<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS -- MARCH 1, 1998
- --------------------------------------------------------------------------------
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, 1998, 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, 27th Floor, San Francisco, CA 94111, or by calling (800)
824-1580. It is also available, along with other related materials, on the SEC's
Internet web site (http://www.sec.gov).
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, NOR HAS THE SECURITIES AND EXCHANGE 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..................................................................... 19
How to Redeem Shares...................................................................... 20
Shareholder Account Manual................................................................ 22
Calculation of Net Asset Value............................................................ 23
Dividends, Other Distributions and Federal Income Taxation................................ 23
Management................................................................................ 25
Other Information......................................................................... 28
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus. Cross-references in the
summary are to headings 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 $79 billion in total assets as of December 31, 1997.
The Manager and its worldwide asset management affiliates maintain
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. Each
class has distinct advantages and disadvantages for different
investors, and investors should choose the class that best suits
their circumstances and objectives. See "How to Invest."
Class A Shares: Offered at net asset value plus any applicable sales charge
(maximum is 4.75% of public offering price) and subject to 12b-1
service and distribution fees at the annualized rate of up to
0.35% of the average daily net assets of 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 with no initial sales charge (a maximum
contingent deferred sales charge of 5% of net asset value at the
time of purchase or sale, whichever is less, is imposed on certain
redemptions made within six years of date of purchase) and subject
to 12b-1 service and distribution fees at the annualized rate of
up to 1.00% of the average daily net assets of Class B shares.
Shares Available Through: Class A and Class B shares are available through broker/dealers,
banks and other financial service entities ("Financial
Institutions") that have entered into agreements 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 may be exchanged without a sales charge for shares of the
same class of any other GT Global Mutual Fund. See "How to Make
Exchanges" and "Shareholder Account Manual."
Redemptions: Shares may be redeemed through Financial Institutions that sell
shares of the Fund 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 ($25 for IRAs and reduced amounts for certain other
retirement plans).
Net Asset Values: 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..................................................................................... 0.32% 0.32%
----------- -----------
Total Fund Operating Expenses........................................................................ 1.64% 2.29%
----------- -----------
----------- -----------
</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 $ 97 $133 $234
Class B Shares:
Assuming a complete redemption at end of period (5)................................... $75 $105 $147 $265
Assuming no redemption................................................................ $23 $ 72 $124 $265
</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, 1997. "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,
which are not subject to 12b-1 distribution and service fees, to certain
categories of investors. See "How to Invest."
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes deduction 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 Class A and Class B share of the Fund. 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, 1997 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+
--------------------------------------------------------------------------
YEAR ENDED OCT. 31,
--------------------------------------------------------------------------
1997(a) 1996 1995 1994 1993(a) 1992 1991
-------- -------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 7.11 $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.25 $ 4.77
-------- -------- -------- -------- -------- ------- -------
Income from investment
operations:
Net investment income....... 0.21 0.22 0.24 0.22 0.24* 0.21* 0.27*
Net realized and unrealized
gain (loss) on
investments................ 1.12 0.82 0.13 (0.03) 1.05 0.10 0.47
-------- -------- -------- -------- -------- ------- -------
Net increase (decrease)
from investment
operations............... 1.33 1.04 0.37 0.19 1.29 0.31 0.74
-------- -------- -------- -------- -------- ------- -------
Distributions:
From net investment
income..................... (0.21) (0.24) (0.22) (0.21) (0.24) (0.14) (0.26)
From net realized gain on
investments................ (0.02) (0.04) (0.01) (0.06) -- (0.14) --
From sources other than net
investment income.......... -- -- -- -- (0.04) -- --
-------- -------- -------- -------- -------- ------- -------
Total distributions....... (0.23) (0.28) (0.23) (0.27) (0.28) (0.28) (0.26)
-------- -------- -------- -------- -------- ------- -------
-------- -------- -------- -------- -------- ------- -------
Net asset value, end of
period....................... $ 8.21 $ 7.11 $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.25
-------- -------- -------- -------- -------- ------- -------
-------- -------- -------- -------- -------- ------- -------
Total investment return (e)... 19.01% 16.80% 6.27% 3.14% 25.1% 5.9% 15.68%
-------- -------- -------- -------- -------- ------- -------
-------- -------- -------- -------- -------- ------- -------
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $292,528 $286,203 $284,069 $317,847 $251,428 $27,754 $71,376
Ratio of net investment income
to average net assets........ 2.74% 3.17% 3.85% 3.30% 3.3%* 4.1%* 5.0%*
Ratio of expenses to average
net assets:
With expense reduction...... 1.50% 1.59% 1.70% 1.67% 1.8%* 1.9%* 1.9%*
Without expense reduction... 1.64% 1.66% 1.74% N/A N/A N/A N/A
Portfolio turnover rate +++... 50% 39% 83% 117% 24% 53% 46%
Average commission rate per
share paid on portfolio
transactions +++............. $ 0.0151 $ 0.0139 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 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.
N/A Not Applicable.
</TABLE>
Prospectus Page 6
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
CLASS A+ CLASS B++
----------------- ----------------------------------------------------------
SEPT. 25, 1990 OCT. 22,
(COMMENCEMENT YEAR ENDED OCT. 31, 1992 TO
OF OPERATIONS) TO ------------------------------------------------ OCT. 31,
OCT. 31, 1990 1997(a) 1996 1995 1994 1993(a) 1992(a)
----------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 4.76 $ 7.11 $ 6.35 $ 6.21 $ 6.29 $ 5.28 $ 5.29
------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income................. 0.01* 0.16 0.17 0.20 0.18 0.20** 0.01
Net realized and unrealized gain
(loss) on investments................ -- 1.13 0.82 0.13 (0.03) 1.05 (0.02)
------- -------- -------- -------- -------- -------- --------
Net increase (decrease) from
investment operations.............. 0.01 1.29 0.99 0.33 0.15 1.25 (0.01)
------- -------- -------- -------- -------- -------- --------
Distributions:
From net investment income............ -- (0.17) (0.20) (0.18) (0.17) (0.20) --
From net realized gain on
investments.......................... -- (0.02) (0.03) (0.01) (0.06) -- --
From sources other than net investment
income............................... -- -- -- -- -- (0.04) --
------- -------- -------- -------- -------- -------- --------
Total distributions................. -- (0.19) (0.23) (0.19) (0.23) (0.24) --
------- -------- -------- -------- -------- -------- --------
Net asset value, end of period.......... $ 4.77 $ 8.21 $ 7.11 $ 6.35 $ 6.21 $ 6.29 $ 5.28
------- -------- -------- -------- -------- -------- --------
------- -------- -------- -------- -------- -------- --------
Total investment return (e)............. 0.2%(b) 18.28% 16.06% 5.57% 2.48% 24.3% (0.2)%(b)
------- -------- -------- -------- -------- -------- --------
------- -------- -------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $9,486 $456,893 $383,966 $356,796 $359,242 $150,768 $ 280
Ratio of net investment income to
average net assets..................... 2.9%*(c) 2.09% 2.52% 3.20% 2.65% 2.6%** N/A(d)
Ratio of expenses to average net assets:
With expense reduction................ 0.6%*(c) 2.15% 2.24% 2.35% 2.32% 2.5%** N/A(d)
Without expense reduction............. N/A 2.29% 2.31% 2.39% N/A N/A N/A
Portfolio turnover rate +++............. None 50% 39% 83% 117% 24% 53%
Average commission rate per share paid
on portfolio transactions +++.......... N/A $ 0.0151 $ 0.0139 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.
++ 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 1.9%, and
the net investment income to average net assets would have been 3.2%.
(a) These selected per share data were calculated based upon 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.
N/A Not Applicable.
</TABLE>
------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY NUMBER
AVERAGE MONTHLY OF AVERAGE AMOUNT
AMOUNT OF DEBT AMOUNT OF DEBT REGISTRANT'S SHARES OF DEBT PER
OUTSTANDING AT OUTSTANDING DURING OUTSTANDING DURING SHARE DURING
YEAR ENDED END OF PERIOD THE PERIOD THE PERIOD THE PERIOD
- ---------------------------------------- ----------------- --------------------- ---------------------- -----------------
<S> <C> <C> <C> <C>
October 31, 1997........................ -- $ 77,178 92,456,411 $ 0.0008
</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, a division of The McGraw-Hill Companies,
Inc. ("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,
Prospectus Page 8
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 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, enhances the
Fund's total return. 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
Prospectus Page 9
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 or such
other collateral as permitted by the Fund's investment program and regulatory
agencies, and as approved by the Board. 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 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.
Prospectus Page 10
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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; and (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.
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.
The value of equity securities held by the Fund will fluctuate in response to
general market and economic developments, as well as developments affecting the
particular issuers of such securities. 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, 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 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
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
HOW TO INVEST
- --------------------------------------------------------------------------------
GENERAL. Shares of the Fund may be purchased through Financial Institutions,
some of which may charge the investor a transaction fee. That fee will be in
addition to the sales charge payable by the investor, with respect to Class A
shares. Some of these Financial Institutions (or their designees) may be
authorized to accept purchase orders on behalf of the Fund. 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 by the Transfer Agent 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. Orders
received by authorized institutions (or their designees) before the close of
regular trading on the NYSE on a Business Day will be deemed to have been
received by the Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. A "Business Day" is any day Monday through Friday on
which the NYSE is open for business. Financial Institutions are responsible for
forwarding the investor's order to the Transfer Agent so that it will be
received prior to the required time.
The minimum initial investment is $500 ($100 for IRAs and $25 for custodial
accounts under Section 403(b)(7) of the Internal Revenue Code of 1986, as
amended (the "Code"), 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). 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 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 GT GLOBAL. After an initial investment is made and a
shareholder account is established through a Financial Institution, at the
investor's option, subsequent purchases may be made directly through GT Global.
See "Shareholder Account Manual." Investors may also make an initial investment
in the Fund and establish a shareholder account directly through GT Global 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.
Prospectus Page 12
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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.
DIFFERENCES BETWEEN THE CLASSES. The primary difference between the 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 12b-1 distribution
plan and has exclusive voting rights with respect to such plan, each class can
experience other minor expense differences and, in addition to different sales
charges, each class has a separate exchange privilege.
The decision as to which class of shares is more beneficial to an investor
depends on the amount invested, the intended length of time the investment is
held and the investor's personal situation. Large investments may qualify for a
reduced Class A sales charge. Investors in Class B shares have 100% of the
purchase invested immediately. Consult your financial adviser. Financial
Institutions may receive different levels of compensation for selling a
particular class of shares.
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 the account and (ii) the account holder pays such
person as compensation for its advice and other services an annual fee of at
least .50% of the assets in the account; (c) any account with assets of at least
$10,000 if (i) the account is established under a "wrap fee" program and (ii)
the account holder pays the sponsor of the program an annual fee of at least
.50% of the assets in the account; (d) accounts advised by one of the companies
composing or affiliated with Liechtenstein Global Trust; (e) any of those
companies; and (f) GT Global New Dimension Fund.
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 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)
Prospectus Page 13
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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.
(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 the 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 the Fund's shares.
(xi) Accounts for which a Financial Institution charges an account management
fee, provided the Financial Institution 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
Prospectus Page 14
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
who have continuously held shares in the GT Global Mutual Funds since that time.
REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in the
Fund have a one-time privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of the Fund and/or one or more of the other GT Global Mutual Funds. The
Transfer Agent must receive from the investor or the investor's broker/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 although loss thereon
might not be deductible as a result of such exercise. See "Dividends, Other
Distributions and Federal Income Taxation."
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. Investors should contact their Financial Institution
or the Transfer Agent for more information.
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 Financial Institution, 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
shares of GT Global Dollar Fund) in the following thirteen months. The LOI is
included as part of the Account Application located at the end of this
Prospectus. The sales charge applicable to that aggregate amount then becomes
the applicable sales charge on all purchases made concurrently with the
execution of the LOI and in the thirteen months following that execution. If an
investor executes an LOI within 90 days of a prior purchase of GT Global Mutual
Fund Class A shares (other than shares of GT Global Dollar Fund), the prior
purchase may be included under the LOI and an appropriate adjustment, if any,
with respect to the sales charges paid by the investor in connection with the
prior purchase will be made, based on the then-current net asset value(s) of the
pertinent Fund(s).
If at the end of the thirteen month period covered by the LOI the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the reduced rate and the
sales charges applicable to the purchases actually made. Shares having a value
equal to 5% of the amount specified in the LOI will be held in escrow during the
thirteen month period (while remaining registered in the investor's name) and
are subject to redemption to assure any necessary payment to GT Global of a
higher applicable sales charge.
For purposes of an LOI, any registered investment adviser, trust company or bank
trust department which exercises investment discretion and which intends within
thirteen months to invest $500,000 or more can be treated as a single purchaser,
provided further that such entity places all purchase and redemption orders.
Such entities should be prepared to establish their qualification for such
treatment. THE FOREGOING LOI APPLIES ONLY TO CLASS A SHARES OF THE FUND AND
OTHER GT 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
Prospectus Page 15
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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, realized on a redemption. The amount of any contingent deferred
sales charge will be paid to GT Global.
PURCHASING CLASS B SHARES
The 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 the Class B shares are sold
without an initial sales charge, the Fund receives the full amount of the
investor's purchase payment. Class B shares may not be purchased for a Savings
Incentive Match Plan for Employees IRA ("SIMPLE IRA") for which a designated
financial institution was selected by the employer on Form 5305-SIMPLE. However,
Class B shares may be purchased for SIMPLE IRAs using Form 5304-SIMPLE. In
addition, Class A shares may be purchased for all SIMPLE IRAs.
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 other 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 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 per share would be used. The contingent deferred sales
charge calculation would therefore be 30.455 shares times $10 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.
Class B shares that are acquired pursuant to the exchange privilege during a
tender offer by GT Global Floating Rate Fund, Inc. ("Floating Rate Fund") will
be subject, in lieu of the contingent deferred sales charge described above, to
a contingent deferred sales charge equivalent to the early withdrawal charge on
the common stock of the Floating Rate Fund. The purchase of Class B shares
Prospectus Page 16
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
will be deemed to have occurred at the time of the initial purchase of the
Floating Rate Fund's common stock.
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, realized
on a 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 Financial Institution or
GT Global for more information.
DOLLAR COST AVERAGING PROGRAM. Investors may purchase either Class A or Class B
shares of the 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 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
Prospectus Page 17
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
continuous investment in securities regardless of fluctuating price levels of
such securities, investors should consider their financial ability to continue
purchases when prices are declining.
A participant in the GT Global Dollar Cost Averaging Program first designates
the size of his or her monthly investment in the Fund ("Monthly Investment")
after participation in the Program begins. The Monthly Investment must be at
least $1,000. The investor then will make an initial investment of at least
$10,000 in the GT Global Dollar Fund. Thereafter, each month an amount equal to
the specified Monthly Investment automatically will be redeemed from the GT
Global Dollar Fund and invested in Fund shares. A sales charge will be applied
to each automatic monthly purchase of Class A shares of the Fund in an amount
determined in accordance with the Right of Accumulation privilege described
above. Investors should contact their Financial Institution 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
GT Global Mutual Fund(s) in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of GT Global
Mutual Fund(s) that have appreciated most during the period being exchanged for
shares of GT Global Mutual 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 FEDERAL INCOME 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 Financial Institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their Financial Institution or GT Global for more information.
Prospectus Page 18
<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 other GT
Global Mutual 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 FEDERAL INCOME 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 MID CAP GROWTH FUND
-- GT GLOBAL AMERICA SMALL CAP GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
-- GT GLOBAL DEVELOPING MARKETS 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 DIMENSION 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.
An investor interested in making an exchange should contact his or her Financial
Institution or the Transfer Agent to request the prospectus of the other GT
Global Mutual Fund(s) being considered. Certain Financial Institutions may
charge a fee for handling exchanges.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to the
shareholder's Financial Institution 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 shareholder's
Financial Institution 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 19
<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
more than one class of shares, the Shareholder must specify the class of shares
to be redeemed.
REDEMPTIONS THROUGH FINANCIAL INSTITUTIONS. Shareholders with accounts at
Financial Institutions which sell shares of the Fund may submit redemption
requests to such Financial Institutions. If the shares are held in the name of
the Financial Institution, the redemption must be made through the Financial
Institution. Financial Institutions may honor a redemption request either by
repurchasing shares from a redeeming shareholder at the net asset value next
determined after the Financial Institution 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 Financial Institution, credited to
the shareholder's account at the Financial Institution at the election of the
shareholder. Financial Institutions may impose a service charge for handling
redemption transactions placed through them and may have other requirements
concerning redemptions. Accordingly, shareholders should contact their Financial
Institution 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 (less any applicable contingent deferred sales
charge for Class B shares or, in limited circumstances, Class A shares) next
determined after the Transfer Agent has received the request or after an
Authorized Institution has received the request, provided that the request is
transmitted to the Transfer Agent prior to the time set for receipt of such
redemption requests. Redemptions will only be effected if the request is
received in good order and accompanied by 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
fifteen 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 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 $500. 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.
Prospectus Page 20
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Shareholders who hold certificates for shares may not redeem by telephone.
REDEMPTION REQUESTS MAY NOT BE MADE BY TELEPHONE FOR FIFTEEN DAYS FOLLOWING ANY
CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
Shareholders automatically have telephone privileges to authorize redemptions.
The Fund, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine 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 fifteen 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 Financial Institution 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.
Systematic withdrawal plans offered by Financial Institutions may have different
features. Accordingly, shareholders should contact their Financial Institution
for more details.
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 Institution 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 the Transfer Agent has assured itself that good payment has been collected
for the purchase of the shares. In the case of purchases by check it can take up
to 10 business days to confirm that the check has cleared and good payment has
been received. Redemption proceeds will not be delayed when shares have been
paid for by wire or when the investor's account holds a sufficient number of
shares for which funds already have been collected.
The Fund may redeem the shares of any shareholder whose account is reduced to
less than $500 in value through redemptions or other action by the shareholder.
Written notice will be given to the shareholder at least 60 days prior to the
date fixed for such redemption, during which time the shareholder may increase
his or her holdings to an aggregate amount of $500 or more (with a minimum
purchase of $100).
Prospectus Page 21
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Shareholders are encouraged to place purchase, exchange and redemption orders
through their Financial Institutions. 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" 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 Mutual Funds
P.O. Box 7345
San Francisco, CA 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 MUST BE SENT TO 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 the Transfer Agent 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 Mutual Funds
P.O. Box 7893
San Francisco, CA 94120-7893
REDEMPTIONS BY TELEPHONE
Call the Transfer Agent 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 Mutual Funds
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 to the following address:
GT Global Investor Services, Inc.
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 the Transfer Agent at 1-800-223-2138.
Prospectus Page 22
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund calculates its net asset value as of the close of 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. 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 value 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 of the
Fund will result in different net asset values. 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 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 among 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 over net short-term loss) and net gains
from foreign currency transactions, if any. The Fund may make an additional
dividend or other distribution
Prospectus Page 23
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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-distribution 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 (i.e., the
excess of net long-term capital gain over net short-term capital loss) that it
distributes 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 its earnings and profits. Distributions of the
Fund's net capital gain, when designated as such, are taxable to its
shareholders as long-term capital gains, regardless of how long they have held
their Fund shares and whether paid in cash or reinvested in additional shares.
Under the Taxpayer Relief Act of 1997, different maximum tax rates apply to a
noncorporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on securities held for more than one year but not more than 18 months
and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain recognized
on securities held for more than 18 months. Pursuant to an Internal Revenue
Service notice, the Fund may divide each net capital gain distribution into a
28% rate gain distribution and a 20% rate gain distribution (in accordance with
the Fund's holding periods for the securities it sold that generated the
distributed gain) and its shareholders must treat those portions accordingly.
The Fund provides federal tax information to its shareholders annually,
including information about dividends and capital gain distributions paid during
the preceding year and, under certain circumstances, the shareholders'
respective shares of any foreign taxes paid (directly or indirectly) 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 information regarding capital gain
distributions
Prospectus Page 24
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
designates the portions thereof subject to the different maximum rates of tax
applicable to noncorporate taxpayers' net capital gain indicated above.
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 (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 of 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 1.75% and 2.40% of the average daily net assets of the
Fund's Class A and
Prospectus Page 25
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 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 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,
compose Liechtenstein Global Trust ("LGT"). LGT is a provider of global asset
management and private banking products and services to individual and
institutional investors. LGT 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.
On January 30, 1998, LGT entered into an agreement with AMVESCAP PLC
("AMVESCAP") pursuant to which AMVESCAP will acquire LGT's Asset Management
Division, which includes the Manager. AMVESCAP is a holding company formed in
1997 by the merger of INVESCO PLC and A I M Management Group Inc. Consummation
of the transaction is subject to a number of contingencies, including regulatory
approvals. Because the transaction would constitute an assignment of the
Company's investment management agreement under the Investment Company Act of
1940 (and, therefore, a termination of such agreement), it is anticipated that
the approval of the Company's Board of Directors and the Company's shareholders
of new investment management arrangements will be sought. The Manager
anticipates that the transaction will be presented for shareholder approval and
anticipates that the transaction will close on or about May 31, 1998.
As of December 31, 1997, the Manager and its worldwide asset management
affiliates managed approximately $54 billion in assets. In the United States, as
of December 31, 1997, the Manager managed or administered approximately $8
billion of assets of GT Global Funds. As of December 31, 1997, assets entrusted
to LGT totaled approximately $79 billion.
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 Funds, the Manager employs a team approach, taking advantage of
its investment resources around the world in seeking each Fund's investment
objective.
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 Head of investment for the United Kingdom and Europe for the
London inception in 1990 Manager and LGT Asset Management PLC (London) ("LGT Asset
Management"), an affiliate of the Manager, since 1996.
Portfolio Manager for the Manager and LGT Asset Management
from 1984 to 1996.
Paul Griffiths Portfolio Manager since 1995 Portfolio Manager the Manager and LGT Asset Management since
London 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.
Prospectus Page 26
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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, 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 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." GT
Global also pays a commission equal to 4.00% of the amount invested to
broker/dealers who sell Class B shares. From time to time, GT Global may pay
commissions in excess of these amounts. Commissions are not paid on exchanges or
certain reinvestments in Class B shares. In addition, with respect to both
classes of shares, GT Global makes ongoing payments to broker/dealers for
distribution and service activities in accordance with the Rule 12b-1 plans
described below.
GT Global, at its own expense, may provide additional promotional incentives to
broker/dealers that sell shares of the Fund and/or shares of the other GT Global
Mutual Funds. In some instances additional compensation or promotional
incentives may be offered to brokers that have sold or may sell significant
amounts of shares during specified periods of time. Such compensation and
incentives may include, but are not limited to, cash, merchandise, trips and
financial assistance to 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 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. As of October 31, 1997, unreimbursed distribution expenses amounted to
approximately $695,000 (equivalent to approximately .15% of the Fund's net
assets).
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 covered by 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
Prospectus Page 27
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 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 is 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
Fund and the Company's other funds will be voted in the aggregate on other
matters, such as the election of Directors and ratification of the 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 in 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.
Prospectus Page 28
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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, CA 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 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, CA 94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
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, MA 02109. Coopers
& Lybrand L.L.P. conducts an annual audit of the Fund, assists in the
preparation of the Fund's federal and state income tax returns, and consults
with the Company and the Fund as to matters of accounting, regulatory filings,
and federal and state income taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 29
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL FUND,
INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET
INVESTING AND THE RISKS OF INVESTING IN A CONCENTRATION OF INDUSTRIES,
PLEASE CONTACT YOUR FINANCIAL ADVISER OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL NEW DIMENSION FUND
Captures global growth opportunities by investing directly in the six GT Global
Theme 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
GT GLOBAL DEVELOPING MARKETS FUND
Invests in debt and equity securities of developing market issuers
/ / 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 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
GT GLOBAL FLOATING RATE FUND
Invests primarily in senior secured floating rate loans that have the potential
to achieve a high level of current income
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.
G&IPR803004MC
<PAGE>
GT GLOBAL GROWTH &
INCOME FUND
50 California Street, 27th Floor
San Francisco, CA 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
March 1, 1998
- --------------------------------------------------------------------------------
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, 1998, 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.................................................................................................................... 29
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 (including
investment vehicles or companies advised by the Manager or its affiliates
("Affiliated Funds")) 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. With respect to investments in Affiliated Funds, the Manager waives
its advisory fee to the extent that such fees are based on assets of the Fund
invested in Affiliated Funds.
DEPOSITORY RECEIPTS
The Fund may hold equity securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs"), Global
Depository Receipts ("GDRs") 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. GDRs are similar to EDRs and are designed for use in several
international financial markets. 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, GDRs 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
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 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 within
the stated settlement period. 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.
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, i.e.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of the Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, within three days (excluding
Sundays and holidays) of such event the Fund may be required to sell portfolio
securities to restore the 300% 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. If 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 may 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. 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 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
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 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.
Statement of Additional Information Page 6
<PAGE>
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 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 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. 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 to avoid realizing losses that would result in a reduction of its
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 it purchased the security or currency, 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 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.
Statement of Additional Information Page 7
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 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
Statement of Additional Information Page 8
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 purchases 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 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 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
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 only;
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
Statement of Additional Information Page 9
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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
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.
Statement of Additional Information Page 10
<PAGE>
GT GLOBAL GROWTH & INCOME 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 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.
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.
Statement of Additional Information Page 11
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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
entering into a second contract, if its contra party agrees, 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.
Statement of Additional Information Page 12
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options purchased by the Fund) 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 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-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
Statement of Additional Information Page 13
<PAGE>
GT GLOBAL GROWTH & INCOME 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 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.
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 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 foreign 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 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
Statement of Additional Information Page 14
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 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
Statement of Additional Information Page 15
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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 may invest in Hong Kong, which reverted 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 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.
Statement of Additional Information Page 16
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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;
(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;
Statement of Additional Information Page 17
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
(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 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; or (3) 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 investment management
and administration contract. 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
benefit it received 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, 1997, 1996, and 1995, the Fund paid
aggregate brokerage commissions of $463,307, $257,953 and $318,958,
respectively. For the fiscal years ended October 31, 1996 and 1997, the Fund
paid to LGT Bank in Liechtenstein, AG, an "affiliated" broker, aggregate
brokerage commissions of $16,898 and $12,262, respectively, for transactions
involving purchases and sales of portfolio securities which represented 6.55%
and 2.65%, respectively, of the total brokerage commissions paid by the Fund and
5.69% and 2.94%, respectively, 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, 1997 and 1996, the Fund's portfolio turnover rates were 50% and 39%,
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*, 39 Mr. Guilfoyle is President, GT Global, Inc. since 1995; Director, GT Global since 1991;
Director, Chairman of the Board and Senior Vice President and Director of Sales and Marketing, GT Global from May 1992 to
President April 1995; Vice President and Director of Marketing, GT Global from 1987 to 1992;
50 California Street Director, Liechtenstein Global Trust AG (holding company of the various international LGT
San Francisco, CA 94111 companies) Advisory Board since January 1996; Director, G.T. Global Insurance Agency
("G.T. Insurance") since 1996; President and Chief Executive Officer, G.T. Insurance since
1995; Senior Vice President and Director, Sales and Marketing, G.T. Insurance from April
1995 to November 1995; Senior Vice President, Retail Marketing, G.T. Insurance from 1992
to 1993. Mr. Guilfoyle is also a director or trustee of each of the other investment
companies registered under the Investment Company Act of 1940, as amended (the "1940
Act"), that is managed or administered by the Manager.
C. Derek Anderson, 56 Mr. Anderson is President, Plantagenet Capital Management, LLC (an investment
Director partnership); Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking
220 Sansome Street firm); Director, Anderson Capital Management, Inc. since 1988; Director, PremiumWear, Inc.
Suite 400 (formerly Munsingwear, Inc.) (a casual apparel company) and Director, "R" Homes, Inc. and
San Francisco, CA 94104 various other companies. Mr. Anderson is also a director or trustee of each of the other
investment companies registered under the 1940 Act that is managed or administered by the
Manager.
Frank S. Bayley, 58 Mr. Bayley is a partner of the law firm of Baker & McKenzie, and serves as a Director and
Director Chairman of C.D. Stimson Company (a private investment company). Mr. Bayley is also a
Two Embarcadero Center director or trustee of each of the other investment companies registered under the 1940
Suite 2400 Act that is managed or administered by the Manager.
San Francisco, CA 94111
Arthur C. Patterson, 54 Mr. Patterson is Managing Partner of Accel Partners (a venture capital firm). He also
Director serves as a director of Viasoft and PageMart, Inc. (both public software companies), as
428 University Avenue well as several other privately held software and communications companies. Mr. Patterson
Palo Alto, CA 94301 is also a director or trustee of each of the other investment companies registered under
the 1940 Act that is managed or administered by the Manager.
Ruth H. Quigley, 62 Miss Quigley is a private investor. From 1984 to 1986, she was President of Quigley
Director Friedlander & Co., Inc. (a financial advisory services firm). Miss Quigley is also a
1055 California Street director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94108 Act that is managed or administered by the Manager.
Robert G. Wade, Jr.*, 70 Mr. Wade is Consultant to Chancellor LGT; Chairman of the Board of Chancellor Capital
Director Management, Inc. from January 1995 to October 1996; President, Chief Executive Officer and
1166 Avenue of the Americas Chairman of the Board of Chancellor Capital Management, Inc. from 1988 to January 1995.
New York, NY 10036 Mr. Wade is also a director or trustee of each of the other investment companies
registered under the 1940 Act that is managed or administered by the Manager.
</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>
Kenneth W. Chancey, 52 Senior Vice President -- Mutual Fund Accounting, the Manager since 1997;
Vice President and Vice President -- Mutual Fund Accounting, the Manager from 1992 to 1997;
Principal Accounting Officer and Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
50 California Street
San Francisco, CA 94111
Helge K. Lee, 51 Chief Legal and Compliance Officer -- North America, the Manager since
Vice President October 1997; Executive Vice President of the Asset Management Division
50 California Street of Liechtenstein Global Trust since October 1996; Senior Vice President,
San Francisco, CA 94111 General Counsel and Secretary of Chancellor LGT, GT Global, GT Services
and G.T. Insurance from February 1996 to October 1996; Vice President,
General Counsel and Secretary of LGT Asset Management, Inc., Chancellor
LGT, GT Global, GT Services and G.T. Insurance from May 1994 to February
1996; Senior Vice President, General Counsel and Secretary of
Strong/Corneliuson Management, Inc. and Secretary of each of the Strong
Funds from October 1991 through May 1994.
</TABLE>
------------------------------
The Board of Directors has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors for the
Company. Each of the Directors and officers of the Company is also a Director
and officer of G.T. Investment Portfolios, Inc., and 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, Floating Rate
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 12 registered investment
companies with 43 series managed or administered by the Manager. Each Director,
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 reimbursed 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, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and
Miss Quigley, who are not directors, officers or employees of the Manager or any
affiliated company, received total compensation of $38,650, $38,650, $27,850 and
$38,650, respectively, from the Company for which he or she serves as a
Director. For the fiscal year ended October 31, 1997, Mr. Anderson, Mr. Bayley,
Mr. Patterson and Miss Quigley received total compensation of $117,304,
$114,386, $88,350 and $111,688, 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 January 8, 1998, 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 series 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 OCT. 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1997....................................................................................................... $ 6,900,695
1996....................................................................................................... 6,282,438
1995....................................................................................................... 6,301,399
</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 Oct. 31, 1997.................................................................... $ 994,519 $ 4,233,024
</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 OCT. 31, COLLECTED RETAINED REALLOWED
- ---------------------------------------------------------------------------------- ------------- --------- -----------
<S> <C> <C> <C>
1997.............................................................................. $ 208,844 $ 52,850 $ 155,994
1996.............................................................................. 201,573 55,131 146,442
1995.............................................................................. 556,296 80,112 476,184
</TABLE>
GT Global receives any contingent deferred sales charges ("CDSCs") payable with
respect to redemptions of Class B shares and certain Class A shares. For the
fiscal years ended October 31, 1997, 1996 and 1995, GT Global collected CDSCs in
the amounts of $1,199,637, $1,485,113 and $1,552,827, 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 serves as the Fund's pricing and accounting agent. For the
fiscal years ended October 31, 1997, October 31, 1996 and October 31, 1995, the
Fund paid accounting services fees to the Manager of $183,323, $162,035 and
$40,735, 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, 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.
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 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. 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. If 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 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
A Letter of Intent ("LOI") is not a binding obligation to purchase the indicated
amount. While 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 other distributions on the 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 that 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
Statement of Additional Information Page 26
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
pertinent investment advisory agreement). Class A shares purchased in this
manner must be 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") AND OTHER TAX-DEFERRED PLANS
Class A or Class B shares may be purchased as the underlying investment for an
IRA meeting the requirements of sections 408(a), 408A or 530 of the Internal
Revenue Code of 1986, as amended ("Code"), as well as for qualified retirement
plans described in Code Section 401 and custodial accounts complying with Code
Section 403(b)(7).
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. Unless your and your spouse's
earnings exceed a certain level, you also may establish an "education IRA"
and/or a "Roth IRA." Although contributions to these new types of IRAs are
nondeductible, withdrawals from them will be tax-free under certain
circumstances. Please consult your tax adviser for more information. IRA
applications are available from brokers or GT Global.
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 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 adviser 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 plans (I.E., self-employed individual retirement plans) or Code Section
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 tax-exempt organizations can make pre-tax salary reduction contributions
to these accounts.
PROFIT-SHARING (INCLUDING SECTION 401(K)) AND MONEY PURCHASE PENSION
PLANS: Corporations and other employers 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
limits).
SIMPLE PLANS: Employers with no more than 100 employees that 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 Section 401(k)
plan. SIMPLEs are not subject to the complicated nondiscrimination rules that
generally apply to qualified retirement plans.
EXCHANGES BETWEEN FUNDS
Shares of the Fund may be exchanged for shares of the corresponding 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. 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 those
funds upon sixty days' written notice to the shareholders of the 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 its investment objective(s).
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
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
request directly to the shareholder's predesignated account at a domestic bank
or savings institution, if the proceeds are at least $500. Costs in connection
with the administration of this service, including wire charges, currently are
borne by the Fund. Proceeds of less than $500 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 fifteen days' written notice.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders 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). If 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 the realization of 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 the 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 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
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 net asset value of
the Fund at the beginning of such period. This election will be irrevocable so
long as Rule 18f-1 remains in effect, unless the SEC by order upon application
permits the withdrawal of such election.
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
TAXES
- --------------------------------------------------------------------------------
GENERAL
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) 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 (3) 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, and gains realized thereby, may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions ("foreign taxes") that would reduce the yield and/or total
return 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 foreign
taxes and income from sources within foreign countries and U.S. possessions if
it makes this election. Pursuant to the Taxpayer Relief Act of 1997 ("Tax Act"),
individuals who have no more than $300 ($600 for married persons filing jointly)
of creditable foreign taxes included on Form 1099 and all of whose foreign
source income is "qualified passive income" may elect each year to be
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
exempt from the extremely complicated foreign tax credit limitation and will be
able to claim a foreign tax credit without having to file the detailed Form 1116
that otherwise is required.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation -- other than a "controlled foreign
corporation" (I.E., a foreign corporation in which, on any day during its
taxable year, more than 50% of the total voting power of all voting stock
therein or the total value of all stock therein is owned, directly, indirectly
or constructively, by "U.S. shareholders," defined as U.S. persons that own,
directly, indirectly or constructively, at least 10% of that voting power) as to
which the Fund is a U.S. shareholder (effective for its taxable year beginning
November 1, 1998) -- 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 it distributes that income 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 year its pro
rata share of the QEF's ordinary earnings and net capital gain (I.E., 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.
Effective for its taxable year beginning November 1, 1998, the Fund may elect to
"mark to market" its stock in any PFIC. "Marking-to-market," in this context,
means including in ordinary income each taxable year the excess, if any, of the
fair market value of the stock over the Fund's adjusted basis therein as of the
end of that year. Pursuant to the election, the Fund also will be allowed to
deduct (as an ordinary, not capital, loss) the excess, if any, of its adjusted
basis in PFIC stock over the fair market value thereof as of the taxable
year-end, but only to the extent of any net mark-to-market gains with respect to
that stock included in income by the Fund for prior taxable years. The Fund's
adjusted basis in each PFIC's stock subject to the election will be adjusted to
reflect the amounts of income included and deductions taken thereunder.
Regulations proposed in 1992 would provide a similar election with respect to
the stock of certain PFICs.
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") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply, however, to a dividend paid by the Fund to a foreign
shareholder that 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. A distribution of net capital gain by the
Fund to a foreign shareholder generally will be subject to U.S. federal income
tax (at the rates applicable to domestic persons) only if the distribution is
"effectively connected" or the foreign shareholder is treated as a resident
alien individual for federal income tax purposes.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The Fund's 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 amount, 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.
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. As of the date of
preparation of this Statement of Additional Information, it is not entirely
clear whether that 60% portion will qualify for the reduced maximum tax rates on
net capital gain enacted by the Tax Act -- 20% (10% for taxpayers in the 15%
marginal tax bracket) for gain recognized on capital assets held for more than
18 months -- instead of the 28% rate in effect before that legislation, which
now applies to gain recognized on capital assets held for more than one year but
not more than
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
18 months, although technical corrections legislation passed by the House of
Representatives late in 1997 would treat it as qualifying therefor.
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.
If the Fund has an "appreciated financial position" -- generally, an interest
(including an interest through an option, Futures or Forward Contract or short
sale) with respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted basis
- -- and enters into a "constructive sale" of the same or substantially similar
property, the Fund will be treated as having made an actual sale thereof, with
the result that gain will be recognized at that time. A constructive sale
generally consists of a short sale, an offsetting notional principal contract or
Futures or Forward Contract entered into by the Fund or a related person with
respect to the same or substantially similar property. In addition, if the
appreciated financial position is itself a short sale or such a contract,
acquisition of the underlying property or substantially similar property will be
deemed a constructive sale.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust, AG is composed of the Manager and its worldwide
affiliates. Other worldwide affiliates of Liechtenstein Global Trust include LGT
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 and LGT Asset Management AG in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC in London, England; LGT Asset Management Ltd. in Hong Kong; LGT
Asset Management Ltd. in Tokyo; LGT Asset Management Pte. Ltd. in Singapore; LGT
Asset Management Ltd. in Sydney; and LGT Asset Management GmbH in Frankfurt,
Germany.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, MA 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, MA 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 Oct. 31, 1997............................................................. 13.35% 13.28%
Oct. 31, 1992 through Oct. 31, 1997......................................................... 12.67% 12.81%
Oct. 22, 1992 (commencement of operations) through Oct. 31, 1997............................ n/a 12.82%
Sept. 25, 1990 (commencement of operations) through Oct. 31, 1997........................... 11.95% 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 Oct. 31, 1997............................................................. 19.01% 18.28%
Oct. 31, 1992 through Oct. 31, 1997......................................................... 13.77% 13.05%
Oct. 22, 1992 (commencement of operations) through Oct. 31, 1997............................ n/a 12.94%
Sept. 25, 1990 (commencement of operations) through Oct. 31, 1997........................... 12.72% 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>
Oct. 22, 1992 (commencement of operations) through Oct. 31, 1997.......................... n/a 84.31%
Sept. 25, 1990 (commencement of operations) through Oct. 31, 1997......................... 133.95% 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>
Oct. 22, 1992 (commencement of operations) through Oct. 31, 1997.......................... n/a 83.31%
Sept. 25, 1990 (commencement of operations) through Oct. 31, 1997......................... 122.84% n/a
</TABLE>
IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS
The Fund and GT Global may from time to time, in advertisements, sales
literature and reports furnished to present or prospective shareholders, compare
the Fund with the following, among others:
(1) The Consumer Price Index ("CPI"), 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.
(2) 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"), Micropal, 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 its "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.
(3) 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.
(4) Ibbotson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(5) 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.
(6) Dow Jones Industrial Average.
(7) CNBC/Financial News Composite Index.
(8) 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.
(9) Morgan Stanley Capital International All Country (AC) World index
("MSCI"). The MSCI is a broad, unmanaged index of global stock prices,
currently comprising 2500 different issuers, located in 47 countries, and
grouped in 38 separate industries.
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
(10) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S., each of which is a widely used index
composed of world government bonds.
(11) 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.
(12) Salomon Brothers Global Telecommunications Index, which is composed
of telecommunications companies in the developing and emerging countries.
(13) Datastream and Worldscope, each of which is an on-line database
retrieval service for information, including international financial and
economic data.
(14) International Financial Statistics, which is produced by the
International Monetary Fund.
(15) Various publications and reports produced by the World Bank and its
affiliates.
(16) Various publications from the International Bank for Reconstruction
and Development.
(17) Various publications produced by ratings agencies such as Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's, a division of The
McGraw-Hill Companies, Inc. ("S&P") and Fitch.
(18) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(19) Bank Rate National Monitor Index, which is an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.
(20) International Finance Corporation ("IFC") Emerging Markets Data
Base, which provides detailed statistics on stock and bond markets in
developing countries.
(21) Various publications from the Organization for Economic Cooperation
and Development ("OECD").
(22) 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., Financial Research Corporation, 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 Ibbotson 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, including 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 that 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 may be subject
to revision and has not been independently verified by the Fund 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 and Hong Kong Dollar). A foreign currency that 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 investment 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 or relevant indices. The performance of indices does not take
expenses
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
into account, while the Fund incurs expenses in its operations, which will
reduce performance. Each of these factors will cause the performance of the Fund
to differ from relevant indices.
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 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. 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. 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 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 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 return to those
of a benchmark.
The 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.
The Fund may describe in its sales material and advertisements how an investor
may invest in GT Global Mutual Funds through various retirement plans or other
programs that offer deferral of income taxes on investment earnings and pursuant
to which an investor may make deductible contributions. Because of their
advantages, these retirement plans and programs may produce returns superior to
comparable non-retirement investments. 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. In sales material and
advertisements, the Fund may also discuss these plans and programs. See
"Information Relating to Sales and Redemptions -- Individual Retirement Accounts
('IRAs') and Other Tax-Deferred 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 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 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.
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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: 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, 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.
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. 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 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
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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. With respect to stocks, a global stock
research ("GSR") database developed by GT Global is utilized in the selection
process. All stocks within the GSR database are systematically ranked by our
analysts on a 1-5 basis with 1 representing the most favored. The rankings,
along with our quantitative, fundamental research, determine which stocks are
bought and sold.
GT Global describes the major stages of economic development as revolving in a
"virtuous cycle." From time to time, each Fund and GT Global may discuss the
virtuous cycle in its sales literature and advertising. This cycle operates
worldwide, forcing companies to become increasingly competitive in an
ever-expanding global marketplace. GT Global has identified the following
sequential stages within the virtuous cycle:
FALLING BORDERS AND TRADE BARRIERS: Barriers between countries diminish,
increasing the potential for world trade and promoting global competition.
CAPITAL FLOWS FROM DEVELOPED MARKETS TO EMERGING MARKETS: As barriers fall,
restrictions on the free movement of capital in and out of a country are often
reduced or removed. The flow of money from developed to developing markets gains
momentum.
INDUSTRIALIZATION OF EMERGING MARKETS: With capital flowing across borders, many
developing nations are able to quickly begin their process of industrialization.
INCREASED DEMAND FOR GLOBAL CONSUMER PRODUCTS: As people in emerging markets
experience rising standards of living due to increased industrialization, they
demand more consumer products which can help spur global trade flows.
GT Global believes that we increasingly live in a world without boundaries in
terms of trade, competition and investment opportunities. Therefore, GT Global
believes it's becoming more relevant to look at investing in terms of industrial
groupings, or themes, as an alternative to the traditional, primary focus on
regions. GT Global believes such themes make movement possible between stages in
the virtuous cycle of economic progress.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the first
four categories:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They 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 -- Bonds which are rated Aa are judged to be of 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 -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as 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 -- Bonds which are rated Baa are considered as 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 -- Bonds which are rated Ba 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 both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated 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 -- Bonds which are rated Caa 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 -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C 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.
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. 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 Company ranks in the
lower end of its generic rating category.
STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc. ("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 -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation 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 grade period. The "D" rating
also will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation 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 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 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.
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
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."
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Fund as of October 31, 1997, and for the
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, 1997, 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, 1997, 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, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1997
F1
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (28.4%)
Schweizerischer Bankverein (Swiss Bank Corp.) .......... SWTZ 74,750 $ 20,102,411 2.7
BANKS-MONEY CENTER
Royal & Sun Alliance Insurance Group PLC ............... UK 2,081,400 19,951,696 2.6
INSURANCE - MULTI-LINE
CS Holding AG - Registered ............................. SWTZ 108,300 15,258,696 2.0
BANKS-MONEY CENTER
AEGON N.V. ............................................. NETH 187,875 14,809,312 2.0
INSURANCE-LIFE
First Tennessee National Corp. ......................... US 245,400 14,141,175 1.9
BANKS-REGIONAL
Union Bank of Switzerland - Bearer ..................... SWTZ 11,752 13,531,589 1.8
BANKS-MONEY CENTER
ABN AMRO Holding N.V. .................................. NETH 667,296 13,442,181 1.8
BANKS-MONEY CENTER
ING Groep N.V. ......................................... NETH 264,262 11,096,009 1.5
OTHER FINANCIAL
Deutsche Bank AG ....................................... GER 134,150 8,774,787 1.2
BANKS-MONEY CENTER
American General Corp. ................................. US 170,000 8,670,000 1.1
INSURANCE-LIFE
IKB Deutsche Industriebank AG .......................... GER 394,000 8,339,229 1.1
BANKS-REGIONAL
General Accident PLC ................................... UK 400,000 6,806,441 0.9
INSURANCE - PROPERTY-CASUALTY
National Westminster Bank PLC .......................... UK 471,800 6,781,828 0.9
BANKS-MONEY CENTER
Fortis Amev N.V. ....................................... NETH 164,542 6,468,086 0.9
OTHER FINANCIAL
Lloyds TSB Group PLC ................................... UK 513,428 6,415,697 0.8
BANKS-REGIONAL
Commonwealth Bank of Australia ......................... AUSL 546,000 6,275,641 0.8
BANKS-SUPER REGIONAL
Generale de Banque S.A.: ............................... BEL -- -- 0.8
BANKS-MONEY CENTER
Common ............................................... -- 14,762 6,038,244 --
Strip VVPR-/- ........................................ -- 1,342 567 --
Kredietbank N.V. ....................................... BEL 12,980 5,446,409 0.7
BANKS-REGIONAL
Commercial Union PLC ................................... UK 361,550 5,093,962 0.7
INSURANCE - MULTI-LINE
Mercury Asset Management Group PLC ..................... UK 196,698 4,272,457 0.6
INVESTMENT MANAGEMENT
M & G Group PLC ........................................ UK 155,000 3,139,257 0.4
INVESTMENT MANAGEMENT
General Property Trust ................................. AUSL 1,500,000 2,688,928 0.4
REAL ESTATE
Reinsurance Australia Corporation Ltd. ................. AUSL 880,000 2,276,555 0.3
INSURANCE - MULTI-LINE
Infrastructure Trust of Australia Group ................ AUSL 2,830,000 2,188,401 0.3
OTHER FINANCIAL
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
National Australia Bank Ltd. ........................... AUSL 125,000 $ 1,709,139 0.2
BANKS-REGIONAL
Realty Development Corp., Ltd. "A" ..................... HK 5,000 14,230 --
REAL ESTATE
------------
213,732,927
------------
Energy (14.2%)
Royal Dutch Petroleum Co. .............................. NETH 371,840 19,674,378 2.6
OIL
Elektrowatt "B" AG ..................................... SWTZ 49,068 18,821,083 2.5
ELECTRICAL & GAS UTILITIES
Exxon Corp. ............................................ US 182,600 11,218,488 1.5
OIL
Mobil Corp. ............................................ US 127,600 9,290,875 1.2
OIL
Shell Transport & Trading Co., PLC ..................... UK 1,121,700 7,953,685 1.1
OIL
Electrabel S.A. ........................................ BEL 34,760 7,801,667 1.0
ELECTRICAL & GAS UTILITIES
Elf Aquitaine .......................................... FR 52,475 6,498,283 0.9
OIL
RWE AG ................................................. GER 134,620 5,839,128 0.8
ELECTRICAL & GAS UTILITIES
PG&E Corp. ............................................. US 220,000 5,623,750 0.7
ELECTRICAL & GAS UTILITIES
Reunies Electrobel & Tractebel S.A. .................... BEL 57,935 4,935,325 0.7
ELECTRICAL & GAS UTILITIES
Groupe Bruxelles Lambert S.A. .......................... BEL 31,025 4,805,337 0.6
OIL
Santos Ltd. ............................................ AUSL 907,472 4,172,138 0.6
OIL
------------
106,634,137
------------
Consumer Non-Durables (7.8%)
Avon Products, Inc. .................................... US 182,000 11,921,000 1.6
PERSONAL CARE/COSMETICS
Universal Corp. ........................................ US 280,500 10,501,219 1.4
TOBACCO
Philip Morris Cos., Inc. ............................... US 255,000 10,104,375 1.3
TOBACCO
Guinness PLC ........................................... UK 871,500 7,791,169 1.0
BEVERAGES - ALCOHOLIC
Pernod Ricard .......................................... FR 158,720 7,358,318 1.0
BEVERAGES - ALCOHOLIC
Cadbury Schweppes PLC .................................. UK 670,000 6,742,704 0.9
BEVERAGES - NON-ALCOHOLIC
Brown-Forman Corp. "B" ................................. US 93,600 4,603,950 0.6
BEVERAGES - ALCOHOLIC
------------
59,022,735
------------
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Services (7.7%)
Telecom Corporation of New Zealand Limited: ............ NZ -- -- 1.9
TELEPHONE NETWORKS
Common ............................................... -- 2,614,200 $ 12,660,904 --
ADR{\/} .............................................. -- 38,000 1,479,625 --
McGraw-Hill, Inc. ...................................... US 162,000 10,590,750 1.4
BROADCASTING & PUBLISHING
Woolworths Ltd. ........................................ AUSL 2,100,000 6,776,098 0.9
RETAILERS-OTHER
PMP Communications Ltd. ................................ AUSL 2,656,500 5,509,086 0.7
BROADCASTING & PUBLISHING
Qantas Airways Ltd. .................................... AUSL 2,890,000 5,180,668 0.7
TRANSPORTATION - AIRLINES
Royal PTT Nederland N.V. ............................... NETH 112,735 4,309,602 0.6
TELEPHONE NETWORKS
Cognizant Corp. ........................................ US 109,800 4,302,788 0.6
CONSUMER SERVICES
Dun & Bradstreet Corp. ................................. US 109,800 3,136,163 0.4
BROADCASTING & PUBLISHING
EMI Group PLC .......................................... UK 381,600 3,088,259 0.4
LEISURE & TOURISM
ACNielsen Corp.-/- ..................................... US 36,600 837,218 0.1
CONSUMER SERVICES
------------
57,871,161
------------
Materials/Basic Industry (4.7%)
Akzo Nobel N.V. ........................................ NETH 58,950 10,389,900 1.4
CHEMICALS
BASF AG ................................................ GER 234,000 7,937,953 1.1
CHEMICALS
Solvay S.A. "A" ........................................ BEL 117,540 7,083,515 0.9
CHEMICALS
Monsanto Co. ........................................... US 160,500 6,861,375 0.9
CHEMICALS
Aberfoyle Ltd. ......................................... AUSL 1,160,000 2,324,077 0.3
METALS - NON-FERROUS
Solutia, Inc. .......................................... US 32,100 710,213 0.1
CHEMICALS
------------
35,307,033
------------
Health Care (4.4%)
Bristol Myers Squibb Co. ............................... US 277,400 24,341,850 3.2
PHARMACEUTICALS
Bayer AG ............................................... GER 258,600 9,072,369 1.2
PHARMACEUTICALS
------------
33,414,219
------------
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (2.7%)
General Electric PLC ................................... UK 1,473,000 $ 9,406,990 1.2
AEROSPACE/DEFENSE
Lockheed Martin Corp. .................................. US 69,545 6,611,122 0.9
AEROSPACE/DEFENSE
BICC PLC ............................................... UK 1,559,172 4,354,279 0.6
INDUSTRIAL COMPONENTS
------------
20,372,391
------------
Consumer Durables (1.4%)
GKN PLC ................................................ UK 460,400 10,324,636 1.4
------------
AUTO PARTS
Multi-Industry/Miscellaneous (1.3%)
VEBA AG ................................................ GER 170,200 9,484,616 1.3
CONGLOMERATE
------------ -----
TOTAL EQUITY INVESTMENTS (cost $338,444,171) ............. 546,163,855 72.6
------------ -----
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (20.6%)
Australia (0.7%)
Australian Government, 8.75% due 8/15/08 ............. AUD 5,774,000 4,934,994 0.7
Canada (1.2%)
Canadian Government, 8.75% due 12/1/05 ............... CAD 10,620,000 9,179,080 1.2
Denmark (0.7%)
Kingdom of Denmark, 7% due 11/15/07 .................. DKK 31,100,000 5,034,931 0.7
Germany (3.8%)
Deutschland Republic:
6.75% due 4/22/03 .................................. DEM 23,000,000 14,318,817 1.9
6.25% due 1/4/24 ................................... DEM 4,300,000 2,508,188 0.3
Treuhandanstalt:
6.625% due 7/9/03 .................................. DEM 12,060,000 7,473,074 1.0
6.375% due 7/1/99 .................................. DEM 7,000,000 4,192,288 0.6
Italy (1.8%)
Italian Buoni Poliennali del Tesoro (BTPS):
6% due 2/15/00 ..................................... ITL 18,365,000,000 10,984,835 1.5
10.5% due 9/01/05 .................................. ITL 2,725,000,000 2,039,827 0.3
New Zealand (0.4%)
New Zealand Government, 8% due 4/15/04 ............... NZD 4,440,000 2,955,320 0.4
Sweden (0.6%)
Swedish Government, 8% due 8/15/07 ................... SEK 30,000,000 4,469,072 0.6
United Kingdom (4.0%)
United Kingdom Treasury:
8% due 6/10/03 ..................................... GBP 14,000,000 24,942,355 3.3
7.5% due 12/7/06 ................................... GBP 3,116,000 5,556,353 0.7
</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, 1997
- --------------------------------------------------------------------------------
<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 (7.4%)
United States Treasury Bonds:
6% due 2/15/26 ..................................... USD 24,060,000 $ 23,404,459 3.1
6.25% due 8/15/23 .................................. USD 9,075,000 9,101,587 1.2
United States Treasury Notes:
7.5% due 2/15/05 ................................... USD 15,460,000 16,928,096 2.2
6.5% due 8/15/05 ................................... USD 2,580,000 2,676,397 0.3
Federal National Mortgage Association, 6.375% due
8/15/07 ............................................. AUD 5,940,000 4,241,014 0.6
------------
Total Government & Government Agency Obligations (cost
$151,129,623) ........................................... 154,940,687
------------
Corporate Bonds (5.5%)
Germany (2.5%)
Siemens Capital Corp., 8% due 6/24/02+/+ ............. USD 4,710,000 7,985,805 1.1
Commerzbank AG, Convertible Bond, 9.45% due
12/31/00+ ........................................... DEM 4,173,000 6,630,339 0.9
Deutsche Bank AG, 9.00% due 12/31/02+/+ .............. DEM 5,625,000 3,892,976 0.5
United Kingdom (3.0%)
Daily Mail & General Trust, Convertible Bond, 5.75%
due 9/26/03 ......................................... GBP 3,405,000 7,795,748 1.0
Land Securities PLC, Convertible Bond, 9.375% due
7/31/04 ............................................. GBP 3,485,000 7,679,334 1.0
MBNA Chester Asset Receivable #3, 6.6% due
11/17/03+ ........................................... GBP 4,500,000 7,568,182 1.0
------------
Total Corporate Bonds (cost $33,669,644) ................. 41,552,384
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $184,799,267) ....... 196,493,071 26.1
------------ -----
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Societe Generale Banque put warrants due 11/15/99
Tractebel (cost $0) ................................... BEL 11,587 84,839 --
------------ -----
BANKS-MONEY CENTER
<CAPTION>
NO. OF VALUE % OF NET
RIGHTS COUNTRY RIGHTS (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Infrastructure Trust of Australia Group Rights, expire
12/1/97 (cost $0) ..................................... AUSL 943,333 6,632 --
------------ -----
OTHER FINANCIAL
</TABLE>
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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ---------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1997, with State Street Bank & Trust
Co., due November 3, 1997, for an effective yield of
5.57%, collateralized by $1,935,000 U.S. Treasury
Bonds, 8.875% due 8/15/17 (market value of collateral
is $2,538,597, including accrued interest). (cost
$2,485,384) ........................................... $ 2,485,383 0.3
------------ -----
TOTAL INVESTMENTS (cost $525,728,822) * ................. 745,233,780 99.0
Other Assets and Liabilities ............................. 7,244,043 1.0
------------ -----
NET ASSETS ............................................... $752,477,823 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} 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 $527,143,379 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 232,777,964
Unrealized depreciation: (14,687,563)
-------------
Net unrealized appreciation: $ 218,090,401
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depository Receipt
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1997, 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) ................. 5.2 0.7 5.9
Belgium (BEL/BEF) .................... 4.7 4.7
Canada (CAN/CAD) ..................... 1.2 1.2
Denmark (DEN/DKK) .................... 0.7 0.7
France (FR/FRF) ...................... 1.9 1.9
Germany (GER/DEM) .................... 6.7 6.3 13.0
Italy (ITLY/ITL) ..................... 1.8 1.8
Netherlands (NETH/NLG) ............... 10.8 10.8
New Zealand (NZ/NZD) ................. 1.9 0.4 2.3
Sweden (SWDN/SEK) .................... 0.6 0.6
Switzerland (SWTZ/CHF) ............... 9.0 9.0
United Kingdom (UK/GBP) .............. 13.5 7.0 20.5
United States & Other (US/USD) ....... 18.9 7.4 1.3 27.6
------ ----- --- -----
Total ............................... 72.6 26.1 1.3 100.0
------ ----- --- -----
------ ----- --- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $752,477,823.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE UNREALIZED
(U.S. CONTRACT DELIVERY APPRECIATION
CONTRACTS TO SELL: DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 26,803,508 1.80000 11/21/97 $(1,136,841)
French Francs........................... 2,481,413 6.14000 11/21/97 (152,423)
French Francs........................... 1,238,580 5.72800 02/06/98 945
Netherland Guilders..................... 10,870,680 2.08800 11/14/97 (765,316)
Swiss Francs............................ 12,639,800 1.44000 12/19/97 (417,578)
------------ -------------
Total Contracts to Sell (Receivable
amount $51,562,768).................. 54,033,981 (2,471,213)
------------ -------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 7.18%.
Total Open Forward Foreign Currency
Contracts............................ $(2,471,213)
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $525,728,822) (Note 1)............................. $745,233,780
U.S. currency..................................................................... $ 710
Foreign currencies (cost $66,141)................................................. 65,897 66,607
---------
Receivable for Fund shares sold.............................................................. 6,808,910
Interest and interest withholding tax reclaims receivable.................................... 4,291,268
Dividends and dividend withholding tax reclaims receivable................................... 1,596,979
-----------
Total assets............................................................................... 757,997,544
-----------
Liabilities:
Payable for open forward foreign currency contracts (Note 1)................................. 2,471,213
Payable for Fund shares repurchased (Note 2)................................................. 1,507,330
Payable for investment management and administration fees (Note 2)........................... 631,265
Payable for service and distribution expenses (Note 2)....................................... 484,947
Payable for printing and postage expenses.................................................... 124,328
Payable for forward foreign currency contracts -- closed (Note 1)............................ 97,836
Payable for transfer agent fees (Note 2)..................................................... 94,599
Payable for custodian fees (Note 1).......................................................... 37,200
Payable for professional fees................................................................ 33,142
Payable for fund accounting fees (Note 2).................................................... 16,751
Payable for registration and filing fees..................................................... 9,540
Payable for Directors' fees and expenses (Note 2)............................................ 7,754
Other accrued expenses....................................................................... 3,816
-----------
Total liabilities.......................................................................... 5,519,721
-----------
Net assets..................................................................................... $752,477,823
-----------
-----------
Class A:
Net asset value and redemption price per share ($292,527,640 DIVIDED BY 35,620,970 shares
outstanding).................................................................................. $ 8.21
-----------
-----------
Maximum offering price per share (100/95.25 of $8.21) *........................................ $ 8.62
-----------
-----------
Class B:+
Net asset value and offering price per share ($456,893,047 DIVIDED BY 55,651,933 shares
outstanding).................................................................................. $ 8.21
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($3,057,136 DIVIDED
BY 372,705 shares outstanding)................................................................ $ 8.20
-----------
-----------
Net assets consist of:
Paid in capital (Note 4)..................................................................... $521,143,879
Accumulated net realized gain on investments and foreign currency transactions............... 14,233,867
Net unrealized depreciation on translation of assets and liabilities in foreign currencies... (2,404,881)
Net unrealized appreciation of investments................................................... 219,504,958
-----------
Total -- representing net assets applicable to capital shares outstanding...................... $752,477,823
-----------
-----------
<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.
F9
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $1,854,546)............................ $16,116,249
Interest income (net of foreign withholding tax of $3,879)................................ 14,091,494
Other income.............................................................................. 43,134
-----------
Total investment income................................................................. 30,250,877
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 6,900,695
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 994,519
Class B..................................................................... 4,233,024 5,227,543
----------
Transfer agent fees (Note 2).............................................................. 1,258,598
Custodian fees (Note 1)................................................................... 472,449
Printing and postage expenses............................................................. 230,825
Fund accounting fees (Note 2)............................................................. 183,323
Registration and filing fees.............................................................. 70,955
Audit fees................................................................................ 54,630
Legal fees................................................................................ 25,414
Directors' fees and expenses (Note 2)..................................................... 14,779
Other expenses (Note 1)................................................................... 30,664
-----------
Total expenses before reductions........................................................ 14,469,875
-----------
Expense reductions (Notes 1 & 5)...................................................... (1,009,844)
-----------
Total net expenses...................................................................... 13,460,031
-----------
Net investment income....................................................................... 16,790,846
-----------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments.............................................. 11,255,273
Net realized gain on foreign currency transactions............................ 12,750,255
----------
Net realized gain during the year....................................................... 24,005,528
Net change in unrealized depreciation on translation of assets and liabilities
in foreign currencies........................................................ (4,059,448)
Net change in unrealized appreciation of investments.......................... 84,674,909
----------
Net unrealized appreciation during the year............................................. 80,615,461
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 104,620,989
-----------
Net increase in net assets resulting from operations........................................ $121,411,835
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income...................................................... $ 16,790,846 $ 18,175,444
Net realized gain on investments and foreign currency transactions......... 24,005,528 15,732,409
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies.............................. (4,059,448) 1,957,055
Net change in unrealized appreciation of investments....................... 84,674,909 62,236,320
------------ ------------
Net increase in net assets resulting from operations..................... 121,411,835 98,101,228
------------ ------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................................................. (7,733,156) (9,963,848)
From net realized gain on investments...................................... (757,327) (1,766,763)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................................................. (9,266,887) (10,894,963)
From net realized gain on investments...................................... (907,529) (2,225,842)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................................................. (125,777) (65,132)
From net realized gain on investments...................................... (12,318) (5,890)
------------ ------------
Total distributions...................................................... (18,802,994) (24,922,438)
------------ ------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested........................... 426,976,337 237,835,679
Decrease from capital shares repurchased................................... (450,361,754) (279,569,655)
------------ ------------
Net decrease from capital share transactions............................. (23,385,417) (41,733,976)
------------ ------------
Total increase in net assets................................................. 79,223,424 31,444,814
Net assets:
Beginning of year.......................................................... 673,254,399 641,809,585
------------ ------------
End of year................................................................ $752,477,823* $673,254,399*
------------ ------------
------------ ------------
* Includes undistributed net investment income of........................... $ -- $ 755,291
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F11
<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,
----------------------------------------------------------
1997 (D) 1996 1995 1994 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 7.11 $ 6.35 $ 6.21 $ 6.29 $ 5.28
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income................. 0.21 0.22 0.24 0.22 0.24*
Net realized and unrealized gain
(loss) on investments................ 1.12 0.82 0.13 (0.03) 1.05
---------- ---------- ---------- ---------- ----------
Net increase from investment
operations......................... 1.33 1.04 0.37 0.19 1.29
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.21) (0.24) (0.22) (0.21) (0.24)
From net realized gain on
investments.......................... (0.02) (0.04) (0.01) (0.06) --
From sources other than net investment
income............................... -- -- -- -- (0.04)
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.23) (0.28) (0.23) (0.27) (0.28)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 8.21 $ 7.11 $ 6.35 $ 6.21 $ 6.29
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 19.01% 16.80% 6.27% 3.14% 25.1%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 292,528 $ 286,203 $ 284,069 $ 317,847 $ 251,428
Ratio of net investment income to
average net assets..................... 2.74% 3.17% 3.85% 3.30% 3.3%*
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.50% 1.59% 1.70% 1.67% 1.8%*
Without expense reductions............ 1.64% 1.66% 1.74% N/A N/A
Portfolio turnover rate++............... 50% 39% 83% 117% 24%
Average commission rate per share paid
on portfolio transactions++............ $ 0.0151 $ 0.0139 N/A N/A N/A
</TABLE>
- ----------------
+ 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
class of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.005 for the year ended October 31, 1993.
Without such reimbursement, the expense ratio would have been 1.9% and
the ratio of net investment income to average net assets would have
been 3.2%.
(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 year.
The accompanying notes are an integral part of the financial statements.
F12
<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
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1997 (D) 1996 1995 1994 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 7.11 $ 6.35 $ 6.21 $ 6.29 $ 5.28
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income................. 0.16 0.17 0.20 0.18 0.20
Net realized and unrealized gain
(loss) on investments................ 1.13 0.82 0.13 (0.03) 1.05
---------- ---------- ---------- ---------- ----------
Net increase from investment
operations......................... 1.29 0.99 0.33 0.15 1.25
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.17) (0.20) (0.18) (0.17) (0.20)
From net realized gain on
investments.......................... (0.02) (0.03) (0.01) (0.06) --
From sources other than net investment
income............................... -- -- -- -- (0.04)
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.19) (0.23) (0.19) (0.23) (0.24)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 8.21 $ 7.11 $ 6.35 $ 6.21 $ 6.29
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 18.28% 16.06% 5.57% 2.48% 24.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 456,893 $ 383,966 $ 356,796 $ 359,242 $ 150,768
Ratio of net investment income to
average net assets..................... 2.09% 2.52% 3.20% 2.65% 2.6%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.15% 2.24% 2.35% 2.32% 2.5%
Without expense reductions............ 2.29% 2.31% 2.39% N/A N/A
Portfolio turnover rate++............... 50% 39% 83% 117% 24%
Average commission rate per share paid
on portfolio transactions++............ $ 0.0151 $ 0.0139 N/A N/A N/A
<CAPTION>
ADVISOR CLASS+
----------------------------------------
YEAR JUNE 1, 1995
ENDED YEAR ENDED TO
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 (D) 1996 1995
----------- ----------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 7.10 $ 6.35 $ 6.24
----------- ----------- -------------
Income from investment operations:
Net investment income................. 0.23 0.23 0.11
Net realized and unrealized gain
(loss) on investments................ 1.13 0.82 0.13
----------- ----------- -------------
Net increase from investment
operations......................... 1.36 1.05 0.24
----------- ----------- -------------
Distributions to shareholders:
From net investment income............ (0.24) (0.26) (0.13)
From net realized gain on
investments.......................... (0.02) (0.04) --
From sources other than net investment
income............................... -- -- --
----------- ----------- -------------
Total distributions................. (0.26) (0.30) (0.13)
----------- ----------- -------------
Net asset value, end of period.......... $ 8.20 $ 7.10 $ 6.35
----------- ----------- -------------
----------- ----------- -------------
Total investment return (c)............. 19.23% 17.19% 3.83%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 3,057 $ 3,085 $ 944
Ratio of net investment income to
average net assets..................... 3.09% 3.52% 4.20%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.15% 1.24% 1.35%(a)
Without expense reductions............ 1.29% 1.31% 1.39%(a)
Portfolio turnover rate++............... 50% 39% 83%
Average commission rate per share paid
on portfolio transactions++............ $0.0151 $ 0.0139 N/A
</TABLE>
- ----------------
+ 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
class of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.005 for the year ended October 31, 1993.
Without such reimbursement, the expense ratio would have been 1.9% and
the ratio of net investment income to average net assets would have
been 3.2%.
(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 year.
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Growth & Income Fund ("Fund") is a separate series of G.T. Investment
Funds, Inc. ("Company"). The Company is organized as a Maryland corporation and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a non-diversified, open-end management investment company. The Company has
thirteen 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(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
Fund deems it appropriate, prices obtained for the day of valuation from a bond
pricing service will be used. Short-term investments 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
F14
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
fluctuates with changes in currency exchange rates. The Forward Contract is
marked-to-market daily and the change in market value is recorded by the Fund as
an unrealized gain or loss. When the Forward Contract is closed, the Fund
records a realized gain or loss equal to the difference between the value at the
time it was opened and the value at the time it was closed. Forward Contracts
involve market risk in excess of the amounts shown in the Fund's "Statement of
Assets and Liabilities." The Fund could be exposed to risk if a 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, 1997, stocks with an aggregate value of approximately $51,986,675
were on loan to brokers. The loans were secured by cash collateral of
$54,846,747. 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, 1997, the Fund
F15
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
received $976,164 of income from securities lending which was used to offset the
Fund's custody and administrative expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
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.
(N) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised or administered by
the Manager, has a line of credit with each of BankBoston and State Street Bank
& Trust Company. The arrangements with the banks allow the Fund and the GT Funds
to
borrow an aggregate maximum amount of $200,000,000. The Fund is limited to
borrowing up to 33 1/3% of the value of each Fund's total assets. On October 31,
1997, the Fund had no loan outstanding.
For the year ended October 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
for the Fund was $2,560,909, with a weighted average interest rate of 6.41%.
Interest expense for the Fund for the year ended October 31, 1997 was $5,014,
included in "Other Expenses" on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc., is the Funds' investment manager and
administrator. 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.
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, 1997, GT Global retained $52,850
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 $32 for the year ended October 31, 1997. 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, 1997 GT Global collected CDSCs in the
amount of $1,199,605. 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.
F16
<PAGE>
GT GLOBAL GROWTH & INCOME 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 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.
Effective November 1, 1997, 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 1.75%, 2.40% and 1.40% of the
average daily net assets of the Fund's Class A, Class B and Advisor Class
shares, respectively. This undertaking may be changed or eliminated in the
future.
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, 1997, purchases and sales of investment
securities by the Fund, other than short-term investments and U.S. government
obligations, aggregated $322,737,917 and $326,736,141, respectively. Purchases
and sales of U.S. government obligations were $32,891,598 and $17,886,577,
respectively, for the year ended October 31, 1997.
4. CAPITAL SHARES
At October 31, 1997, 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 Developing Markets 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 fifteen series of the Company
and designated as Advisor Class common stock. 1,100,000,000 shares remain
unclassified. Transactions in capital shares of the Fund were as follows:
F17
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
------------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 37,585,791 $289,617,397 21,196,018 $143,350,526
Shares issued in connection with reinvestment of
distributions................................................ 935,467 7,161,559 1,500,319 9,894,388
----------- ------------ ----------- ------------
38,521,258 296,778,956 22,696,337 153,244,914
Shares repurchased............................................. (43,156,190) (332,338,391) (27,157,086) (182,477,096)
----------- ------------ ----------- ------------
Net decrease................................................... (4,634,932) $(35,559,435) (4,460,749) $(29,232,182)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
------------------------- -------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------- ----------- ------------ ----------- ------------
Shares sold.................................................... 12,634,686 $ 97,336,518 9,561,545 $ 63,970,280
Shares issued in connection with reinvestment of
distributions................................................ 1,087,287 8,343,350 1,656,409 10,934,244
----------- ------------ ----------- ------------
13,721,973 105,679,868 11,217,954 74,904,524
Shares repurchased............................................. (12,063,889) (93,059,122) (13,373,837) (89,395,191)
----------- ------------ ----------- ------------
Net increase (decrease)........................................ 1,658,084 $ 12,620,746 (2,155,883) $(14,490,667)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
------------------------- -------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------- ----------- ------------ ----------- ------------
Shares sold.................................................... 3,177,501 $ 24,442,634 1,416,928 $ 9,616,882
Shares issued in connection with reinvestment of
distributions................................................ 9,792 74,879 10,469 69,359
----------- ------------ ----------- ------------
3,187,293 24,517,513 1,427,397 9,686,241
Shares repurchased............................................. (3,248,879) (24,964,241) (1,141,817) (7,697,368)
----------- ------------ ----------- ------------
Net increase (decrease)........................................ (61,586) $ (446,728) 285,580 $ 1,988,873
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager directed certain portfolio trades to brokers who paid a portion of
the Fund's expenses. For the period ended October 31, 1997, the Fund's expenses
were reduced by $33,680 under these arrangements.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$1,489,466 as a capital gain dividend for the fiscal year ended October 31,
1997.
Pursuant to Section 854 of the Internal Revenue Code, the Fund designates 76% of
the ordinary income dividends paid (including short-term capital gain
distributions, if any) as income qualifying for the corporate dividends received
deduction for the fiscal year ended October 31, 1997.
F18
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL GROWTH & INCOME FUND
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY GT GLOBAL 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 NEW DIMENSION FUND
Captures global growth opportunities by investing directly in the six GT Global
Theme 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
GT GLOBAL DEVELOPING MARKETS FUND
Invests in debt and equity securities of developing market issuers
/ / 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 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
GT GLOBAL FLOATING RATE FUND
Invests primarily in senior secured floating rate loans that have the potential
to achieve a high level of current income
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 GROWTH & INCOME FUND, 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.
GROSA703 MC
