360
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (519 / 365 = 1.42)
VOA = ending value of account ($976.89, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1.42 = 976.89
(T + 1)*1.42 = (976.89/$1,000)
T + 1 = (976.89/$1,000)* 0.70
T = (976.89/$1,000)* 0.70 - 1
T = -0.0163
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($976.89, Class Adv shares have no sales charge)
CALCULATION:
T = (976.89/$1,000) - 1
T = -0.0231
<PAGE>
EXHIBIT 16(VIII)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: TELECOMMUNICATIONS FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class A Shares of the GT Global: Telecommunications Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1019.20 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1019.20
(T + 1)*1 = (1019.20/$1,000)
T + 1 = (1019.20/$1,000)*1
T = (1019.20/$1,000)*1 - 1
T = 0.0192
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: January 27, 1992 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1739 / 365 = 4.76)
VOA = ending value of account ($1588.74 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*4.76 = 1588.74
(T + 1)*4.76 = (1588.74/$1,000)
T + 1 = (1588.74/$1,000)* 0.21
T = (1588.74/$1,000)* 0.21 - 1
T = 0.1021
- --------------------------------------------------------------------------------
Time period covered: January 27, 1992 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1588.74 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
T = (1588.74/$1,000) - 1
T = 0.5887
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: TELECOMMUNICATIONS FUND
CLASS A SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class A Shares of the GT Global: Telecommunications Fund
Series of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1070.03, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1070.03
(T + 1)*1 = (1070.03/$1,000)
T + 1 = (1070.03/$1,000)*1
T = (1070.03/$1,000)*1 - 1
T = 0.0700
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: January 27, 1992 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1739 / 365 = 4.76)
VOA = ending value of account ($1667.97, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*4.76 = 1667.97
(T + 1)*4.76 = (1667.97/$1,000)
T + 1 = (1667.97/$1,000)* 0.21
T = (1667.97/$1,000)* 0.21 - 1
T = 0.1134
- --------------------------------------------------------------------------------
Time period covered: January 27, 1992 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1667.97, which does not take sales charge into
account)
CALCULATION:
T = (1667.97/$1,000) - 1
T = 0.6680
<PAGE>
EXHIBIT 16(VIII)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: TELECOMMUNICATIONS FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class B Shares of the GT Global: Telecommunications Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1014.56 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1014.56
(T + 1)*1 = (1014.56/$1,000)
T + 1 = (1014.56/$1,000)*1
T = (1014.56/$1,000)*1 - 1
T = 0.0146
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1309 / 365 = 3.59)
VOA = ending value of account ($1427.54 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*3.59 = 1427.54
(T + 1)*3.59 = (1427.54/$1,000)
T + 1 = (1427.54/$1,000)* 0.28
T = (1427.54/$1,000)* 0.28 - 1
T = 0.1044
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA:T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1427.54 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
T = (1427.54/$1,000) - 1
T = 0.4275
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: TELECOMMUNICATIONS FUND
CLASS B SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class B Shares of the GT Global: Telecommunications Fund
Series of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1064.56, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1064.56
(T + 1)*1 = (1064.56/$1,000)
T + 1 = (1064.56/$1,000)*1
T = (1064.56/$1,000)*1 - 1
T = 0.0646
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (1309 / 365 = 3.59)
VOA = ending value of account ($1457.54, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*3.59 = 1457.54
(T + 1)*3.59 = (1457.54/$1,000)
T + 1 = (1457.54/$1,000)* 0.28
T = (1457.54/$1,000)* 0.28 - 1
T = 0.1109
- --------------------------------------------------------------------------------
Time period covered: April 1, 1993 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1457.54, which does not take sales charge into
account)
CALCULATION:
T = (1457.54/$1,000) - 1
T = 0.4575
<PAGE>
EXHIBIT 16(VIII)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: TELECOMMUNICATIONS FUND
CLASS ADV SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class Adv Shares of the GT Global: Telecommunications Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1074.93, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1 = 1074.93
(T + 1)*1 = (1074.93/$1,000)
T + 1 = (1074.93/$1,000)*1
T = (1074.93/$1,000)*1 - 1
T = 0.0749
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ( $1,000)
T = average annual total return
n = number of years (519 / 365 = 1.42)
VOA = ending value of account ($1160.28, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1.42 = 1160.28
(T + 1)*1.42 = (1160.28/$1,000)
T + 1 = (1160.28/$1,000)* 0.70
T = (1160.28/$1,000)* 0.70 - 1
T = 0.1104
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T= aggregate total return
VOA = ending value of account ($1160.28, Class Adv shares have no sales charge)
CALCULATION:
T = (1160.28/$1,000) - 1
T = 0.1603
<PAGE>
EXHIBIT 16(IX)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: FINANCIAL SERVICES FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class A Shares of the GT Global: Financial Services Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1145.00 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1145.00
(T + 1)*1 = (1145.00/$1,000)
T + 1 = (1145.00/$1,000)*1
T = (1145.00/$1,000)*1 - 1
T = 0.1450
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ( $1,000)
T = average annual total return
n = number of years (884 / 365 = 2.42)
VOA = ending value of account ($1194.09 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*2.42 = 1194.09
(T + 1)*2.42 = (1194.09/$1,000)
T + 1 = (1194.09/$1,000)* 0.41
T = (1194.09/$1,000)* 0.41 - 1
T = 0.0761
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T = aggregate total return
VOA = ending value of account ($1194.09 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
T = (1194.09/$1,000) - 1
T = 0.1941
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: FINANCIAL SERVICES FUND
CLASS A SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class A Shares of the GT Global: Financial Services Fund
Series of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1202.10, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1202.10
(T + 1)*1 = (1202.10/$1,000)
T + 1 = (1202.10/$1,000)*1
T = (1202.10/$1,000)*1 - 1
T = 0.2021
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ( $1,000)
T = average annual total return
n = number of years (884 / 365 = 2.42)
VOA = ending value of account ($1253.64, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*2.42 = 1253.64
(T + 1)*2.42 = (1253.64/$1,000)
T + 1 = (1253.64/$1,000)* 0.41
T = (1253.64/$1,000)* 0.41 - 1
T = 0.0979
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T= aggregate total return
VOA = ending value of account ($1253.64, which does not take sales charge into
account)
CALCULATION:
T = (1253.64/$1,000) - 1
T = 0.2536
<PAGE>
EXHIBIT 16(IX)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: FINANCIAL SERVICES FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class B Shares of the GT Global: Financial Services Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1148.14 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1148.14
(T + 1)*1 = (1148.14/$1,000)
T + 1 = (1148.14/$1,000)*1
T = (1148.14/$1,000)*1 - 1
T = 0.1481
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (884 / 365 = 2.42)
VOA = ending value of account ($1210.07 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*2.42 = 1210.07
(T + 1)*2.42 = (1210.07/$1,000)
T + 1 = (1210.07/$1,000)* 0.41
T = (1210.07/$1,000)* 0.41 - 1
T = 0.0820
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1210.07 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
T = (1210.07/$1,000) - 1
T = 0.2101
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: FINANCIAL SERVICES FUND
CLASS B SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class B Shares of the GT Global: Financial Services Fund
Series of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1198.14, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1198.14
(T + 1)*1 = (1198.14/$1,000)
T + 1 = (1198.14/$1,000)*1
T = (1198.14/$1,000)*1 - 1
T = 0.1981
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (884 / 365 = 2.42)
VOA = ending value of account ($1240.07, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*2.42 = 1240.07
(T + 1)*2.42 = (1240.07/$1,000)
T + 1 = (1240.07/$1,000)* 0.41
T = (1240.07/$1,000)* 0.41 - 1
T = 0.0930
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1240.07, which does not take sales charge into
account)
CALCULATION:
T = (1240.07/$1,000) - 1
T = 0.2401
<PAGE>
EXHIBIT 16(IX)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: FINANCIAL SERVICES FUND
CLASS ADV SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class Adv Shares of the GT Global: Financial Services Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1208.68, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1 = 1208.68
(T + 1)*1 = (1208.68/$1,000)
T + 1 = (1208.68/$1,000)*1
T = (1208.68/$1,000)*1 - 1
T = 0.2087
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (519 / 365 = 1.42)
VOA = ending value of account ($1302.41, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1.42 = 1302.41
(T + 1)*1.42 = (1302.41/$1,000)
T + 1 = (1302.41/$1,000)* 0.70
T = (1302.41/$1,000)* 0.70 - 1
T = 0.2046
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1302.41, Class Adv shares have no sales charge)
CALCULATION:
T = (1302.41/$1,000) - 1
T = 0.3024
<PAGE>
EXHIBIT (X)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: INFRASTRUCTURE FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class A Shares of the GT Global: Infrastructure Fund Series
of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1133.40 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1133.40
(T + 1)*1 = (1133.40/$1,000)
T + 1 = (1133.40/$1,000)*1
T = (1133.40/$1,000)*1 - 1
T = 0.1334
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (884 / 365 = 2.42)
VOA = ending value of account ($1200.83 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*2.42 = 1200.83
(T + 1)*2.42 = (1200.83/$1,000)
T + 1 = (1200.83/$1,000)* 0.41
T = (1200.83/$1,000)* 0.41 - 1
T = 0.0786
- --------------------------------------------------------------------------------
Time Period Covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1200.83 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
T = (1200.83/$1,000) - 1
T = 0.2008
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: INFRASTRUCTURE FUND
CLASS A SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class A Shares of the GT Global: Infrastructure Fund Series
of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1189.93, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1189.93
(T + 1)*1 = (1189.93/$1,000)
T + 1 = (1189.93/$1,000)*1
T = (1189.93/$1,000)*1 - 1
T = 0.1899
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (884 / 365 = 2.42)
VOA = ending value of account ($1260.72, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*2.42 = 1260.72
(T + 1)*2.42 = (1260.72/$1,000)
T + 1 = (1260.72/$1,000)* 0.41
T = (1260.72/$1,000)* 0.41 - 1
T = 0.1005
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1260.72, which does not take sales charge into
account)
CALCULATION:
T = (1260.72/$1,000) - 1
T = 0.2607
<PAGE>
EXHIBIT 16(X)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: INFRASTRUCTURE FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class B Shares of the GT Global: Infrastructure Fund Series
of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1133.71 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1133.71
(T + 1)*1 = (1133.71/$1,000)
T + 1 = (1133.71/$1,000)*1
T = (1133.71/$1,000)*1 - 1
T = 0.1337
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (884 / 365 = 2.42)
VOA = ending value of account ($1215.84 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*2.42 = 1215.84
(T + 1)*2.42 = (1215.84/$1,000)
T + 1 = (1215.84/$1,000)* 0.41
T = (1215.84/$1,000)* 0.41 - 1
T = 0.0841
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T = aggregate total return
VOA = ending value of account ($1215.84 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
Calculation:
T = (1215.84/$1,000) - 1
T = 0.2158
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: INFRASTRUCTURE FUND
CLASS B SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class B Shares of the GT Global: Infrastructure Fund Series
of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1183.71, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1183.71
(T + 1)*1 = (1183.71/$1,000)
T + 1 = (1183.71/$1,000)*1
T = (1183.71/$1,000)*1 - 1
T = 0.1837
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (884 / 365 = 2.42)
VOA = ending value of account ($1245.84, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*2.42 = 1245.84
(T + 1)*2.42 = (1245.84/$1,000)
T + 1 = (1245.84/$1,000)* 0.41
T = (1245.84/$1,000)* 0.41 - 1
T = 0.0951
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T= aggregate total return
VOA = ending value of account ($1245.84, which does not take sales charge into
account)
CALCULATION:
T = (1245.84/$1,000) - 1
T = 0.2458
<PAGE>
EXHIBIT 16(X)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: INFRASTRUCTURE FUND
CLASS ADV SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class Adv Shares of the GT Global: Infrastructure Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1196.05, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1 = 1196.05
(T + 1)*1 = (1196.05/$1,000)
T + 1 = (1196.05/$1,000)*1
T = (1196.05/$1,000)*1 - 1
T = 0.1960
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (519 / 365 = 1.42)
VOA = ending value of account ($1210.00, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1.42 = 1210.00
(T + 1)*1.42 = (1210.00/$1,000)
T + 1 = (1210.00/$1,000)* 0.70
T = (1210.00/$1,000)* 0.70 - 1
T = 0.1438
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1210.00, Class Adv shares have no sales charge)
CALCULATION:
T = (1210.00/$1,000) - 1
T = 0.2100
<PAGE>
EXHIBIT 16(XI)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: NATURAL RESOURCES FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class A Shares of the GT Global: Natural Resources Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1457.73 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1457.73
(T + 1)*1 = (1457.73/$1,000)
T + 1 = (1457.73/$1,000)*1
T = (1457.73/$1,000)*1 - 1
T = 0.4577
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (884 / 365 = 2.42)
VOA = ending value of account ($1462.72 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*2.42 = 1462.72
(T + 1)*2.42 = (1462.72/$1,000)
T + 1 = (1462.72/$1,000)* 0.41
T = (1462.72/$1,000)* 0.41 - 1
T = 0.1702
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1462.72 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
T = (1462.72/$1,000) - 1
T = 0.4627
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: NATURAL RESOURCES FUND
CLASS A SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class A Shares of the GT Global: Natural Resources Fund
Series of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1530.43, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1530.43
(T + 1)*1 = (1530.43/$1,000)
T + 1 = (1530.43/$1,000)*1
T = (1530.43/$1,000)*1 - 1
T = 0.5304
Time period covered: October 31, 1991 - October 31, 1996
- --------------------------------------------------------------------------------
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (884 / 365 = 2.42)
VOA = ending value of account ($1535.67, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*2.42 = 1535.67
(T + 1)*2.42 = (1535.67/$1,000)
T + 1 = (1535.67/$1,000)* 0.41
T = (1535.67/$1,000)* 0.41 - 1
T = 0.1940
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1535.67, which does not take sales charge into
account)
CALCULATION:
T = (1535.67/$1,000) - 1
T = 0.5357
<PAGE>
EXHIBIT 16(XI)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: NATURAL RESOURCES FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class B Shares of the GT Global: Natural Resources Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1473.90 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1473.90
(T + 1)*1 = (1473.90/$1,000)
T + 1 = (1473.90/$1,000)*1
T = (1473.90/$1,000)*1 - 1
T = 0.4739
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (884 / 365 = 2.42)
VOA = ending value of account ($1487.64 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*2.42 = 1487.64
(T + 1)*2.42 = (1487.64/$1,000)
T + 1 = (1487.64/$1,000)* 0.41
T = (1487.64/$1,000)* 0.41 - 1
T = 0.1784
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA:
T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1487.64 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
T = (1487.64/$1,000) - 1
T = 0.4876
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: NATURAL RESOURCES FUND
CLASS B SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class B Shares of the GT Global: Natural Resources Fund
Series of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1523.90, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1523.90
(T + 1)*1 = (1523.90/$1,000)
T + 1 = (1523.90/$1,000)*1
T = (1523.90/$1,000)*1 - 1
T = 0.5239
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (884 / 365 = 2.42)
VOA = ending value of account ($1517.64, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*2.42 = 1517.64
(T + 1)*2.42 = (1517.64/$1,000)
T + 1 = (1517.64/$1,000)* 0.41
T = (1517.64/$1,000)* 0.41 - 1
T = 0.1882
- --------------------------------------------------------------------------------
Time period covered: May 31, 1994 (commencement of operations)- October 31,
1996
FORMULA:
T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1517.64, which does not take sales charge into
account)
CALCULATION:
T = (1517.64/$1,000) - 1
T = 0.5176
<PAGE>
EXHIBIT 16(XI)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: NATURAL RESOURCES FUND
CLASS ADV SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class Adv Shares of the GT Global: Natural Resources Fund
Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1537.62, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1 = 1537.62
(T + 1)*1 = (1537.62/$1,000)
T + 1 = (1537.62/$1,000)*1
T = (1537.62/$1,000)*1 - 1
T = 0.5376
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (519 / 365 = 1.42)
VOA = ending value of account ($1540.30, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1.42 = 1540.30
(T + 1)*1.42 = (1540.30/$1,000)
T + 1 = (1540.30/$1,000)* 0.70
T = (1540.30/$1,000)* 0.70 - 1
T = 0.3558
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA:
T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1540.30, Class Adv shares have no sales charge)
CALCULATION:
T = (1540.30/$1,000) - 1
T = 0.5403
<PAGE>
EXHIBIT 16(XII)(A)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: CONSUMER PRODUCTS & SERVICES FUND
CLASS A SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class A Shares of the GT Global: Consumer Products &
Services Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1417.55 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1417.55
(T + 1)*1 = (1417.55/$1,000)
T + 1 = (1417.55/$1,000)*1
T = (1417.55/$1,000)*1 - 1
T = 0.4175
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: December 30, 1994 (commencement of operations)- October
31, 1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (671 / 365 = 1.84)
VOA = ending value of account ($1809.45 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
$1,000 (T + 1)*1.84 = 1809.45
(T + 1)*1.84 = (1809.45/$1,000)
T + 1 = (1809.45/$1,000)* 0.54
T = (1809.45/$1,000)* 0.54 - 1
T = 0.3807
- --------------------------------------------------------------------------------
Time period covered: December 30, 1994 (commencement of operations)- October
31, 1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T = aggregate total return
VOA = ending value of account ($1809.45 which assumes deduction of the maximum
4.75% sales charge on a $1,000 investment at the beginning of the period)
CALCULATION:
T = (1809.45/$1,000) - 1
T = 0.8094
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: CONSUMER PRODUCTS & SERVICES FUND
CLASS A SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class A Shares of the GT Global: Consumer Products &
Services Fund Series of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1488.24, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1488.24
(T + 1)*1 = (1488.24/$1,000)
T + 1 = (1488.24/$1,000)*1
T = (1488.24/$1,000)*1 - 1
T = 0.4882
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: December 30, 1994 (commencement of operations)- October
31, 1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (671 / 365 = 1.84)
VOA = ending value of account ($1899.68, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1.84 = 1899.68
(T + 1)*1.84 = (1899.68/$1,000)
T + 1 = (1899.68/$1,000)* 0.54
T = (1899.68/$1,000)* 0.54 - 1
T = 0.4177
- --------------------------------------------------------------------------------
Time period covered: December 30, 1994 (commencement of operations)- October
31, 1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T= aggregate total return
VOA = ending value of account ($1899.68, which does not take sales charge into
account)
CALCULATION:
T = (1899.68/$1,000) - 1
T = 0.8997
<PAGE>
EXHIBIT 16(XII)(B)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: CONSUMER PRODUCTS & SERVICES FUND
CLASS B SHARES
The following is the schedule for the computation of the Standardized Return
quotations for the Class B Shares of the GT Global: Consumer Products &
Services Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1431.12 which assumes deduction of the maximum
5.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*1 = 1431.12
(T + 1)*1 = (1431.12/$1,000)
T + 1 = (1431.12/$1,000)*1
T = (1431.12/$1,000)*1 - 1
T = 0.4311
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: December 30, 1994 (commencement of operations)- October
31, 1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (671 / 365 = 1.84)
VOA = ending value of account ($1842.83 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
$1,000 (T + 1)*1.84 = 1842.83
(T + 1)*1.84 = (1842.83/$1,000)
T + 1 = (1842.83/$1,000)* 0.54
T = (1842.83/$1,000)* 0.54 - 1
T = 0.3945
- --------------------------------------------------------------------------------
Time period covered: December 30, 1994 (commencement of operations)- October
31, 1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T = aggregate total return
VOA = ending value of account ($1842.83 which assumes deduction of the maximum
4.00% sales charge on a $1,000 investment at the end of the period)
CALCULATION:
T = (1842.83/$1,000) - 1
T = 0.8428
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: CONSUMER PRODUCTS & SERVICES FUND
CLASS B SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class B Shares of the GT Global: Consumer Products &
Services Fund Series of the Registrant.
NON-STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1481.12, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1 = 1481.12
(T + 1)*1 = (1481.12/$1,000)
T + 1 = (1481.12/$1,000)*1
T = (1481.12/$1,000)*1 - 1
T = 0.4811
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: December 30, 1994 (commencement of operations)- October
31, 1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (671 / 365 = 1.84)
VOA = ending value of account ($1882.83, which does not take sales charge into
account)
CALCULATION:
$1,000 (T + 1)*1.84 = 1882.83
(T + 1)*1.84 = (1882.83/$1,000)
T + 1 = (1882.83/$1,000)* 0.54
T = (1882.83/$1,000)* 0.54 - 1
T = 0.4109
- --------------------------------------------------------------------------------
Time period covered: December 30, 1994 (commencement of operations)- October
31, 1996
FORMULA: T = (VOA / P) - 1
P = initial investment ( $1,000)
T = aggregate total return
VOA = ending value of account ($1882.83, which does not take sales charge into
account)
CALCULATION:
T = (1882.83/$1,000) - 1
T = 0.8828
<PAGE>
EXHIBIT 16 (XII)(ADV)
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
GT GLOBAL: CONSUMER PRODUCTS & SERVICES FUND
CLASS ADV SHARES
The following is the schedule for the computation of the Non-Standardized Return
quotations for the Class Adv Shares of the GT Global: Consumer Products &
Services Fund Series of the Registrant.
STANDARDIZED RETURN
Time period covered: October 31, 1995 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ($1,000)
T = average annual total return
n = number of years (1)
ERV = ending redeeming value ($1495.00, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1 = 1495.00
(T + 1)*1 = (1495.00/$1,000)
T + 1 = (1495.00/$1,000)*1
T = (1495.00/$1,000)*1 - 1
T = 0.4950
- --------------------------------------------------------------------------------
Time period covered: October 31, 1991 - October 31, 1996
FORMULA: P(1 + T)*N = ERV
P = initial investment ( $1,000)
T = average annual total return
n = number of years (5)
NA
CALCULATION:
NA
NA
NA
NA
NA
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: P(1 + T)*N = VOA
P = initial investment ($1,000)
T = average annual total return
n = number of years (519 / 365 = 1.42)
VOA = ending value of account ($1848.55, Class Adv shares have no sales charge)
CALCULATION:
$1,000 (T + 1)*1.42 = 1848.55
(T + 1)*1.42 = (1848.55/$1,000)
T + 1 = (1848.55/$1,000)* 0.70
T = (1848.55/$1,000)* 0.70 - 1
T = 0.5418
- --------------------------------------------------------------------------------
Time period covered: May 31, 1995 (commencement of operations)- October 31,
1996
FORMULA: T = (VOA / P) - 1
P = initial investment ($1,000)
T= aggregate total return
VOA = ending value of account ($1848.55, Class Adv shares have no sales charge)
CALCULATION:
T = (1848.55/$1,000) - 1
T = 0.8485
<PAGE>
Exhibit 99.18
G.T. INVESTMENT FUNDS, INC.
MULTIPLE CLASS PLAN PURSUANT TO RULE 18f-3
G.T. Investment Funds, Inc. ("Company") hereby adopts this Multiple Class
Plan pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act") on behalf of its current operating series, GT Global
Growth & Income Fund ("Growth & Income Fund"), GT Global Government Income
Fund ("Government Income Fund"), GT Global High Income Fund ("High Income
Fund"), GT Global Strategic Income Fund ("Strategic Income Fund"), GT Global
Emerging Markets Fund ("Emerging Markets Fund"), GT Global Latin America
Growth Fund ("Latin America Growth Fund"), GT Global Consumer Products and
Services Fund ("Consumer Products and Services Fund"), GT Global Financial
Services Fund ("Financial Services Fund"), GT Global Health Care Fund
("Health Care Fund"), GT Global Infrastructure Fund ("Infrastructure Fund"),
GT Global Natural Resources Fund ("Natural Resources Fund"), GT Global
Telecommunications Fund ("Telecommunications Fund") and any series that may
commence operations in the future (referred to hereinafter collectively as
the "Funds" and individually as a "Fund").
A. GENERAL DESCRIPTION OF CLASSES THAT ARE OFFERED
1. CLASS A SHARES. Class A shares of each Fund are sold to the
general public subject to an initial sales charge of 4.75% of the public
offering price for Class A shares of the Fund. The initial sales charge is
waived for certain eligible purchasers and reduced or waived for certain
large volume purchases.
Class A shares of each Fund may pay a service fee at the annualized rate
of up to 0.25% of the average daily net assets for the Fund's Class A shares.
Class A shares of the High Income Fund, Government Income Fund, Strategic
Income Fund and Growth & Income Fund may pay a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets for the Fund's
Class A shares, less any amounts paid by the respective Fund as the
aforementioned service fee. Class A shares of the Emerging Markets Fund,
Latin America Growth Fund, Consumer Products and Services Fund, Financial
Services Fund, Health Care Fund, Infrastructure Fund, Natural Resources Fund
and Telecommunications Fund may pay a distribution fee at the annualized rate
of up to 0.50% of the average daily net assets for the Fund's Class A shares,
less any amounts paid by the respective Fund as the aforementioned service
fee. Such fees are paid pursuant to a plan of distribution adopted in
accordance with Rule 12b-1 under the 1940 Act.
Class A shares of each Fund are subject to a contingent deferred sales
charge ("CDSC") on redemptions of shares: (i) purchased without an initial
sales charge due to a sales charge waiver for purchases of $500,000 or more,
and (ii) redeemed within one year after the date of purchase. Purchases of
Class A shares of two or more GT Global Mutual
<PAGE>
G.T. Investment Funds, Inc.
Multiple Class Plan
Page 2
Funds (other than GT Global Dollar Fund) may be combined for this purpose.
The Class A CDSC is equal to 1% of the lower of (i) the original purchase
price, or (ii) the net asset value of the shares at the time of redemption.
Class A shares that are redeemed will not be subject to a CDSC to the
extent that the value of such shares represents: (i) reinvestment of
dividends or other distributions, or (ii) Class A shares redeemed one year or
more after their purchase. Class A shares purchased in amounts of at least
$500,000 without a sales charge may be exchanged for Class A shares of
another GT Global Mutual Fund (other than GT Global Dollar Fund) without the
imposition of a CDSC, although the CDSC will apply to the redemption of the
shares acquired through an exchange.
2. CLASS B SHARES. Class B shares of each Fund are sold to the
general public without imposition of an initial sales charge; however, a CDSC
is imposed on certain redemptions of Class B shares. The maximum CDSC for
Class B shares is equal to 5% of the lesser of the original purchase price or
the net asset value of the shares at the time of redemption. The CDSC is
waived for certain exchanges and redemptions.
Class B shares that are redeemed will not be subject to a CDSC to the
extent that the value of such shares represents: (i) reinvestment of
dividends or capital gains distributions, or (ii) shares redeemed more than
six years after their purchase.
Class B shares are subject to a service fee at the annualized rate of up
to 0.25% of the average daily net assets of the Class B shares of each Fund
and a distribution fee at the annualized rate of up to 0.75% of the average
daily net assets of the Fund's Class B shares. Such fees are paid pursuant
to a plan of distribution adopted in accordance with Rule 12b-1 under the
1940 Act.
3. ADVISOR CLASS SHARES. Advisor Class shares are sold without
imposition of an initial sales charge or CDSC and are not subject to any
service or distribution fees.
Advisor Class shares of each Fund are available for purchase only by: (a)
trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 1,000 employees; (b)
any account with assets of at least $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 0.50% on the assets in the account; (c) any account with assets
of at least $10,000 if (i) such account is established under a "wrap fee"
program, and (ii) the account holder pays the
2
<PAGE>
G.T. Investment Funds, Inc.
Multiple Class Plan
Page 3
sponsor of such program an annual fee of at least 0.50% on the assets in the
account; (d) accounts advised by one of the companies comprising or
affiliated with Liechtenstein Global Trust; and (e) any of the companies
comprising or affiliated with Liechtenstein Global Trust.
B. EXPENSE ALLOCATIONS OF EACH CLASS
Certain expenses may be attributable to a particular Class of shares
("Class Expenses"). Class Expenses are charged directly to the net assets of
the particular Class and, thus, are borne on a pro rata basis by the
outstanding shares of that Class.
In addition to the service and distribution fees described above, each
Class could also pay a different amount of the following other expenses:
(1) transfer agent fees identified as being attributable to a specific
Class of shares;
(2) stationery, printing, postage and delivery expenses related to
preparing and distributing materials such as shareholder reports,
prospectuses and proxy statements to current shareholders of a
specific Class of shares;
(3) Blue Sky registration fees incurred by a specific Class of shares;
(4) SEC registration fees incurred by a specific Class of shares;
(5) expenses of administrative personnel and services as required to
support the shareholders of a specific Class of shares;
(6) Directors' fees or expenses incurred as a result of issues
relating to a specific Class of shares;
(7) accounting expenses relating solely to a specific Class of shares;
(8) auditors' fees, litigation expenses and legal fees and expenses
relating to a specific Class of shares; and
(9) expenses incurred in connection with shareholders meetings as a
result of issues relating to a specific Class of shares.
3
<PAGE>
G.T. Investment Funds, Inc.
Multiple Class Plan
Page 4
4
<PAGE>
G.T. Investment Funds, Inc.
Multiple Class Plan
Page 5
C. EXCHANGE PRIVILEGES
Class A shares of any Fund may be exchanged only for Class A shares of
other GT Global Mutual Funds, as listed in the Fund's Prospectus. Class B
shares of any Fund may be exchanged only for Class B shares of other GT
Global Mutual Funds, as listed in the Fund's Prospectus. Advisor Class
shares of any Fund may be exchanged only for Advisor Class shares of other GT
Global Mutual Funds, as listed in the Fund's Prospectus.
This exchange privilege is available only in those jurisdictions where
the sale of GT Global Mutual Fund shares to be acquired may be legally made.
The terms of the exchange privileges may be modified at any time, on sixty
days' prior written notice to shareholders.
D. ADDITIONAL INFORMATION
The prospectus for each Fund contains additional information about the
Classes and each Fund's multiple class structure. This Multiple Class Plan
is subject to the terms of the then current prospectus for the applicable
Classes; provided, however, that none of the terms set forth in any such
prospectus shall be inconsistent with the terms of the Classes contained in
this Plan.
E. DATE OF EFFECTIVENESS
This Multiple Class Plan will become effective on July 26, 1996. Before
any material amendment of this Multiple Class Plan, a majority of the
Directors of the Company, and a majority of the Directors who are not
interested persons of the Company, shall find that the plan as proposed to be
adopted or amended, including the expense allocation, is in the best
interests of each class individually and the Company as a whole.
5
<PAGE>
- --------------------------------------------------------------------------------
Page 1
- --------------------------------------------------------------------------------
EXHIBIT 99.19
POWER OF ATTORNEY
William J. Guilfoyle hereby constitutes and appoints David J. Thelander,
Daniel R. Waltcher and Matthew M. O'Toole, and each of them, with full power to
act without the other, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities (until revoked in writing) to sign the
Registration Statement and any and all Amendments to the Registration Statement
(including Post-Effective Amendments), and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
G.T. INVESTMENT FUNDS, INC.
/s/ Willian J. Guilfoyle
_____________________________ Director, Chairman of February 26, 1997
William J. Guilfoyle the Board and President
<PAGE>
- --------------------------------------------------------------------------------
Page 2
- --------------------------------------------------------------------------------
POWER OF ATTORNEY
William J. Guilfoyle hereby constitutes and appoints David J. Thelander,
Daniel R. Waltcher and Matthew M. O'Toole, and each of them, with full power to
act without the other, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities (until revoked in writing) to sign the
Registration Statement and any and all Amendments to the Registration Statement
(including Post-Effective Amendments), and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
GLOBAL INVESTMENT PORTFOLIO (HUB)
/s/ Willian J. Guilfoyle
_____________________________ Director, Chairman of February 26, 1997
William J. Guilfoyle the Board and President
<PAGE>
- --------------------------------------------------------------------------------
Page 3
- --------------------------------------------------------------------------------
POWER OF ATTORNEY
William J. Guilfoyle hereby constitutes and appoints David J. Thelander,
Daniel R. Waltcher and Matthew M. O'Toole, and each of them, with full power to
act without the other, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities (until revoked in writing) to sign the
Registration Statement and any and all Amendments to the Registration Statement
(including Post-Effective Amendments), and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
GLOBAL HIGH INCOME PORTFOLIO (HUB)
/s/ Willian J. Guilfoyle
_____________________________ Director, Chairman of February 26, 1997
William J. Guilfoyle the Board and President
<PAGE>
Exhibit 99.19
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
David J. Thelander, Daniel R. Waltcher and Matthew M. O'Toole, and each of
them, with full power to act without the other, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities (until revoked in writing) to sign the Registration
Statement and any and all Amendments to the Registration Statement (including
Post-Effective Amendments), and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
G.T. INVESTMENT FUNDS, INC.
<TABLE>
<S> <C> <C>
- -------------------------------- Director, Chairman of the
David A. Minella Board and President
/s/ C. Derek Anderson
- -------------------------------- Director February 24, 1997
C. Derek Anderson
/s/ Frank S. Bayley
- -------------------------------- Director February 24, 1997
Frank S. Bayley
/s/ Arthur C. Patterson
- -------------------------------- Director February 24, 1997
Arthur C. Patterson
/s/ Ruth H. Quigley
- -------------------------------- Director February 24, 1997
Ruth H. Quigley
/s/ Robert G. Wade, Jr.
- -------------------------------- Director February 24, 1997
Robert G. Wade, Jr.
</TABLE>
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
David J. Thelander, Daniel R. Waltcher and Matthew M. O'Toole, and each of
them, with full power to act without the other, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities (until revoked in writing) to sign the Registration
Statement and any and all Amendments to the Registration Statement (including
Post-Effective Amendments), and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
GLOBAL INVESTMENT PORTFOLIO (HUB)
<TABLE>
<S> <C> <C>
- -------------------------------- Director, Chairman of the
David A. Minella Board and President
/s/ C. Derek Anderson
- -------------------------------- Director February 24, 1997
C. Derek Anderson
/s/ Frank S. Bayley
- -------------------------------- Director February 24, 1997
Frank S. Bayley
/s/ Arthur C. Patterson
- -------------------------------- Director February 24, 1997
Arthur C. Patterson
/s/ Ruth H. Quigley
- -------------------------------- Director February 24, 1997
Ruth H. Quigley
/s/ Robert G. Wade, Jr.
- -------------------------------- Director February 24, 1997
Robert G. Wade, Jr.
</TABLE>
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
David J. Thelander, Daniel R. Waltcher and Matthew M. O'Toole, and each of
them, with full power to act without the other, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities (until revoked in writing) to sign the Registration
Statement and any and all Amendments to the Registration Statement (including
Post-Effective Amendments), and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
GLOBAL HIGH INCOME PORTFOLIO (HUB)
<TABLE>
<S> <C> <C>
- -------------------------------- Director, Chairman of the
David A. Minella Board and President
/s/ C. Derek Anderson
- -------------------------------- Director February 24, 1997
C. Derek Anderson
/s/ Frank S. Bayley
- -------------------------------- Director February 24, 1997
Frank S. Bayley
/s/ Arthur C. Patterson
- -------------------------------- Director February 24, 1997
Arthur C. Patterson
/s/ Ruth H. Quigley
- -------------------------------- Director February 24, 1997
Ruth H. Quigley
/s/ Robert G. Wade, Jr.
- -------------------------------- Director February 24, 1997
Robert G. Wade, Jr.
</TABLE>
