<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 29, 1998
FILE NOS. 33-52038
811-7166
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 14 /X/
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 16 /X/
------------------------
G.T. GLOBAL VARIABLE INVESTMENT SERIES
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
50 CALIFORNIA STREET, 27TH FLOOR,
SAN FRANCISCO, CALIFORNIA 94111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(415) 392-6181
------------------------
<TABLE>
<S> <C>
MICHAEL A. SILVER, ESQ. ARTHUR J. BROWN, ESQ.
CHANCELLOR LGT ASSET R. CHARLES MILLER, ESQ.
MANAGEMENT, INC. KIRKPATRICK & LOCKHART LLP
50 CALIFORNIA STREET, 27TH FLOOR 1800 MASSACHUSETTS AVENUE, N.W.,
SAN FRANCISCO, CALIFORNIA 94111 2ND FLOOR
(NAME AND ADDRESS OF AGENT FOR SERVICE) WASHINGTON, D.C. 20036
(202) 778-9000
</TABLE>
------------------------
<TABLE>
<C> <S>
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
/ / IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485
/ / ON PURSUANT TO PARAGRAPH (b) OF RULE 485
/ / 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(i) OF RULE 485
/X/ ON APRIL 1, 1998 PURSUANT TO PARAGRAPH (a)(i) OF RULE 485
/ / 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(ii) OF RULE 485
/ / ON PURSUANT TO PARAGRAPH (a)(ii) OF RULE 485
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
/ / THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
</TABLE>
PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED,
REGISTRANT HAS PREVIOUSLY ELECTED TO REGISTER AN INDEFINITE NUMBER OF ITS SHARES
OF BENEFICIAL INTEREST. A RULE 24f-2 NOTICE FOR REGISTRANT'S FISCAL YEAR ENDED
DECEMBER 31, 1997 WILL BE FILED ON OR BEFORE MARCH 31, 1998.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
G.T. GLOBAL VARIABLE INVESTMENT SERIES
CONTENTS OF POST-EFFECTIVE AMENDMENT
THIS POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT OF G.T. GLOBAL
VARIABLE INVESTMENT SERIES CONTAINS THE FOLLOWING DOCUMENTS:
<TABLE>
<S> <C> <C>
Facing Sheet
Contents of Post-Effective Amendment
Cross-Reference Sheet
Part A -- Prospectus
-- GT Global Variable Investment Funds
Part B -- Statement of Additional Information
-- GT Global Variable Investment Funds
Part C -- Other Information
Signature Page
Exhibits
</TABLE>
<PAGE>
G.T. GLOBAL VARIABLE INVESTMENT SERIES
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A
PROSPECTUS
<TABLE>
<CAPTION>
ITEM NO. OF
PART A OF FORM N-1A CAPTIONS IN PROSPECTUS
- --------------------------------- ------------------------------------------------------------------
<S> <C>
1. Cover Page................... Cover Page
2. Synopsis..................... General Information
3. Condensed Financial
Information.................. Financial Highlights
4. General Description of
Registrant................... Investment Objectives and Policies; Risk Factors; Currency,
Options and Futures Strategies; Management; Other Information
5. Management of the Fund....... Management; Other Information
5a. Management's Discussion of
Fund Performance............. See Registrant's current Annual Report
6. Capital Stock and Other
Securities................... Dividends, Other Distributions and Federal Income Taxation; Other
Information
7. Purchase of Securities Being
Offered...................... How to Invest; Calculation of Net Asset Value; Management
8. Redemption or Repurchase..... Calculation of Net Asset Value
9. Pending Legal Proceedings.... Not Applicable
</TABLE>
<PAGE>
G.T. GLOBAL VARIABLE INVESTMENT SERIES
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A
(CONTINUED)
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM NO. OF
PART B OF FORM N-1A CAPTIONS IN STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------- ------------------------------------------------------------------
<S> <C>
10. Cover Page................... Cover Page
11. Table of Contents............ Table of Contents
12. General Information and
History...................... Cover Page
13. Investment Objectives and
Policies..................... Investment Objectives and Policies; Options, Futures and Currency
Strategies; Investment Limitations; Risk Factors; Appendix
14. Management of the Fund....... Trustees and Executive Officers; Management
15. Control Persons and Principal
Holders of Securities........ Trustees and Executive Officers; Management
16. Investment Advisory and Other
Services..................... Management; Additional Information
17. Brokerage Allocation and
Other Practices.............. Execution of Portfolio Transactions
18. Capital Stock and Other
Securities................... Additional Information
19. Purchase, Redemption and
Pricing of Securities Being
Offered...................... Valuation of Shares; Information Relating to Sales and Redemptions
20. Tax Status................... Taxes
21. Underwriters................. Management
22. Calculation of Performance
Data......................... Investment Results
23. Financial Statements......... Financial Statements
</TABLE>
<PAGE>
GT GLOBAL
VARIABLE
INVESTMENT
FUNDS
PROSPECTUSES
<PAGE>
[LOGO]GT GLOBAL VARIABLE INVESTMENT FUNDS
PROSPECTUS -- APRIL 1, 1998
- --------------------------------------------------------------------------------
The GT GLOBAL VARIABLE INVESTMENT FUNDS described herein (individually, a
"Fund," and collectively, the "Funds") are mutual funds that are offered for
investment exclusively to separate accounts ("Separate Accounts") that fund
certain variable annuity contracts ("VA Contracts") offered by certain life
insurance companies ("Participating Insurance Companies").
The Fund's investment manager, Chancellor LGT Asset Management, Inc. (the
"Manager"), and its worldwide affiliates are part of Liechtenstein Global Trust,
a provider of global asset management and private banking products and services
to individual and institutional investors.
The GT Global Variable Investment Funds currently are:
/ / GT Global Variable New Pacific Fund
/ / GT Global Variable Europe Fund
/ / GT Global Variable Latin America Fund
/ / GT Global Variable America Fund
/ / GT Global Variable International Fund
/ / GT Global Variable Infrastructure Fund
/ / GT Global Variable Natural Resources Fund
/ / GT Global Variable Telecommunications Fund
/ / GT Global Variable Emerging Markets Fund
/ / GT Global Variable Growth & Income Fund
/ / GT Global Variable Global Government Income Fund
/ / GT Global Variable Strategic Income Fund
/ / GT Global Variable U.S. Government Income Fund
/ / GT Global Money Market Fund
Each of the following Funds is a series of a "diversified" investment company
under the Investment Company Act of 1940, as amended ("1940 Act"): GT Global
Variable New Pacific Fund ("New Pacific Fund"), GT Global Variable Europe Fund
("Europe Fund"), GT Global Variable America Fund ("America Fund"), GT Global
Variable Infrastructure Fund ("Infrastructure Fund"), GT Global Variable Natural
Resources Fund ("Natural Resources Fund"), GT Global Variable Telecommunications
Fund ("Telecommunications Fund"), GT Global Variable International Fund
("International Fund"), GT Global Variable Emerging Markets Fund ("Emerging
Markets Fund"), GT Global Variable U.S. Government Income Fund ("U.S. Government
Income Fund") and GT Global Money Market Fund ("Money Market Fund"). Each of the
following Funds is a series of a "non-diversified" investment company under the
1940 Act: GT Global Variable Latin America Fund ("Latin America Fund"), GT
Global Variable Growth & Income Fund ("Growth & Income Fund"), GT Global
Variable Strategic Income Fund ("Strategic Income Fund") and GT Global Variable
Global Government Income Fund ("Global Government Income Fund").
The Strategic Income Fund invests up to 50% of its assets in debt securities
whose credit quality is generally considered the equivalent of debt securities
commonly known as "junk bonds." Investments of this type are subject to a
greater risk of loss of principal and interest. Investors should carefully
consider the risks associated with an investment in the Strategic Income Fund.
This Prospectus concisely sets forth information about the Funds that an
investor should know before investing through the VA Contracts. This Prospectus,
in addition to the VA Contracts prospectus, should be read carefully and
retained for future reference. A Statement of Additional Information, dated
April 1, 1998, has been filed with the Securities and Exchange Commission (the
"SEC") and, as supplemented or amended from time to time, is incorporated herein
by reference. The Statement of Additional Information is available without
charge by writing to the Funds at 50 California Street, 27th Floor, San
Francisco, 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).
[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.
FUND SHARES ARE AVAILABLE AS A POOLED FUNDING VEHICLE FOR VARIABLE ANNUITY
CONTRACTS OFFERED BY PARTICIPATING INSURANCE COMPANIES. THIS PROSPECTUS
SHOULD BE ACCOMPANIED BY THE PROSPECTUS FOR SUCH CONTRACTS.
AN INVESTMENT IN THE GT GLOBAL MONEY MARKET FUND IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE GT
GLOBAL MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
Prospectus Page 1
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
General Information....................................................................... 3
Financial Highlights...................................................................... 4
Investment Objectives and Policies........................................................ 15
Risk Factors.............................................................................. 31
Currency, Options and Futures Strategies.................................................. 37
How to Invest............................................................................. 39
Calculation of Net Asset Value............................................................ 39
Dividends, Other Distributions and Federal Income Taxation................................ 40
Management................................................................................ 42
Other Information......................................................................... 49
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
GENERAL INFORMATION
- --------------------------------------------------------------------------------
Each Fund is organized as a separate series of either G.T. Global Variable
Investment Series or G.T. Global Variable Investment Trust (individually, a
"Company," and collectively, the "Companies"). Each Company is registered with
the SEC as an open-end management investment company. See "Other Information."
Each Fund is treated as a separate entity for certain matters under the 1940 Act
and for other purposes, including federal income tax purposes. A shareholder of
one Fund is not deemed to be a shareholder of any other Fund.
The Funds are mutual funds that serve as funding vehicles for the VA Contracts
offered by Participating Insurance Companies through Separate Accounts. Shares
of the Funds may be offered to Separate Accounts of Participating Insurance
Companies and serve as the underlying investments for VA Contracts ("shared
funding"). Due to differences in tax treatment or other considerations, the
interests of various VA Contract holders might at some time be in conflict. The
Companies currently do not foresee any such conflict. However, the Companies'
Boards of Trustees intend to monitor events to identify any material
irreconcilable conflict that may arise and to determine what action, if any,
should be taken in response to such conflict. If such a conflict were to occur,
one or more Participating Insurance Companies' Separate Accounts might be
required to withdraw all or a substantial portion of its investments in one or
more Funds. This might disrupt a Fund's orderly portfolio management to the
potential detriment of VA Contract holders.
The following Funds are organized as series of G.T. Global Variable Investment
Series ("Investment Series"):
/ / GT Global Variable New Pacific Fund
/ / GT Global Variable Europe Fund
/ / GT Global Variable America Fund
/ / GT Global Variable International Fund
/ / GT Global Money Market Fund
The following Funds are organized as series of G.T. Global Variable Investment
Trust ("Investment Trust"):
/ / GT Global Variable Latin America Fund
/ / GT Global Variable Infrastructure Fund
/ / GT Global Variable Natural Resources Fund
/ / GT Global Variable Telecommunications Fund
/ / GT Global Variable Growth & Income Fund
/ / GT Global Variable Strategic Income Fund
/ / GT Global Variable Emerging Markets Fund
/ / GT Global Variable Global Government Income Fund
/ / GT Global Variable U.S. Government Income Fund
The VA Contracts are described in a separate prospectus issued by each
Participating Insurance Company for which the Companies assume no
responsibility. Individual VA Contract holders are not the "shareholders" of
either Company or any Fund. Rather, each Participating Insurance Company and its
separate accounts are the shareholders (the "shareholders"). In accordance with
current law, shareholder voting rights will be passed on to VA Contract holders.
As described below, for certain matters Company shareholders vote together as a
group; as to other matters, they vote separately by Fund.
Prospectus Page 3
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed financial information concerning income and
capital charges for one share of each Fund for the periods shown. This
information is supplemented by the financial statements and accompanying notes
appearing in the Statement of Additional Information. The financial statements
and notes for the periods indicated below have been audited by Coopers &
Lybrand, L.L.P. independent accountants, whose report thereon appears in the
Statement of Additional Information.
G.T. GLOBAL VARIABLE INVESTMENT SERIES
<TABLE>
<CAPTION>
JULY 5, 1994
(COMMENCEMENT
OF
OPERATIONS)
YEAR ENDED DECEMBER 31, TO
------------------------------------------ DECEMBER 31,
1997 1996 1995 1994
------------ ------------ ------------ -------------
GT GLOBAL GT GLOBAL GT GLOBAL GT GLOBAL
------------ ------------ ------------ -------------
VARIABLE VARIABLE VARIABLE VARIABLE
INTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL
FUND FUND FUND FUND
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 11.01 $ 11.25 $ 12.00
------------ ------------ ------------ -------------
Income from investment operations
Net investment income........................... 0.05* 0.09*** 0.06**
Net gains or losses on securities (both realized
and unrealized)................................ 0.89 (0.22) (0.76)
------------ ------------ ------------ -------------
Total from investment operations.................. 0.94 (0.13) (0.70)
------------ ------------ ------------ -------------
Less distributions
From net investment income...................... (0.00) (0.09) (0.05)
From net realized gain on investments........... (0.04) (0.02) (0.00)
In excess of capital gains...................... (0.00) (0.00) (0.00)
Return of capital............................... (0.00) (0.00) (0.00)
------------ ------------ ------------ -------------
Total distributions........................... (0.04) (0.11) (0.05)
------------ ------------ ------------ -------------
Net asset value, end of period.................... $ 11.91 $ 11.01 $ 11.25
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Total returns +(b)................................ 8.52% (1.14)% (5.81)%
Ratios/supplemental data
Net assets, end of period (in 000's)............ $ 4,782 $ 3,663 $ 2,229
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 0.48% 0.93% 3.33%
Without reimbursement by the Manager and
expense reductions (a)....................... (0.86)% (1.35)% (2.56)%
Without expenses assumed by the Manager (a)... --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 1.15% 1.25% 0.69%
Without reimbursement by the Manager and
expense reductions (a)....................... 2.49% 3.53% 6.58%
Without expenses assumed by the Manager (a)... --% --% --%
Portfolio turnover (a).......................... 92% 107% 17%
Average commission rate per share paid on
portfolio transactions......................... $0.0156 N/A N/A
</TABLE>
- ------------------
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
* Includes reimbursement by the Manager of International Fund operating
expenses of $0.14.
** Includes reimbursement by the Manager of International Fund operating
expenses of $0.11.
*** Includes reimbursement by the Manager of International Fund operating
expenses of $0.22.
(a) Annualized for periods of less than one year.
(b) Not annualized for periods of less than one year.
Prospectus Page 4
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT SERIES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 YEAR ENDED DECEMBER 31, 1996
------------------------------------------ --------------------------------
GT GLOBAL GT GLOBAL
------------------------------------------ --------------------------------
VARIABLE VARIABLE
NEW VARIABLE VARIABLE MONEY NEW VARIABLE VARIABLE
PACIFIC EUROPE AMERICA MARKET PACIFIC EUROPE AMERICA
FUND FUND FUND FUND FUND FUND FUND
----------- -------- -------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 13.92 $ 16.52 $ 19.46
----------- -------- -------- -------- ----------- -------- --------
Income from investment operations
Net investment income........................... 0.13** 0.05 ** 0.12**
Net gains or losses on securities (both realized
and unrealized)................................ 4.16 4.93 3.18
----------- -------- -------- -------- ----------- -------- --------
Total from investment operations.................. 4.29 4.98 3.30
----------- -------- -------- -------- ----------- -------- --------
Less distributions
From net investment income...................... (0.19) (0.16 ) (0.30)
From net realized gain on investments........... (0.00) (0.00 ) (2.75)
In excess of capital gains...................... (0.00) (0.00 ) (0.00)
Return of capital............................... (0.00) (0.00 ) (0.00)
----------- -------- -------- -------- ----------- -------- --------
Total distributions........................... (0.19) (0.16 ) (3.05)
----------- -------- -------- -------- ----------- -------- --------
Net asset value, end of period.................... $ 18.02 $ 21.34 $ 19.71
----------- -------- -------- -------- ----------- -------- --------
----------- -------- -------- -------- ----------- -------- --------
Total returns +(b)................................ 30.97% 30.25 % 18.55%
Ratios/supplemental data
Net assets, end of period (in 000's)............ $ 32,670 $24,537 $41,647
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 0.88% 0.36 % 0.52%
Without reimbursement by the Manager and
expense
reductions (a)............................... 0.60% 0.09 % 0.46%
Without expenses assumed by the Manager (a)... --% -- % --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 1.12% 1.20 % 0.95%
Without reimbursement by the Manager and
expense
reductions (a)............................... 1.40% 1.47 % 1.01%
Without expenses assumed by the Manager (a)... --% -- % --%
Portfolio turnover (a).......................... 70% 56 % 248%
Average commission rate per share paid on
portfolio transactions......................... $ 0.0071 $0.0313 $0.0531
<CAPTION>
MONEY
MARKET
FUND
--------
<S> <C>
Net asset value, beginning of period.............. $ 1.00
--------
Income from investment operations
Net investment income........................... 0.05**
Net gains or losses on securities (both realized
and unrealized)................................ 0.00
--------
Total from investment operations.................. 0.05
--------
Less distributions
From net investment income...................... (0.05)
From net realized gain on investments........... (0.00)
In excess of capital gains...................... (0.00)
Return of capital............................... (0.00)
--------
Total distributions........................... (0.05)
--------
Net asset value, end of period.................... $ 1.00
--------
--------
Total returns +(b)................................ 4.75%
Ratios/supplemental data
Net assets, end of period (in 000's)............ $ 19,794
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 4.67%
Without reimbursement by the Manager and
expense
reductions (a)............................... 4.57%
Without expenses assumed by the Manager (a)... --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 0.75%
Without reimbursement by the Manager and
expense
reductions (a)............................... 0.85%
Without expenses assumed by the Manager (a)... --%
Portfolio turnover (a).......................... N/A
Average commission rate per share paid on
portfolio transactions......................... N/A
</TABLE>
- ------------------
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
* Includes reimbursement by the Manager of New Pacific Fund, Europe Fund,
America Fund and Money Market Fund operating expenses for the fiscal year
ended December 31, 1995 of $0.04, $0.08, $0.01 and $0.00, respectively.
** Includes reimbursement by the Manager of New Pacific Fund, Europe Fund,
America Fund and Money Market Fund operating expenses for the fiscal year
ended December 31, 1996 of $0.04, $0.04, $0.00 and $0.00, respectively.
(a) Annualized for periods of less than one year.
(b) Not annualized for periods of less than one year.
Prospectus Page 5
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT SERIES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
------------------------------------------
GT GLOBAL
------------------------------------------
VARIABLE
NEW VARIABLE VARIABLE MONEY
PACIFIC EUROPE AMERICA MARKET
FUND FUND FUND FUND
----------- -------- -------- --------
Net asset value, beginning of period.............. $ 14.01 $ 15.22 $ 15.81 $ 1.00
<S> <C> <C> <C> <C>
----------- -------- -------- --------
Income from investment operations
Net investment income........................... 0.20* 0.18 * 0.21 * 0.05*
Net gains or losses on securities (both realized
and unrealized)................................ (0.23) 1.28 3.80 0.00
----------- -------- -------- --------
Total from investment operations.................. (0.03) 1.46 4.01 0.05
----------- -------- -------- --------
Less distributions
From net investment income...................... (0.06) (0.16 ) (0.07 ) (0.05)
From net realized gain on investments........... (0.00) (0.00 ) (0.29 ) (0.00)
In excess of capital gains...................... (0.00) (0.00 ) (0.00 ) (0.00)
Return of capital............................... (0.00) (0.00 ) (0.00 ) (0.00)
----------- -------- -------- --------
Total distributions........................... (0.06) (0.16 ) (0.36 ) (0.05)
----------- -------- -------- --------
Net asset value, end of period.................... $ 13.92 $ 16.52 $ 19.46 $ 1.00
----------- -------- -------- --------
----------- -------- -------- --------
Total returns +(b)................................ (0.21)% 9.66 % 25.37 % 5.26%
Ratios/supplemental data
Net assets, end of period (in 000's)............ $ 23,025 $15,641 $37,643 $ 14,891
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 1.27% 1.12 % 1.66 % 5.15%
Without reimbursement by the Manager and
expense
reductions (a)............................... 1.74% 0.60 % 1.60 % 4.85%
Without expenses assumed by the Manager (a)... --% -- % -- % --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 1.14% 1.20 % 1.00 % 0.75%
Without reimbursement by the Manager and
expense
reductions (a)............................... 1.61% 1.72 % 1.06 % 1.05%
Without expenses assumed by the Manager (a)... --% -- % -- % --%
Portfolio turnover (a).......................... 67% 123 % 79 % N/A
Average commission rate per share paid on
portfolio transactions......................... N/A N/A N/A N/A
</TABLE>
- ------------------
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
* Includes reimbursement by the Manager of New Pacific Fund, Europe Fund,
America Fund and Money Market Fund operating expenses for the fiscal year
ended December 31, 1995 of $0.04, $0.08, $0.01 and $0.00, respectively.
** Includes reimbursement by the Manager of New Pacific Fund, Europe Fund,
America Fund and Money Market Fund operating expenses for the fiscal year
ended December 31, 1996 of $0.04, $0.04, $0.00 and $0.00, respectively.
(a) Annualized for periods of less than one year.
(b) Not annualized for periods of less than one year.
Prospectus Page 6
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT SERIES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
-----------------------------------------
GT GLOBAL
-----------------------------------------
VARIABLE
NEW VARIABLE VARIABLE MONEY
PACIFIC EUROPE AMERICA MARKET
FUND FUND FUND FUND
----------- -------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 16.07 $ 15.33 $13.75 $ 1.00
----------- -------- ------- -------
Income from investment operations
Net investment income................. 0.08** 0.16** 0.48 ** 0.03**
Net gains or losses on securities
(both realized and unrealized)....... (2.08) (0.25) 2.08 0.00
----------- -------- ------- -------
Total from investment operations........ (2.00) (0.09) 2.56 0.03
----------- -------- ------- -------
Less distributions
From net investment income............ (0.06) (0.00) (0.50 ) (0.03)
From net realized gain on
investments.......................... (0.00) (0.02) (0.00 ) (0.00)
In excess of capital gains............ (0.00) (0.00) (0.00 ) (0.00)
Return of capital..................... (0.00) (0.00) (0.00 ) (0.00)
----------- -------- ------- -------
Total distributions..................... (0.06) (0.02) (0.50 ) (0.03)
----------- -------- ------- -------
Net asset value, end of period.......... $ 14.01 $ 15.22 $15.81 $ 1.00
----------- -------- ------- -------
----------- -------- ------- -------
Total returns +(b)...................... (12.47)% (0.59)% 18.88 % 3.48%
Ratios/supplemental data
Net assets, end of period (in
000's)............................... $19,391 $15,020 $15,257 $19,474
Ratio of net investment income to
average net assets:
With reimbursement by the Manager
and expense reductions (a)......... 0.83% 1.48% 1.83 % 3.70%
Without reimbursement by the Manager
and expense reductions (a)......... 0.48% 1.07% 0.76 % 3.64%
Without expenses assumed by the
Manager (a)........................ --% --% -- % --%
Ratio of expenses to average net
assets:
With reimbursement by the Manager
and expense reductions (a)......... 1.25% 1.25% 0.98 % 0.75%
Without reimbursement by the Manager
and expense reductions (a)......... 1.60% 1.66% 2.05 % 0.81%
Without expenses assumed by the
Manager (a)........................ --% --% -- % --%
Portfolio turnover (a)................ 30% 61% 139 % N/A
Average commission rate per share paid
on portfolio transactions............ N/A N/A N/A N/A
<CAPTION>
FEBRUARY 10, 1993 (COMMENCEMENT OF
OPERATIONS) TO DECEMBER 31, 1993
-----------------------------------------
GT GLOBAL
-----------------------------------------
VARIABLE
NEW VARIABLE VARIABLE MONEY
PACIFIC EUROPE AMERICA MARKET
FUND FUND FUND FUND
----------- -------- ------- ------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $12.00 $12.00 $12.00 $1.00
----------- -------- ------- ------
Income from investment operations
Net investment income................. 0.04* 0.05* 1.11* 0.03 *
Net gains or losses on securities
(both realized and unrealized)....... 4.03 3.28 0.64 0.00
----------- -------- ------- ------
Total from investment operations........ 4.07 3.33 1.75 0.03
----------- -------- ------- ------
Less distributions
From net investment income............ (0.00) (0.00) (0.00) (0.03 )
From net realized gain on
investments.......................... (0.00) (0.00) (0.00) (0.00 )
In excess of capital gains............ (0.00) (0.00) (0.00) (0.00 )
Return of capital..................... (0.00) (0.00) (0.00) (0.00 )
----------- -------- ------- ------
Total distributions..................... (0.00) (0.00) (0.00) (0.03 )
----------- -------- ------- ------
Net asset value, end of period.......... $16.07 $15.33 $13.75 $1.00
----------- -------- ------- ------
----------- -------- ------- ------
Total returns +(b)...................... 33.9% 27.8% 14.7% 2.6 %
Ratios/supplemental data
Net assets, end of period (in
000's)............................... $7,945 $5,410 $1,700 $3,775
Ratio of net investment income to
average net assets:
With reimbursement by the Manager
and expense reductions (a)......... 0.9% 1.1% 14.1% 2.9 %
Without reimbursement by the Manager
and expense reductions (a)......... 0.3% 0.4% 12.8% 2.1 %
Without expenses assumed by the
Manager (a)........................ (2.0)% (2.8)% 7.6% (2.6 )%
Ratio of expenses to average net
assets:
With reimbursement by the Manager
and expense reductions (a)......... 0.6% 0.7% 0.0% 0.2 %
Without reimbursement by the Manager
and expense reductions (a)......... 1.3% 1.4% 1.3% 1.0 %
Without expenses assumed by the
Manager (a)........................ 3.6% 4.6% 6.5% 5.7 %
Portfolio turnover (a)................ 15% 27% 831% N/A
Average commission rate per share paid
on portfolio transactions............ N/A N/A N/A N/A
</TABLE>
- ------------------
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
* Includes reimbursement by the Manager of New Pacific Fund, Europe Fund,
America Fund and Money Market Fund operating expenses for the fiscal year
ended December 31, 1993 of $0.03, $0.03, $0.10 and $0.01, respectively.
** Includes reimbursement by the Manager of New Pacific Fund, Europe Fund,
America Fund and Money Market Fund operating expenses for the fiscal year
ended December 31, 1994, of $0.03, $0.04, $0.28 and $0.00, respectively.
(a) Annualized for periods of less than one year.
(b) Not annualized.
Prospectus Page 7
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT TRUST
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 YEAR ENDED DECEMBER 31, 1996
----------------------------------------- -----------------------------------------
GT GLOBAL VARIABLE GT GLOBAL VARIABLE
----------------------------------------- -----------------------------------------
NATURAL NATURAL
INFRASTRUCTURE RESOURCES EMERGING INFRASTRUCTURE RESOURCES EMERGING
FUND FUND MARKETS FUND FUND FUND MARKETS FUND
-------------- --------- ------------ -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $13.27 $13.88 $10.88
-------------- --------- ------------ -------------- --------- ------------
Income from investment operations
Net investment income................. 0.11* (0.06)* 0.11*
Net gains or losses on securities
(both realized and unrealized)....... 3.19 7.16 3.27
-------------- --------- ------------ -------------- --------- ------------
Total from investment operations........ 3.30 7.10 3.38
-------------- --------- ------------ -------------- --------- ------------
Less distributions
From net investment income............ (0.03) (0.00) (0.00)
From capital gain..................... (0.07) (0.00) (0.00)
In excess of capital gains............ (0.00) (0.00) (0.00)
Return of capital..................... (0.00) (0.00) (0.00)
-------------- --------- ------------ -------------- --------- ------------
Total distributions..................... (0.10) (0.00) (0.00)
-------------- --------- ------------ -------------- --------- ------------
Net asset value, end of period.......... $ 16.47 $ 20.98 $ 14.26
-------------- --------- ------------ -------------- --------- ------------
-------------- --------- ------------ -------------- --------- ------------
Total returns +(b) 24.88% 51.15% 31.07%
Ratios/supplemental data
Net assets, end of period (in
000's)............................... $ 6,054 $16,308 $17,604
Ratio of net investment income to
average net assets:
With reimbursement by the Manager
and expense reductions (a)......... 1.35% (0.60)% 0.89%
Without reimbursement by the Manager
and expense reductions (a)......... 0.03% (1.30)% 0.39%
Without expenses assumed by the
Manager (a)........................ --% --% --%
Ratio of expenses to average net
assets:
With reimbursement by the Manager
and expense reductions (a)......... 1.21% 1.19% 1.18%
Without reimbursement by the Manager
and expense reductions (a)......... 2.53% 1.89% 1.68%
Without expenses assumed by the
Manager (a)........................ --% --% --%
Portfolio turnover (a)................ 76% 199% 216%
Average commission rate per share paid
on portfolio transactions............ $0.0101 $0.0164 $0.0021
</TABLE>
- ------------------
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
* Includes reimbursement by the Manager of Infrastructure Fund, Natural
Resources Fund and Emerging Markets Fund of operating expenses for the
fiscal year ended December 31, 1996 of $0.19, $0.11 and $0.05, respectively.
(a) Annualized for periods of less than one year.
(b) Not annualized.
Prospectus Page 8
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
JULY 5, 1994
(COMMENCEMENT
JANUARY 31, 1995 OF OPERATIONS)
(COMMENCEMENT OF YEAR ENDED TO
OPERATIONS) TO DECEMBER 31, DECEMBER 31,
DECEMBER 31, 1995 1995 1994
-------------------------- ------------ ---------------
GT GLOBAL VARIABLE
<S> <C> <C> <C> <C>
-----------------------------------------------------------
NATURAL EMERGING
INFRASTRUCTURE RESOURCES EMERGING MARKETS
FUND FUND MARKETS FUND FUND
-------------- --------- ------------ ---------------
Net asset value, beginning of period.... $12.00 $12.00 $11.89 $12.00
------- --------- ------------ -------
Income from investment operations
Net investment income................. 0.07*** 0.73*** 0.14** 0.07*
Net gains or losses on securities
(both realized and unrealized)....... 1.20 1.91 (1.04) (0.05)
------- --------- ------------ -------
Total from investment operations........ 1.27 2.64 (0.90) 0.02
------- --------- ------------ -------
Less distributions
From net investment income............ -- (0.71) (0.09) (0.07)
From capital gain..................... -- -- -- (0.00)
In excess of capital gains............ -- (0.05) -- (0.06)
Return of capital..................... -- -- (0.02) (0.00)
------- --------- ------------ -------
Total distributions..................... -- (0.76) (0.11) (0.13)
------- --------- ------------ -------
Net asset value, end of period.......... $13.27 $13.88 $10.88 $11.89
------- --------- ------------ -------
------- --------- ------------ -------
Total returns +(b) 10.58% 22.20% (7.54)% 0.12%
Ratios/supplemental data
Net assets, end of period (in
000's)............................... $1,594 $1,365 $8,983 $7,267
Ratio of net investment income to
average net assets:
With reimbursement by the Manager
and expense reductions (a)......... 1.24% 10.87% 1.55% 4.10%
Without reimbursement by the Manager
and expense
reductions (a)..................... (6.11)% 2.94% 0.51% (0.20)%
Without expenses assumed by the
Manager (a)........................ --% --% --% --%
Ratio of expenses to average net
assets:
With reimbursement by the Manager
and expense reductions (a)......... 1.22% 1.14% 1.18% 0.00%
Without reimbursement by the Manager
and expense
reductions (a)..................... 8.57% 9.07% 2.22% 4.30%
Without expenses assumed by the
Manager (a)........................ --% --% --% --%
Portfolio turnover (a)................ 38% 875% 210% 117%
Average commission rate per share paid
on portfolio transactions............ N/A N/A N/A N/A
</TABLE>
- ------------------
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
* Includes reimbursement by the Manager of Emerging Markets Fund operating
expenses of $0.07.
** Includes reimbursement by the Manager of Emerging Markets Fund operating
expenses for the fiscal year ended December 31, 1995 of $0.09.
*** Includes reimbursement by the Manager of operating expenses for the period
January 31, 1995 to December 31, 1995 for the Infrastructure Fund and
Natural Resources Fund of $0.42 and $0.47, respectively.
(a) Annualized for periods of less than one year.
(b) Not annualized.
Prospectus Page 9
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
----------------------------------------------------------------------------------
GT GLOBAL VARIABLE
----------------------------------------------------------------------------------
LATIN GLOBAL U.S. TELECOM-
AMERICA GROWTH & STRATEGIC GOVERNMENT GOVERNMENT MUNICATIONS
FUND INCOME FUND INCOME FUND INCOME FUND INCOME FUND FUND
----------- ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............
----------- ----------- ----------- ------------- ------------- -------------
Income from investment operations
Net investment income.........................
Net gains or losses on securities (both
realized and unrealized).....................
----------- ----------- ----------- ------------- ------------- -------------
Total from investment operations................
----------- ----------- ----------- ------------- ------------- -------------
Less distributions
From net investment income....................
From net realized gain or investments.........
In excess of capital gains....................
Return of capital.............................
----------- ----------- ----------- ------------- ------------- -------------
Total distributions.............................
----------- ----------- ----------- ------------- ------------- -------------
Net asset value, end of period..................
----------- ----------- ----------- ------------- ------------- -------------
----------- ----------- ----------- ------------- ------------- -------------
Total returns +(b)..............................
Ratios/supplemental data
Net assets, end of period (in 000's)..........
Ratio of net investment income to average net
assets:
With reimbursement by the Manager and
expense reductions (a).....................
Without reimbursement by the Manager and
expense reductions (a).....................
Without expenses assumed by the
Manager (a)................................
Ratio of expenses to average net assets:
With reimbursement by the Manager and
expense reductions (a).....................
Without reimbursement by the Manager and
expense reductions (a).....................
Without expenses assumed by the
Manager (a)................................
Portfolio turnover (a)........................
Average commission rate per share paid on
portfolio transactions.......................
</TABLE>
- ------------------
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
* Includes reimbursement by the Manager of operating expenses for the fiscal
year ended December 31, 1996 for the Latin America Fund, the Growth & Income
Fund, the Strategic Income Fund, the Global Government Income Fund, the U.S.
Government Income Fund and the Telecommunications Fund of $0.02, $0.01,
$0.02, $0.06, $0.08 and $0.00, respectively.
(a) Annualized for periods of less than one year.
(b) Not annualized.
Prospectus Page 10
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------------------------------------
GT GLOBAL VARIABLE
----------------------------------------------------------------------------------
LATIN GLOBAL U.S. TELECOM-
AMERICA GROWTH & STRATEGIC GOVERNMENT GOVERNMENT MUNICATIONS
FUND INCOME FUND INCOME FUND INCOME FUND INCOME FUND FUND
----------- ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............ $ 12.42 $ 14.57 $ 11.86 $ 11.51 $ 11.74 $ 16.87
----------- ----------- ----------- ------------- ------------- -------------
Income from investment operations
Net investment income......................... 0.27* 0.53* 0.95* 0.72* 0.60* (0.05)*
Net gains or losses on securities (both
realized and unrealized)..................... 2.49 1.81 1.50 (0.06) (0.35) 3.31
----------- ----------- ----------- ------------- ------------- -------------
Total from investment operations................ 2.76 2.34 2.45 0.66 0.25 3.26
----------- ----------- ----------- ------------- ------------- -------------
Less distributions
From net investment income.................... (0.37) (0.35) (0.85) (0.74) (0.58) (0.02)
From net realized gain or investments......... (0.00) (0.05) (0.08) (0.00) (0.00) (1.97)
In excess of capital gains.................... (0.01) (0.00) (0.00) (0.00) (0.00) (0.00)
Return of capital............................. (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
----------- ----------- ----------- ------------- ------------- -------------
Total distributions............................. (0.38) (0.40) (0.93) (0.74) (0.58) (1.99)
----------- ----------- ----------- ------------- ------------- -------------
Net asset value, end of period.................. $ 14.80 $ 16.51 $ 13.38 $ 11.43 $ 11.41 $ 18.14
----------- ----------- ----------- ------------- ------------- -------------
----------- ----------- ----------- ------------- ------------- -------------
Total returns +(b).............................. 22.48% 16.33% 21.58% 6.17% 2.23% 19.34%
Ratios/supplemental data
Net assets, end of period (in 000's).......... $ 22,928 $ 36,433 $ 31,718 $ 10,397 $ 5,483 $ 63,252
Ratio of net investment income to average net
assets:
With reimbursement by the Manager and
expense reductions (a)..................... 1.94% 3.58% 7.74% 6.32% 5.24% (0.26)%
Without reimbursement by the Manager and
expense reductions (a)..................... 1.69% 3.48% 7.59% 5.80% 4.49% (0.31)%
Without expenses assumed by the
Manager (a)................................ --% --% --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and
expense reductions (a)..................... 1.17% 1.20% 0.99% 0.95% 1.00% 1.12%
Without reimbursement by the Manager and
expense reductions (a)..................... 1.42% 1.30% 1.14% 1.47% 1.75% 1.17%
Without expenses assumed by the
Manager (a)................................ --% --% --% --% --% --%
Portfolio turnover (a)........................ 102% 57% 210% 235% 49% 77%
Average commission rate per share paid on
portfolio transactions....................... $ 0.0002 $ 0.0147 N/A N/A N/A $ 0.0068
</TABLE>
- ------------------
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
* Includes reimbursement by the Manager of operating expenses for the fiscal
year ended December 31, 1996 for the Latin America Fund, the Growth & Income
Fund, the Strategic Income Fund, the Global Government Income Fund, the U.S.
Government Income Fund and the Telecommunications Fund of $0.02, $0.01,
$0.02, $0.06, $0.08 and $0.00, respectively.
(a) Annualized for periods of less than one year.
(b) Not annualized.
Prospectus Page 11
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
----------------------------------------------------------------------------------
GT GLOBAL VARIABLE
----------------------------------------------------------------------------------
LATIN GLOBAL U.S. TELECOM-
AMERICA GROWTH & STRATEGIC GOVERNMENT GOVERNMENT MUNICATIONS
FUND INCOME FUND INCOME FUND INCOME FUND INCOME FUND FUND
----------- ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............ $ 19.17 $ 12.99 $ 10.82 $ 10.63 $ 10.79 $ 13.98
----------- ----------- ----------- ------------- ------------- -------------
Income from investment operations
Net investment income......................... 0.51* 0.52* 1.07* 0.79* 0.62* 0.02*
Net gains or losses on securities (both
realized and unrealized)..................... (5.10) 1.46 0.93 0.84 0.93 3.26
----------- ----------- ----------- ------------- ------------- -------------
Total from investment operations................ (4.59) 1.98 2.00 1.63 1.55 3.28
----------- ----------- ----------- ------------- ------------- -------------
Less distributions
From net investment income.................... (0.16) (0.40) (0.96) (0.75) (0.60) (0.03)
From capital gain............................. (2.00) (0.00) (0.00) (0.00) (0.00) (0.36)
In excess of capital gains.................... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Return of capital............................. (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
----------- ----------- ----------- ------------- ------------- -------------
Total distributions............................. (2.16) (0.40) (0.96) (0.75) (0.60) (0.39)
----------- ----------- ----------- ------------- ------------- -------------
Net asset value, end of period.................. $ 12.42 $ 14.57 $ 11.86 $ 11.51 $ 11.74 $ 16.87
----------- ----------- ----------- ------------- ------------- -------------
----------- ----------- ----------- ------------- ------------- -------------
Total returns +(b).............................. (24.14)% 15.49% 19.50% 15.85% 14.73% 23.66%
Ratios/supplemental data
Net assets, end of period (in 000's).......... $ 19,771 $ 30,565 $ 25,345 $ 11,944 $ 5,992 $ 50,778
Ratio of net investment income to average net
assets:
With reimbursement by the Manager and
expense reductions (a)..................... 4.43% 3.87% 9.59% 7.03% 5.43% 0.16%
Without reimbursement by the Manager and
expense reductions (a)..................... 3.92% 3.66% 9.35% 6.37% 3.87% 0.10%
Without expenses assumed by the
Manager (a)................................ --% --% --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and
expense reductions (a)..................... 1.18% 1.23% 1.00% 1.00% 1.00% 1.20%
Without reimbursement by the Manager and
expense reductions (a)..................... 1.69% 1.44% 1.24% 1.66% 2.56% 1.26%
Without expenses assumed by the
Manager (a)................................ --% --% --% --% --% --%
Portfolio turnover (a)........................ 140% 73% 193% 394% 186% 70%
Average commission rate per share paid on
portfolio transactions....................... N/A N/A N/A N/A N/A N/A
</TABLE>
- ------------------
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
* Includes reimbursement by the Manager of operating expenses for the fiscal
year ended December 31, 1995 for the Latin America Fund, the Growth & Income
Fund, the Strategic Income Fund, the Global Government Income Fund, the U.S.
Government Income Fund and the Telecommunications Fund of $0.06, $0.03,
$0.03, $0.07, $0.14 and $0.00, respectively.
(a) Annualized for periods of less than one year.
(b) Not annualized.
Prospectus Page 12
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
----------------------------------------------------------------------------------
GT GLOBAL VARIABLE
----------------------------------------------------------------------------------
LATIN GLOBAL U.S. TELECOM-
AMERICA GROWTH & STRATEGIC GOVERNMENT GOVERNMENT MUNICATIONS
FUND INCOME FUND INCOME FUND INCOME FUND INCOME FUND FUND
----------- ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........... $ 17.68 $ 13.77 $ 14.57 $ 12.53 $ 12.23 $ 13.07
Income from investment operations
Net investment income........................ 0.11* 0.46* 1.71* 0.77* 0.63* 0.01*
Net gains or losses on securities (both
realized and unrealized).................... 1.49 (0.85) (4.17) (1.85) (1.39) 0.92
----------- ----------- ----------- ------------- ------------- -------------
Total from investment operations............... 1.6 (0.39) (2.46) (1.08) (0.76) 0.93
----------- ----------- ----------- ------------- ------------- -------------
Less distributions
From net investment income................... (0.04) (0.39) (0.79) (0.73) (0.62) (0.02)
From capital gain............................ (0.07) (0.00) (0.45) (0.00) (0.06) (0.00)
In excess of capital gains................... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Return of capital............................ (0.00) (0.00) (0.05) (0.09) (0.00) (0.00)
----------- ----------- ----------- ------------- ------------- -------------
Total distributions............................ (0.11) (0.39) (1.29) (0.82) (0.68) (0.02)
----------- ----------- ----------- ------------- ------------- -------------
Net asset value, end of period................. $ 19.17 $ 12.99 10.82 $ 10.63 $ 10.79 $ 13.98
----------- ----------- ----------- ------------- ------------- -------------
----------- ----------- ----------- ------------- ------------- -------------
Total returns +(b)............................. 9.14% (2.85)% (17.09)% (8.70)% (6.27)% 7.15%
Ratios/supplemental data
Net assets, end of period (in 000's)......... $ 26,631 $ 25,580 $ 23,367 $ 9,654 $ 2,415 $ 36,029
Ratio of net investment income to average net
assets:
With reimbursement by the Manager and
expense reductions (a).................... 0.82% 3.69% 7.58% 6.89% 5.53% 0.31%
Without reimbursement by the Manager and
expense reductions (a).................... 0.49% 3.45% 7.43% 6.21% 1.29% 0.07%
Without expenses assumed by the
Manager (a)............................... --% --% --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and
expense reductions (a).................... 1.25% 1.25% 1.00% 1.00% 0.38% 1.25%
Without reimbursement by the Manager and
expense reductions (a).................... 1.58% 1.49% 1.15% 1.68% 4.63% 1.49%
Without expenses assumed by the
Manager (a)............................... --% --% --% --% --% --%
Portfolio turnover (a)....................... 185% 53% 313% 350% 34% 81%
Average commission rate per share paid on
portfolio transactions...................... N/A N/A N/A N/A N/A N/A
</TABLE>
- ------------------
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
* Includes reimbursement by the Manager for Latin America Fund, Growth &
Income Fund, Strategic Income Fund, Global Government Income Fund, U.S.
Government Income Fund and Telecommunications Fund operating expenses for
the fiscal year ended December 31, 1994 of $0.04, $0.03, $0.04, $0.08, $0.48
and $0.01, respectively.
(a) Annualized for periods of less than one year.
(b) Not annualized.
Prospectus Page 13
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
OCTOBER 18, 1993
(COMMENCEMENT
FEBRUARY 10, 1993 (COMMENCEMENT OF OF OPERATIONS) TO
OPERATIONS) TO DECEMBER 31, 1993 DECEMBER 31, 1993
------------------------------------------------------------------- -------------------
GT GLOBAL VARIABLE
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------
LATIN GLOBAL U.S. TELECOM-
AMERICA GROWTH & STRATEGIC GOVERNMENT GOVERNMENT MUNICATIONS
FUND INCOME FUND INCOME FUND INCOME FUND INCOME FUND FUND
----------- ----------- ----------- ------------- ------------- -------------------
Net asset value, beginning of period...... $ 12.00 $ 12.00 $ 12.00 $ 12.00 $ 12.00 $ 12.00
Income from investment operations
Net investment income................... 0.04* 0.31* 0.61* 0.57* 0.53* 0.04*
Net gains or losses on securities (both
realized and unrealized)............... 5.64 1.79 2.57 0.52 0.23 1.03
----------- ----------- ----------- ------------- ------------- -------
Total from investment operations.......... 5.68 2.10 3.18 1.09 0.76 1.07
----------- ----------- ----------- ------------- ------------- -------
Less distributions
From net investment income.............. (0.00) (0.28) (0.61) (0.56) (0.53) (0.00)
From capital gain....................... (0.00) (0.05) (0.00) (0.00) (0.00) (0.00)
In excess of capital gains.............. (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
----------- ----------- ----------- ------------- ------------- -------
Total distributions....................... (0.00) (0.33) (0.61) (0.56) (0.53) (0.00)
----------- ----------- ----------- ------------- ------------- -------
Net asset value, end of period............ $ 17.68 $ 13.77 $ 14.57 $ 12.53 $ 12.23 $ 13.07
----------- ----------- ----------- ------------- ------------- -------
----------- ----------- ----------- ------------- ------------- -------
Total returns +(b)........................ 47.3% 17.8% 27.5% 9.5% 6.4% 8.9%
Ratios/supplemental data
Net assets, end of period (in 000's).... $ 8,240 $ 11,677 $ 18,089 $ 6,136 $ 974 $ 7,903
Ratio of net investment income to
average net assets:
With reimbursement by the Manager and
expense reductions *(a).............. 1.0% 3.2% 6.6% 6.1% 5.3% 2.5%
Without reimbursement by the Manager
and expense reductions (a)........... 0.4% 2.7% 6.3% 5.5% 3.4% 2.3%
Without expenses assumed by
the Manager (a)...................... (2.5)% 1.1% 5.2% 2.4% (6.9)% 1.6%
Ratio of expenses to average net assets:
With reimbursement by the Manager and
expense reductions *(a).............. 0.7% 0.6% 0.5% 0.5% 0.0% 0.9%
Without reimbursement by the Manager
and expense reductions (a)........... 1.3% 1.2% 0.9% 1.1% 1.9% 1.1%
Without expenses assumed by
the Manager (a)...................... 4.2% 2.8% 1.9% 4.2% 12.3% 1.8%
Portfolio turnover (a).................. 78% 17% 245% 298% 81% 20%
Average commission rate per share paid
on portfolio transactions.............. N/A N/A N/A N/A N/A N/A
</TABLE>
- ------------------
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
* Includes reimbursement by the Manager for Latin America Fund, Growth &
Income Fund, Strategic Income Fund, Global Government Income Fund, U.S.
Government Income Fund and Telecommunications Fund operating expenses for
the fiscal year ended December 31, 1993 of $0.02, $0.05, $0.03, $0.06, $0.19
and $0.00, respectively.
(a) Annualized for periods of less than one year.
(b) Not annualized.
Prospectus Page 14
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
Each Fund has its own investment objective(s) and investment policies. The
objective(s) and policies of each Fund determine the types of securities in
which that Fund may invest and will affect both the investment return and the
degree of risk to which that Fund is subject. There can be no assurance that any
Fund will achieve its investment objective(s).
GLOBAL GROWTH FUNDS
The investment objective of each of the New Pacific Fund, the Europe Fund, the
International Fund, and the America Fund (collectively, "Global Growth Funds")
is long-term growth of capital. The New Pacific Fund, the Europe Fund and the
International Fund each seeks its objective by investing, under normal
circumstances, at least 65% of its total assets in equity securities of issuers
domiciled in its Primary Investment Area, as described below. The America Fund
seeks its objective by investing, under normal circumstances, at least 65% of
its total assets in equity securities of companies domiciled in the United
States that, at the time of purchase, have market capitalizations of $1 billion
to $5 billion ("U.S. mid cap companies"). Equity securities in which the Global
Growth Funds may invest include common stocks, preferred stocks, convertible
debt securities and warrants to acquire such securities.
The Primary Investment Areas of the Global Growth Funds are as follows:
NEW PACIFIC FUND -- Australia, Hong Kong, India, Indonesia, Malaysia, New
Zealand, Pakistan, the Philippines, Singapore, South Korea, Taiwan and Thailand.
EUROPE FUND -- Austria, Belgium, Denmark, Finland, France, Germany, Greece,
Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden,
Switzerland, Turkey and the United Kingdom.
INTERNATIONAL FUND -- all countries listed for each other Global Growth Fund,
and Argentina, Brazil, Canada, Chile, Colombia, Israel, Japan, Mexico, Peru and
Venezuela, but not the United States.
AMERICA FUND -- the United States.
From time to time the Investment Series' Board of Trustees may add or delete
countries from a Global Growth Fund's Primary Investment Area.
For purposes of this Prospectus, an issuer typically is considered as domiciled
in a particular country if it is (a) organized under the laws of, or has its
principal office in, a particular country or (b) normally derives 50% or more of
its total revenues from business in that country, provided that, in the
Manager's view, the value of such issuer's securities tends to reflect such
country's development to a greater extent than developments elsewhere. However,
these are not absolute requirements, and certain companies incorporated in a
particular country and considered by the Manager to be located in that country
may have substantial foreign operations or subsidiaries and/or export sales
exceeding in size the assets or sales in that country.
Each Global Growth Fund may invest up to 35% of its assets in the equity
securities of issuers domiciled outside of its Primary Investment Area,
including: (a) securities of issuers not domiciled in the Primary Investment
Area but which are domiciled in countries that are linked by tradition, economic
markets, cultural similarities or geography to such Primary Investment Area; and
(b) securities of issuers domiciled elsewhere in the world that have operations
in the Primary Investment Area or that stand to benefit from political and
economic events in the Primary Investment Area. In addition, the America Fund
may invest up to 35% of its total assets in equity securities of issuers
domiciled in the United States that are not U.S. mid cap companies.
Up to 35% of each Global Growth Fund's assets may be invested in debt securities
of issuers that may or may not be domiciled in such Fund's Primary Investment
Area. The Global Growth Funds will limit their purchases of debt securities to
obligations rated no lower than investment grade, or if unrated, deemed by the
Manager to be of equivalent quality. See "Risk Factors."
In managing the New Pacific Fund, the Europe Fund and the International Fund,
the Manager seeks to identify those countries and industries where economic and
political factors, including currency
Prospectus Page 15
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
movements, are likely to produce above-average growth rates. The Manager further
attempts to identify those companies in such countries and industries that are
best positioned and managed to take advantage of these economic and political
factors. The Manager intends to invest in such markets only after balancing the
potential for growth of selected companies in each market relative to the risks
of investing in each such country. Among the factors to be considered are that
several of the markets included in the Primary Investment Areas of the New
Pacific Fund, the Europe Fund and the International Fund are so-called
developing countries, and their economies and markets are less developed and
more prone to uncertainty, instability and risk than the other markets in which
such Funds invest. Under normal circumstances, the assets of the International
Fund are invested in the equity securities of issuers domiciled in at least
three different countries.
In selecting equity securities for the America Fund, the Manager uses a
multi-stage process to identify companies that possess sustainable above average
growth at an attractive offering price. The process for selecting mid cap growth
stocks consists of four components: asset allocation, industry diversification,
stock selection and quality control. The Manager tracks individual companies and
categorizes them into industry groups. Purchases and sales of individual
securities are based on the ratings established by the Manager on a weekly
basis. Stocks ranked in the top 30% are buys, and the bottom 30% are sells. The
quality control process ensures consistency with the industry and asset
allocation guidelines as well as stock guidelines. There is no assurance that
this process will produce better or more consistent results than other
investment processes.
INFRASTRUCTURE FUND
The INFRASTRUCTURE FUND'S investment objective is long-term capital growth. It
seeks its objective by investing primarily in equity securities of companies
throughout the world that design, develop or provide products and services
significant to a country's infrastructure. The Infrastructure Fund invests in
infrastructure companies that, in the opinion of the Manager, have potential for
above average, long-term growth in sales and earnings.
At least 65% of the Infrastructure Fund's total assets normally will be invested
in common and preferred stocks and warrants to acquire such securities issued by
infrastructure companies. An "infrastructure" company is an entity in which (i)
at least 50% of either the revenues or earnings was derived from infrastructure
activities, or (ii) at least 50% of the assets was devoted to such activities,
based on the company's most recent fiscal year. The remainder of the
Infrastructure Fund's assets may be invested in debt securities issued by
infrastructure companies and/or equity and debt securities of companies outside
of the infrastructure industries which, in the opinion of the Manager, stand to
benefit from developments in the infrastructure industries. The Infrastructure
Fund will not invest more than 20% of its total assets in debt securities rated
below investment grade. See "Risk Factors."
The Infrastructure Fund may invest substantially in securities denominated in
one or more currencies. Under normal conditions, the Infrastructure Fund invests
in the equity securities of issuers located in at least three different
countries, including the United States. Investments in securities of issuers in
any one country, other than the United States, will represent no more than 50%
of the Infrastructure Fund's total assets.
In analyzing companies for possible investment by the Infrastructure Fund, the
Manager ordinarily looks for several of the following characteristics:
above-average per share earnings growth; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; development of new technologies; efficient
service; pricing flexibility; strong management; and general operating
characteristics that will enable the companies to compete successfully in their
respective markets.
For purposes of the Infrastructure Fund's policy of normally investing at least
65% of its total assets in the equity securities of infrastructure companies,
the companies in which the Infrastructure Fund will principally invest will be
those engaged in designing, developing or providing the following products and
services: electricity production; oil, gas, and coal exploration, development,
production and distribution; water supply, including water treatment facilities;
nuclear power and other alternative energy sources; transportation, including
the construction or operation of transportation systems; steel, concrete, or
similar types of products; communications equipment and services (including
equipment and services for both data and voice transmission); mobile
communications and cellular radio/paging; emerging technologies combining
telephone, television and/or
Prospectus Page 16
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
computer systems; and other products and services which, in the Manager's
judgment, constitute services significant to the development of a country's
infrastructure.
The Manager believes that a country's infrastructure is one key to the long-term
success of that country's economy. The Manager believes that adequate energy,
transportation, water and communications systems are essential elements for
long-term economic growth. The Manager believes that many developing nations,
especially in Asia and Latin America, plan to make significant expenditures to
the development of their infrastructure in the coming years, which is expected
to facilitate increased levels of services and manufactured goods.
In the developed countries of North America, Europe, Japan and the Pacific Rim,
the Manager expects that the replacement and upgrade of transportation and
communications systems should stimulate growth in the infrastructure industries
of those countries. In addition, in the Manager's view, deregulation of
telecommunications and electric and gas utilities in many countries is promoting
significant changes in these industries.
The Manager believes that strong economic growth in developing countries and
infrastructure replacement, upgrade, and deregulation in more developed
countries provide an environment for favorable investment opportunities in
infrastructure companies worldwide. In addition, the long-term growth rates of
certain foreign countries' economies may be substantially higher than the
long-term growth rate of the U.S. economy. An integral aspect of certain foreign
countries' economic growth may be the development or improvement of their
infrastructure.
NATURAL RESOURCES FUND
The NATURAL RESOURCES FUND'S investment objective is long-term capital growth.
It seeks its objective by investing primarily in equity securities of companies
throughout the world that own, explore or develop natural resources and other
basic commodities or supply goods and services to such companies. The Natural
Resources Fund invests in natural resource companies that, in the opinion of the
Manager, have potential for above average, long-term growth in sales and
earnings.
At least 65% of the Natural Resources Fund's total assets will normally be
invested in common stock and preferred stock, and warrants to acquire such
securities, issued by natural resource companies. A "natural resource" company
is an entity in which (i) at least 50% of either the revenues or earnings was
derived from natural resource activities, or (ii) at least 50% of the assets was
devoted to such activities, based upon the company's most recent fiscal year.
The remainder of the Natural Resources Fund's assets may be invested in debt
securities issued by natural resource companies and/or equity and debt
securities of companies outside of the natural resource industries, which, in
the opinion of the Manager, stand to benefit from developments in the natural
resource industries. The Natural Resources Fund will not invest more than 20% of
its total assets in debt securities rated below investment grade. See "Risk
Factors."
The Natural Resources Fund may invest substantially in securities denominated in
one or more currencies. Under normal conditions, the Natural Resources Fund
invests in the equity securities of issuers located in at least three different
countries, including the United States. Investments in securities of issuers in
any one country, other than the United States, will represent no more than 50%
of the Natural Resources Fund's total assets.
The Natural Resources Fund may invest in securities of companies in those
natural resource industries and commodity groups that, in the Manager's opinion,
may perform well during periods of rising inflation. In analyzing such companies
for possible investment by the Natural Resources Fund, the Manager ordinarily
looks for several of the following characteristics: above-average per share
earnings growth; high return on invested capital; a healthy balance sheet; sound
financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; strong
management; and general operating characteristics which will enable the
companies to compete successfully in their respective markets.
For purposes of the Natural Resources Fund's policy of normally investing at
least 65% of its total assets in the equity securities of natural resource
companies, the companies in which the Natural Resources Fund will principally
invest will be those which own, explore or develop: energy sources (such as oil,
gas and coal); ferrous and non-ferrous metals (such as iron, aluminum, copper,
nickel, zinc and lead), strategic metals (such as uranium and titanium) and
precious metals (such as gold, silver and platinum); chemicals; forest products
(such as timber, coated and uncoated tree sheet, pulp and newsprint); other
basic commodities (such as foodstuffs); refined products (such as chemicals and
Prospectus Page 17
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
steel) and service companies that sell to these producers and refiners; and
other products and services which, in the Manager's opinion, are significant to
the ownership and development of natural resources and other basic commodities.
The Manager will allocate the Natural Resources Fund's investments among those
natural resource companies depending on its assessment of their long-term growth
potential. In assessing these companies' long-term growth potential, the Manager
will also evaluate, among other factors, their capabilities for expanded
exploration and production, superior exploration programs and production
techniques and facilities, current inventories, expected production and demand
levels, and the potential to accumulate new resources.
The Manager believes that the liberalization of formerly socialist economies
will bring about dramatic changes in both the supply and demand for natural
resources. In addition, rapid industrialization in developing countries of Asia
and Latin America is generating new demands for industrial materials that are
affecting world commodities markets. The Manager believes these changes are
likely to create investment opportunities that benefit from new sources of
supply and/or from changes in commodities prices.
The Manager also believes that investments in natural resource industries offer
an opportunity to protect wealth against the capital-eroding effects of
inflation. During periods of accelerating inflation or currency uncertainty,
worldwide investment demand for natural resources, particularly precious metals,
tends to increase, and during periods of disinflation or currency stability, it
tends to decrease. The Manager believes that rising commodity prices and
increasing worldwide industrial production may favorably affect share prices of
natural resource companies, and investments in such companies can offer
excellent opportunities to offset the effects of inflation.
TELECOMMUNICATIONS FUND
The TELECOMMUNICATIONS FUND'S investment objective is long-term growth of
capital. It seeks its objective by investing primarily in equity securities of
companies throughout the world engaged in the development, manufacture or sale
of telecommunications services or equipment.
At least 65% of the Telecommunication Fund's total assets normally will be
invested in common and preferred stocks and warrants to acquire such stocks
issued by telecommunications companies. A "telecommunications company" is an
entity in which (i) at least 50% of either its revenues or earnings was derived
from telecommunications activities, or (ii) at least 50% of its assets was
devoted to telecommunications activities, based on the company's most recent
fiscal year. The remainder of the assets of the Telecommunications Fund may be
invested in debt securities issued by telecommunications companies and/or equity
and debt securities of companies outside of the telecommunications industry
which, in the opinion of the Manager, stand to benefit from developments in the
telecommunications industries.
The Telecommunications Fund may invest substantially in securities denominated
in one or more currencies. Under normal conditions, the Telecommunications Fund
invests in the equity securities of issuers located in at least three different
countries, including the United States. Investments in securities of issuers in
any one country, other than the United States, will represent no more than 40%
of the Telecommunications Fund's total assets.
Telecommunications companies cover a variety of sectors, ranging from companies
concentrating on established technologies to those primarily engaged in emerging
or developing technologies. The characteristics of companies focusing on the
same technology will vary among countries depending upon the extent to which the
technology is established in the particular country. The Manager will allocate
the Telecommunications Fund's investments among these sectors depending upon its
assessment of their relative long-term growth potentials.
For purposes of the Telecommunications Fund's policy of normally investing at
least 65% of its total assets in the equity securities of telecommunications
companies, the companies in which the Telecommunications Fund will principally
invest will be those engaged in designing, developing or providing the following
products and services: communications equipment and services (including
equipment and services for both data and voice transmission); electronic
components and equipment; broadcasting (including television and radio,
satellite, microwave and cable television and narrowcasting); computer
equipment, mobile communications and cellular radio/paging; electronic mail;
local and wide area networking and linkage of word and data processing systems;
publishing and information systems; videotext and teletext; and emerging
technologies combining telephone, television and/or computer systems.
Prospectus Page 18
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
The Manager expects that, from time to time, a significant portion of the
Telecommunications Fund's assets may be invested in the securities of domestic
issuers. Telecommunications, however, is a global industry with significant,
growing markets outside of the United States. A sizeable proportion of the
companies that comprise the telecommunications industry are headquartered
outside of the United States.
For these reasons, the Manager believes that a portfolio comprised only of
securities of U.S. issuers does not provide the greatest potential for return
from a telecommunications investment. The Manager uses its financial expertise
in markets located throughout the world and the substantial global resources of
Liechtenstein Global Trust in attempting to identify those countries and
telecommunications companies then providing the greatest potential for long-term
capital appreciation. In this fashion, the Manager and the Telecommunications
Fund seek to enable shareholders to capitalize on the substantial investment
opportunities and the potential for long-term growth of capital presented by the
global telecommunications industry. The Manager will allocate the
Telecommunications Fund's assets among securities of countries and in currency
denominations and industry sectors where opportunities for meeting the
Telecommunications Fund's investment objective are expected to be the most
attractive.
The Manager believes that there are opportunities for continued growth in demand
for components, products, media and systems to collect, store, retrieve,
transmit, process, distribute, record, reproduce and use information. The
pervasive societal impact of communications and information technologies has
been accelerated by the lower costs and higher efficiencies that result from the
blending of computers with telecommunications systems. Accordingly, companies
engaged in the production of methods for using electronic and, potentially,
video technology to communicate information are expected to be important in the
Telecommunication's Fund's portfolio. Older technologies, such as photography
and print, also may be represented, however.
LATIN AMERICA FUND
The LATIN AMERICA FUND'S investment objective is capital appreciation. The Fund
normally invests at least 65% of its total assets in the securities of a broad
range of Latin American issuers. The Latin America Fund may invest in common
stock, preferred stock, rights, warrants and securities convertible into common
stock, and other substantially similar forms of equity securities with
comparable risk characteristics, as well as bonds, notes, debentures or other
forms of indebtedness that may be developed in the future. Up to 35% of the
Latin America Fund's total assets may be invested in a combination of equity and
debt securities of U.S. issuers.
For purposes of this Prospectus, unless otherwise indicated, the Latin America
Fund defines Latin America to include the following countries: Argentina, the
Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica,
Dominican Republic, Ecuador, El Salvador, French Guiana, Guatemala, Guyana,
Haiti, Honduras, Jamaica, Mexico, the Netherlands Antilles, Nicaragua, Panama,
Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and Venezuela. Under
current market conditions, the Latin America Fund expects to invest primarily in
securities issued by companies and governments in Mexico, Chile, Brazil and
Argentina. The Latin America Fund may invest more than 25% of its assets in any
of these four countries, but does not expect to invest more than 60% of its
total assets in any one country.
Under normal circumstances, the Latin America Fund may invest up to 50% of its
assets in debt securities. Capital appreciation in debt securities may arise as
a result of a favorable change in relative foreign exchange rates, in relative
interest rate levels and/or in the creditworthiness of issuers. The receipt of
income from such debt securities owned by the Fund is incidental to the Fund's
objective of capital appreciation. The Latin America Fund's investment in Latin
American debt securities may consist substantially of Brady Bonds and other
sovereign debt securities issued by Latin American governments. "Sovereign debt
securities" are those debt securities issued by Latin American governments, and
other emerging market governments, that are traded in the markets of developed
countries or groups of developed countries. There are no credit quality
limitations placed on the debt securities in which the Latin America Fund may
invest, and some or all of such debt securities may be below investment grade
securities. See "Risk Factors."
The Latin America Fund defines securities of Latin American issuers as the
following: (a) securities of companies organized under the laws of a Latin
American country or for which the principal trading market is in Latin America;
(b) securities issued or guaranteed by the government of a country in Latin
America, its agencies or instrumentalities, or
Prospectus Page 19
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
municipalities, or the central bank of such country; (c) U.S. dollar-denominated
securities or securities denominated in a Latin American currency issued by
companies to finance operations in Latin America; (d) securities of companies
that derive 50% or more of their total revenues from either goods or services
produced in Latin America or sales made in Latin America; and (e) securities of
Latin American issuers, as defined herein, in the form of depositary shares. For
purposes of the foregoing definition, the Latin America Fund's purchases of
securities issued by companies outside of Latin America to finance their Latin
American operations will be limited to securities the performance of which is
materially related to such company's Latin American activities.
In allocating investments among the various Latin American markets, the Manager
looks principally at the stage of industrialization, potential for productivity
gains through economic deregulation, the impact of financial liberalization and
monetary conditions and the political outlook in each country. In allocating
assets between equity and debt securities, the Manager will consider, among
other factors: the level and anticipated direction of interest rates; expected
rates of economic growth and corporate profits growth; changes in Latin American
government policy including regulation governing industry, trade, financial
markets, and foreign and domestic investment; substance and likely development
of government finances; and the condition of the balance of payments and changes
in the terms of trade. In evaluating investments in securities of U.S. issuers,
the Manager will consider, among other factors, the issuer's Latin American
business activities and the impact that developments in Latin America may have
on the issuer's operations and financial condition.
Certain sectors of the economies of certain Latin American countries are closed
to equity investments by foreigners. Further, due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities in certain Latin American countries, the Latin
America Fund may be able to invest in such countries solely or primarily through
governmentally approved investment vehicles or companies. In addition, the
portion of the Latin America Fund's assets invested directly in Chile may be
less than the portion invested in other Latin American countries because, at
present, capital directly invested in Chile normally cannot be repatriated for
at least one year. As a result, the Latin America Fund currently intends to
limit most of its Chilean investments to indirect investments through American
Depositary Receipts ("ADRs") and established Chilean investment companies, the
shares of which are not subject to repatriation restrictions.
EMERGING MARKETS FUND
The EMERGING MARKETS FUND'S investment objective is long-term growth of capital.
Under normal circumstances, the Emerging Markets Fund seeks its objective by
investing at least 65% of its total assets in equity securities of companies in
emerging markets. The Emerging Markets Fund may invest in the following types of
equity securities: common stock, preferred stock, securities convertible into
common stock, rights and warrants to acquire such securities and substantially
similar forms of equity with comparable risk characteristics.
For purposes of the Emerging Markets Fund's operations, "emerging markets"
consist of all countries determined by the Manager to have developing or
emerging economies and markets. These countries generally include every country
in the world except the United States, Canada, Japan, Australia, New Zealand and
most countries located in Western Europe. See "Investment Objectives and
Policies" in the Statement of Additional Information for a complete list of all
the countries that the Emerging Markets Fund does not consider to be emerging
markets.
For purposes of the Emerging Markets Fund's policy of normally investing at
least 65% of its total assets in equity securities of issuers in emerging
Prospectus Page 20
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
markets, the Emerging Markets Fund will consider investment in the following
emerging markets:
<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>
Although the Emerging Markets Fund considers each of the above-listed countries
eligible for investment, it will not be invested in all such markets at all
times. Moreover, investing in some of those markets currently may not be
desirable or feasible, due to the lack of adequate custody arrangements for the
Emerging Markets Fund's assets, overly burdensome repatriation and similar
restrictions, the lack of organized and liquid securities markets, unacceptable
political risks or for other reasons.
For purposes of this Prospectus, a company in an emerging market is an entity:
(i) for which the principal securities trading market is an emerging market, as
defined above; (ii) that (alone or on a consolidated basis) derives 50% or more
of its total revenue from either goods produced, sales made or services
performed in emerging markets; or (iii) organized under the laws of, or with a
principal office in, an emerging market.
The Emerging Markets Fund may also invest up to 35% of its total assets in: (i)
debt securities of government or corporate issuers in emerging markets; (ii)
equity and debt securities of issuers in developed countries, including the
United States; (iii) securities of issuers in emerging markets not included in
the list of emerging markets above, if investing therein becomes feasible and
desirable subsequent to the date of this Prospectus; and (iv) cash and money
market instruments.
The Emerging Markets Fund may invest in debt securities of both governmental and
corporate issuers in emerging markets. Emerging market debt securities often are
rated below investment grade. The Emerging Markets Fund will not invest more
than 20% of its total assets in debt securities rated below investment grade.
See "Risk Factors." If the rating of any of the Emerging Markets Fund's
investments drops below a minimum rating considered acceptable by the Manager,
the Fund will dispose of any such security as soon as practicable and consistent
with the best interests of the Emerging Markets Fund and its shareholders.
Growth of capital in debt securities in which the Emerging Markets Fund invests
may arise as a result of favorable changes in relative foreign exchange rates,
in relative interest rate levels and/or in the creditworthiness of issuers. The
receipt of income from debt securities owned by the Emerging Markets Fund is
incidental to the its objective of long-term growth of capital.
The Emerging Markets Fund invests in those emerging markets that the Manager
believes have strongly developing economies and in which the markets are
becoming more sophisticated. In selecting investments, the Manager seeks to
identify those countries and industries where economic and political factors,
including currency movements, are likely to produce above-average growth rates.
The Manager then invests in those companies in such countries and industries
that are best positioned and managed to take advantage of these economic and
political factors. The assets of the Emerging Markets Fund ordinarily will be
invested in the securities of issuers in at least three different emerging
markets. In evaluating investments in securities of issuers in developed
markets, the Manager will consider, among other things, the business activities
of the issuer in emerging markets and the impact that developments in emerging
markets are likely to have on the issuer.
GROWTH & INCOME FUND
The investment objectives of the GROWTH & INCOME FUND are long-term capital
appreciation together with current income. In seeking those objectives, the
Growth & Income Fund normally invests at least 65% of its total assets in a
combination of blue-chip equity securities and high quality government bonds.
The Growth & Income 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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
("S&P"), i.e., rated Aaa or Aa by Moody's or AAA or AA by S&P, or, if unrated,
are determined by the Manager to be of comparable quality.
Up to 35% of the Growth & Income Fund's 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 objectives.
Equity securities that the Growth & Income 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 U.S. 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 Growth & Income Fund may
include debt obligations convertible into equity securities or having attached
warrants or rights to purchase equity securities.
The Growth & Income Fund currently contemplates that it will invest principally
in securities of issuers in the United States, Canada, Japan, the Western
European nations, New Zealand and Australia. The Growth & Income Fund may invest
substantially in securities denominated in more than one currency. Under normal
market conditions, the Growth & Income Fund invests in the securities of issuers
located in at least three different countries. Investments in securities of
issuers in any one country, other than the United States, will represent no more
than 40% of the Fund's total assets. The Growth & Income Fund may purchase
securities of an issuer located in one country but denominated in the currency
of another country (or a multinational currency unit).
The Manager allocates the Growth & Income Fund's assets among securities of
issuers located in countries where opportunities for meeting the Fund's
investment objectives are expected to be the most attractive. The relative
proportions of equity and debt securities held by the Growth & Income Fund at
any one time will vary, and will depend 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 Growth & Income Fund to respond
to general economic changes and market conditions around the world, the Fund is
authorized to invest up to 100% of its assets in either equity securities or
debt securities.
STRATEGIC INCOME FUND
The STRATEGIC INCOME FUND seeks high current income as its primary investment
objective and capital appreciation as its secondary investment objective.
The Strategic Income Fund invests in debt securities of issuers in: (1) the
United States; (2) developed foreign countries; and (3) emerging markets. The
Strategic Income Fund selects debt securities from those issued by governments,
their agencies and instrumentalities; central banks; and commercial banks and
other corporate entities. Debt securities in which the Strategic Income Fund may
invest include bonds, notes, debentures, and other similar instruments
(including mortgage-backed and asset-backed securities). The Strategic Income
Fund normally invests at least 50% of its net assets in U.S. and foreign debt
and other fixed income securities that, at the time of purchase, are rated at
least investment grade by Moody's or S&P, or, if unrated, are determined by the
Manager to be of comparable quality. No more than 50% of the Strategic Income
Fund's total assets may be invested in securities rated below investment grade.
The Strategic Income Fund considers "emerging markets" to consist of all
countries determined by the Manager to have developing or emerging economies and
markets. These countries generally include every country in the world except the
United States, Canada, Japan, Australia, New Zealand and most countries in
Western Europe.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
The Strategic Income Fund will consider investment in the following emerging
markets:
<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>
The Strategic Income Fund will not be invested in all such markets at all times.
Moreover, investing in some of those markets currently may not be desirable or
feasible, due to the lack of adequate custody arrangements, overly burdensome
repatriation requirements and similar restrictions, the lack of organized and
liquid securities markets, unacceptable political risks or for other reasons.
The Strategic Income Fund's investments in emerging market securities may
consist substantially of Brady Bonds (described below) and other sovereign debt
securities issued by emerging market governments that are traded in the markets
of developed countries or groups of developed countries ("Sovereign Debt"). The
Manager may invest in debt securities of emerging market issuers that it
determines to be suitable investments for the Strategic Income Fund without
regard to ratings. Currently, the substantial majority of emerging market debt
securities are considered to have a credit quality below investment grade. The
Strategic Income Fund also may invest in below investment grade debt securities
of corporate issuers in the United States and in developed foreign countries,
subject to the overall 50% limitation.
GLOBAL GOVERNMENT INCOME FUND
The GLOBAL GOVERNMENT INCOME FUND seeks high current income. Its secondary
objectives are capital appreciation and protection of principal through active
management of its maturity structure and currency exposure. At least 65% of the
Fund's total assets normally are invested in debt obligations issued or
guaranteed by the U.S. or foreign governments (including foreign states,
provinces or municipalities) or their agencies, authorities or
instrumentalities, including mortgage-backed securities issued by agencies or
instrumentalities of the U.S. government. For purposes of this policy, the
Global Government Income Fund considers debt obligations of supranational
entities organized or supported by several national governments, such as the
World Bank and the Asian Development Bank, to be "government securities."
The Global Government Income Fund invests primarily in high quality government
debt securities. High quality debt securities are those securities rated in the
top two ratings categories of Moody's or S&P or, if unrated, determined by the
Manager to be of comparable quality.
The Global Government Income Fund currently contemplates that it will invest
principally in obligations of the United States, Canada, Japan, the Western
European nations, New Zealand and Australia, as well as in multinational
currency units. Under normal market conditions, the Global Government Income
Fund invests in issuers of not less than three different countries. Investments
in securities of issuers in any one country, other than the United States,
normally represent no more than 40% of the Fund's total assets. The Global
Government Income Fund does not invest in a foreign currency or in securities
denominated in a foreign currency if such currency is not at the time of
investment considered by the Manager to be fully exchangeable into U.S. dollars
(or a multinational currency unit) without legal restriction. The Global
Government Income Fund may purchase securities of an issuer located in one
country but denominated in the currency of another country (or a multinational
currency unit).
The Global Government Income Fund also may invest up to 35% of its total assets
in: (a) foreign government securities that are not high quality but are rated at
least investment grade by Moody's or S&P, or if unrated, determined by the
Manager to be of comparable quality; (b) corporate debt obligations of U.S. or
foreign issuers rated at least investment grade by Moody's or S&P, including
debt obligations convertible into equity securities or having attached warrants
or rights to purchase equity securities; (c) privately issued mortgage-backed
and asset-backed securities rated in the highest rating category by Moody's or
S&P, or if
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GT GLOBAL VARIABLE INVESTMENT FUNDS
unrated, determined by the Manager to be of comparable quality; and (d) common
stocks, preferred stocks and warrants to acquire such securities, provided that
the Global Government Income Fund will not invest more than 20% of its total
assets in such securities.
The U.S. government securities in which the Global Government Income Fund may
invest include direct obligations of the U.S. Treasury (such as Treasury bills,
notes and bonds) and obligations issued or guaranteed by U.S. government
agencies and instrumentalities, including securities that are supported by the
full faith and credit of the United States (such as Government National Mortgage
Association ("GNMA") certificates), securities that are supported by the right
of the issuer to borrow from the U.S. Treasury (such as securities of the
Federal Home Loan Banks ("FHLBs"), the Federal Home Loan Mortgage Corporation
("FHLMC"), the Student Loan Marketing Association ("SLMA") and the Tennessee
Valley Authority ("TVA")).
The Manager allocates the Global Government Income Fund's assets among
securities of issuers and in currency denominations where the combination of
fixed income market returns, the price appreciation potential of fixed income
securities and currency exchange rate movements will present opportunities for
meeting its investment objectives. The Manager selects securities of particular
issuers on the basis of its views as to the best values then currently available
in the marketplace. Such values are a function of yield, maturity, issue
classification and quality characteristics, coupled with expectations regarding
the local and world economies, movements in the general level and term of
interest rates, currency values, political developments, and variations of the
supply of funds available for investment in the world bond market relative to
the demands placed upon it.
U.S. GOVERNMENT INCOME FUND
The investment objective of the U.S. GOVERNMENT INCOME FUND is a high level of
current income, consistent with the preservation of capital. The U.S. Government
Income Fund normally invests at least 65% of its total assets in U.S. government
securities including: direct obligations of the U.S. Treasury (such as Treasury
bills, notes and bonds); and obligations issued or guaranteed by U.S. government
agencies and instrumentalities, including securities that are supported by the
full faith and credit of the United States (such as GNMA certificates),
securities that are supported by the right of the issuer to borrow from the U.S.
Treasury (such as securities of the FHLBs) and securities supported primarily or
solely by the creditworthiness of the issuer (such as securities of Fannie Mae,
FHLMC, SLMA and TVA).
U.S. government securities in which the U.S. Government Income Fund may invest
include mortgage-backed securities. Such securities are issued or guaranteed as
to principal and interest by GNMA, Fannie Mae, FHLMC or other government-
sponsored enterprises. Such securities include fixed-rate mortgage obligations,
collateralized mortgage obligations and adjustable rate mortgage obligations.
Treasury bills, notes and bonds and other obligations backed by the full faith
and credit pledge of the U.S. government historically have involved little risk
of loss of principal if held to maturity. While not backed by the full faith and
credit of the U.S. government, securities issued or guaranteed by Fannie Mae or
FHLMC are high quality investments having minimal credit risks. All securities
in which the U.S. Government Income Fund invests, however, are subject to
variations in market value due to interest rate fluctuations.
A number of U.S. government agencies or government-sponsored organizations also
sell their own debt securities. These agencies typically are created by Congress
to fulfill a specific function, such as providing credit to home buyers or
farmers; for example, FHLBs, Federal Farm Credit Banks, and SLMA. Some of these
obligations are backed by the full faith and credit of the U.S. government, as
noted above, and some are supported primarily or solely by the creditworthiness
of the issuing agency, such as those issued by TVA. These securities
traditionally offer somewhat higher yields than U.S. Treasury securities having
similar maturities but may have greater principal risk.
The U.S. Government Income Fund may invest in bonds issued by the Resolution
Funding Corporation ("Refcorp") whose interest payments are guaranteed by U.S.
Treasury zero coupon bonds. The amount and maturity date of the Refcorp bonds
are the same as the amount and maturity date of the corresponding U.S. Treasury
zero coupon bonds held in a separate custody account at the Federal Reserve Bank
of New York. Upon maturity, the Refcorp bonds will be repaid from the proceeds
of those U.S. Treasury zero coupon bonds maturing on the same date.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
The U.S. Government Income Fund may also invest up to 35% of its total assets
in: (a) foreign government securities that are at least of investment grade
quality; (b) any U.S. government securities that are rated below "high quality"
but are rated at least investment grade by Moody's or S&P, or if unrated,
determined by the Manager to be of comparable quality; (c) privately issued
mortgage-backed and asset-backed securities rated in the highest rating category
by Moody's or S&P, or if unrated, determined by the Manager to be of comparable
quality; and (d) commercial paper and other short-term debt obligations of U.S.
and foreign corporations, rated at least A-1 by S&P or Prime-1 by Moody's, or if
unrated, determined by the Manager to be of comparable quality. For purposes of
this policy, the U.S. Government Income Fund considers debt obligations of
supranational entities organized or supported by several national governments,
such as the World Bank and the Asian Development Bank, to be "foreign government
securities." The U.S. Government Income Fund may purchase securities that are
issued by the government of one country but denominated in the currency of
another country (or a multinational currency unit). The U.S. Government Income
Fund will not invest in a security denominated in a foreign currency if such
currency is not at the time of investment considered by the Manager to be fully
exchangeable into U.S. dollars (or a multinational currency unit) without legal
restriction.
MONEY MARKET FUND
The investment objective of the MONEY MARKET FUND is maximum current income
consistent with liquidity and conservation of capital. The Money Market Fund
seeks this objective by investing in high quality, U.S. dollar-denominated money
market instruments.
The Money Market Fund seeks to maintain a net asset value of $1.00 per share. To
do so, the Money Market Fund will maintain a dollar-weighted average maturity of
90 days or less and will purchase only instruments having remaining maturities
of 13 months or less.
The Money Market Fund invests only in high quality, U.S. dollar-denominated
money market instruments determined by the Manager to present minimal credit
risks in accordance with procedures established by the Investment Series' Board
of Trustees. To be considered high quality, a security must be rated in
accordance with applicable rules in one of the two highest rating categories for
short-term securities by at least two NRSROs (or one, if only one NRSRO has
rated the security); or, if the issuer has no applicable short-term rating,
determined by the Manager to be of equivalent credit quality.
High quality securities are divided into "first tier" and "second tier"
securities. The Money Market Fund will invest only in first tier securities.
First tier securities have received the highest rating for short-term debt from
at least two NRSROs, i.e., rated not lower than A-1 by S&P or P-1 by Moody's (or
one, if only one such NRSRO has rated the security), or, if unrated, determined
by the Manager to be of equivalent quality. If a security has been assigned
different ratings by different NRSROs, at least two NRSROs must have assigned
the higher rating in order for the Manager to determine the security's
eligibility for purchase by the Fund.
The rating criteria of S&P and Moody's, two NRSROs that are currently rating
instruments of the type the Money Market Fund may purchase, are more fully
described in the "Description of Debt Ratings" in the Statement of Additional
Information.
The Money Market Fund may invest in the following types of money market
instruments:
(1) Obligations issued or guaranteed by the U.S. and foreign governments, their
agencies and instrumentalities. These include direct obligations of the U.S.
Treasury, such as Treasury bills and notes; obligations backed by the full faith
and credit of the U.S. government, such as those issued by GNMA; obligations
supported primarily or solely by the creditworthiness of the issuer, such as
securities of Fannie Mae, FHLMC and TVA; and similar U.S. dollar-denominated
instruments of foreign governments, their agencies, authorities and
instrumentalities;
(2) Obligations of U.S. and non-U.S. banks, including certificates of deposit,
bankers' acceptances and similar instruments, when such banks have total assets
at the time of purchase equal to at least $1 billion;
(3) Interest-bearing deposits in U.S. commercial and savings banks having total
assets of $1 billion or less, in principal amounts at each such bank not greater
than are insured by an agency of the U.S. government, provided that the
aggregate amount of such deposits (including interest earned) does not exceed 5%
of the Money Market Fund's assets;
(4) Commercial paper and other short-term debt obligations of U.S. and foreign
companies, rated at
Prospectus Page 25
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
least A-1 by S&P or Prime-1 by Moody's, or, if not rated, determined to be of
equivalent quality by the Manager, provided that any outstanding intermediate-
or long-term debt of the issuer is rated at least AA by S&P or Aa by Moody's.
These instruments may include corporate bonds and notes (corporate obligations
that mature, or that may be redeemed, in one year or less). These corporate
obligations include variable rate master notes, which are redeemable upon notice
and permit investment of fluctuating amounts at varying rates of interest
pursuant to direct arrangements with the issuer of the instrument; and
(5) Repurchase agreements secured by any of the foregoing.
In addition to the foregoing securities, the Money Market Fund may acquire
participation interests in securities in which it is permitted to invest.
Participation interests are pro rata interests in securities held by others.
In managing the Money Market Fund, the Manager may employ a number of
professional money management techniques, including varying the composition of
the Fund's investments and the average weighted maturity of the Fund's
securities within the limitations described above. Determinations to use such
techniques will be based on the Manager's identification and assessment of the
relative values of various money market instruments and the future of interest
rate patterns, economic conditions and shifts in fiscal and monetary policy. The
Manager also may seek to improve the Money Market Fund's income by purchasing or
selling securities in order to take advantage of yield disparities that
regularly occur in the market.
OTHER INVESTMENT INFORMATION
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, a Fund may invest up to 100% of its
total assets in cash (U.S. dollars, foreign currencies or multinational currency
units) and/or high quality debt securities or money market instruments of U.S.
or foreign issuers. In addition, for temporary defensive purposes, most or all
of a Fund's investments may be made in the United States and denominated in U.S.
dollars. To the extent a Fund adopts a temporary defensive position, it will not
be invested so as to achieve directly its investment objective. In addition,
pending investment of proceeds from new sales of shares of a Fund or to meet its
ordinary daily cash needs, a 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.
BRADY BONDS. The Latin America Fund and the Strategic Income Fund may invest in
"Brady Bonds," which are debt restructurings that provide for the exchange of
cash and loans for newly issued bonds. Brady Bonds have been issued by the
countries of Albania, Argentina, Brazil, Bulgaria, Costa Rica, Dominican
Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria, Panama, Peru,
Philippines, Poland, Uruguay, Venezuela and Vietnam, and are expected to be
issued by other emerging market countries. As of the date of this Prospectus,
the Funds are not aware of the occurrence of any payment defaults on Brady
Bonds. Investors should recognize, however, that Brady Bonds do not have a long
payment history. In addition, Brady Bonds are often rated below investment
grade.
The Latin America Fund and the Strategic Income Fund may invest in either
collateralized or uncollateralized Brady Bonds. U.S. dollar-denominated,
collateralized Brady Bonds, which may be fixed rate par bonds or floating rate
discount bonds, are collateralized in full as to principal by U.S. Treasury zero
coupon bonds having the same maturity as the bonds. Interest payments on such
bonds generally are collateralized by cash or securities in an amount that, in
the case of fixed rate bonds, is equal to at least one year of rolling interest
payments or, in the case of floating rate bonds, initially is equal to at least
one year's rolling interest payments based on the applicable interest rate at
the time of issuance and is adjusted at regular intervals thereafter.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Manager believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Infrastructure Fund, the Natural Resources Fund,
the Telecommunications Fund, the Emerging Markets Fund, and the Latin America
Fund, respectively, in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities
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GT GLOBAL VARIABLE INVESTMENT FUNDS
such as the Funds to participate in privatizations may be limited by local law,
or the terms on which the Funds may be permitted to participate may be less
advantageous than those for local investors. There can be no assurance that
foreign governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Strategic Income Fund may invest in
fixed and floating rate loans ("Loans") arranged through private negotiations
between a foreign entity and one or more financial institutions ("Lenders"). The
majority of the Strategic Income Fund's investments in Loans in emerging markets
is expected to be in the form of participations in Loans ("Participations") and
assignments of portions of Loans from third parties ("Assignments").
Participations typically will result in the Strategic Income Fund's having a
contractual relationship only with the Lender, not with the borrower government.
The Strategic Income Fund will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the Lender selling the
Participation and only upon receipt by the Lender of the payments from the
borrower. In connection with purchasing Participations, the Strategic Income
Fund generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement relating to the loan ("Loan Agreement"), nor any
rights of set-off against the borrower, and the Fund may not directly benefit
from any collateral supporting the Loan in which it has purchased the
Participation. As a result, the Strategic Income Fund will assume the credit
risk of both the borrower and the Lender that is selling the Participation.
In the event of the insolvency of the Lender selling a Participation, the
Strategic Income Fund may be treated as a general creditor of the Lender and may
not benefit from any set-off between the Lender and the borrower. The Strategic
Income Fund will acquire Participations only if the Lender interpositioned
between the Fund and the borrower is determined by the Manager to be
creditworthy. When the Strategic Income Fund purchases Assignments from Lenders,
the Fund will acquire direct rights against the borrower on the Loan. However,
since Assignments are arranged through private negotiations between potential
assignees and potential assignors, the rights and obligations acquired by the
Strategic Income Fund as the purchaser of an Assignment may differ from, and be
more limited than, those held by the assigning Lender.
BORROWING AND LENDING. From time to time, it may be advantageous for a Fund to
borrow money rather than sell existing securities to meet redemption requests.
Accordingly, a Fund may borrow from banks or (except for the Money Market Fund)
may borrow through reverse repurchase agreements and "roll" transactions in
connection with meeting requests for the redemption of shares of the Fund. Each
Fund also may borrow up to 5% of its total assets for temporary or emergency
purposes other than to meet redemptions. The Funds (except for the Strategic
Income Fund) will not borrow for leveraging purposes, nor will the Funds (except
for the Infrastructure Fund, the Natural Resources Fund, the Telecommunications
Fund, the Emerging Markets Fund and the Latin America Fund) purchase securities
while borrowings are outstanding. The Infrastructure Fund, the Natural Resources
Fund, the Telecommunications Fund, the Emerging Markets Fund and the Latin
America Fund may each purchase additional securities when outstanding borrowings
represent no more than 5% of its assets. See "Investment Objectives and
Policies" in the Statement of Additional Information.
Each Fund (except for the Money Market 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. Each Fund
(except for the Money Market Fund) may also engage in "roll" borrowing
transactions, which involve the sale of GNMA certificates or other securities
together with a commitment (for which the Fund may receive a fee) to purchase
similar, but not identical, securities at a future date. Each 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.
The Strategic Income Fund may borrow money from banks in an amount up to 33 1/3%
of its total assets (including the amount borrowed), less all liabilities and
indebtedness other than the borrowing and may use the proceeds of such
borrowings for investment purposes. The Strategic Income Fund will borrow for
investment purposes only when the Manager believes that such borrowings will
benefit the Strategic Income Fund, after taking into account considerations such
as the costs of the
Prospectus Page 27
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GT GLOBAL VARIABLE INVESTMENT FUNDS
borrowing and the likely investment returns on the securities purchased with the
borrowed monies.
Borrowing for investment purposes is known as leveraging, which is a speculative
practice. Such borrowing by the Strategic Income Fund will create an opportunity
for increased net income but, at the same time, involves special risk
considerations. For example, leveraging might exaggerate changes in the net
asset value of the Strategic Income Fund's shares and in the yield realized by
the Fund's portfolio. Although the principal of such borrowings will be fixed,
the Strategic Income Fund's assets may change in value during the time the
borrowing is outstanding. By leveraging the Fund, changes in net asset values,
higher or lower, may be greater in degree than if leverage was not employed. To
the extent the income derived from the assets obtained with borrowed funds
exceeds the interest and other expenses that the Strategic Income Fund will have
to pay, the Fund's net income will be greater than if borrowing were not used.
Conversely, if the income from the assets obtained with borrowed funds is not
sufficient to cover the cost of borrowing, the net income of the Strategic
Income Fund will be less than if borrowing were not used, and therefore the
amount available for distribution to shareholders as a dividend will be reduced.
The Strategic Income Fund expects that some of its borrowings may be made on a
secured basis.
SECURITIES LENDING. Each Fund (except the Money Market 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. While a loan is
outstanding, the borrower must maintain with the Fund's custodian collateral
consisting of cash, U.S. government securities or certain irrevocable letters of
credit equal to at least the value of the borrowed securities, plus any accrued
interest or such other collateral as permitted by a Fund's investment program
and regulatory agencies, and as approved by the Board. Each Fund limits its
loans of securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delays in receiving additional collateral or in recovery of the loaned
securities and possible loss of rights in the collateral should the borrower
fail financially.
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Funds may be able to
invest in certain countries solely or primarily through governmentally
authorized investment vehicles or companies. Each Fund (except the Money Market
Fund) may invest up to 10% of its total assets in the aggregate in shares of
other investment companies and up to 5% of its total assets in any one
investment company, as long as each investment does not represent more than 3%
of the voting stock of the acquired investment company at the time of
investment. Some of the investment companies in which the Funds invest may be
investment vehicles or companies that are advised by the Manager.
Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities and
is subject to limitations under the 1940 Act and market availability. The Funds
do not intend to invest in investment companies unless, in the judgment of the
Manager, the potential benefits of such investment justify the payment of any
applicable premium or sales charge. As a shareholder in an investment company, a
Fund would bear its ratable share of that investment company's expenses,
including its advisory and administration fees. At the same time, a Fund would
continue to pay its own management fees and other expenses except with respect
to investments in other investment companies that are advised by the Manager.
The Manager has agreed to waive its fees charged to the Funds to the extent that
such fees are based on the Funds' investments in such other investment
companies.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Funds may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but a Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If a
Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time a Fund enters into a
transaction on a when-issued or forward commitment basis, a segregated account
consisting of cash
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GT GLOBAL VARIABLE INVESTMENT FUNDS
or liquid securities equal to the value of the when-issued or forward commitment
securities will be established and maintained with its custodian and will be
marked to market daily. There is a risk that the securities may not be delivered
and that the Fund may incur a loss. The Growth and Income Fund will not invest
more than 5% of its assets in a combination of securities purchased on a
when-issued basis or with respect to which it has entered into forward
commitment agreements.
The Strategic Income Fund may also sell securities on a "when, as and if issued"
basis for hedging purposes. Under such a transaction, the Strategic Income Fund
is required to deliver at a future date a security it does not presently hold,
but which it has a right to receive if the security is issued. Issuance of the
security may not occur, in which case the Strategic Income Fund would have no
obligation to the other party and would not receive payment for the sale.
Selling securities on a "when, as and if issued" basis may reduce risk of loss
to the extent that such a sale wholly or partially offsets unfavorable price
movements on the investments being hedged. However, such sales also limit the
amount the Strategic Income Fund can receive if the "when, as and if issued"
security is in fact issued.
REPURCHASE AGREEMENTS. A repurchase agreement is a transaction in which a 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 Funds will enter into repurchase agreements only with banks and
dealers believed by the Manager to present minimal credit risks in accordance
with guidelines approved by the Companies' Boards of Trustees. The Manager will
review and monitor the creditworthiness of such institutions under the Boards'
general supervision.
A Fund will not enter into a repurchase agreement with a maturity of more than
seven days if, as a result, more than 15% (10% with respect to the Money Market
Fund) of the value of its net assets would be invested in repurchase agreements
with maturities of more than seven days and other illiquid securities.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The U.S. Government Income Fund may
invest a significant portion of its assets in mortgage-backed and asset-backed
securities. In addition, the Strategic Income Fund and the Global Government
Income Fund is each authorized to invest in mortgage-backed and asset-backed
securities. Such securities are bonds backed by specific types of assets.
Mortgage-backed securities represent direct or indirect interests in pools of
underlying mortgage loans that are secured by real property. U.S. government
mortgage-backed securities are issued or guaranteed as to principal and interest
(but not as to market value) by GNMA, Fannie Mae, FHLMC or other
government-sponsored enterprises. Other mortgage-backed securities and the
secondary mortgage market in which they are traded has helped to keep mortgage
money available for home financing.
Mortgage-backed securities may be composed of one or more classes and may be
structured either as pass-through securities or collateralized debt obligations.
Multiple-class mortgage-backed securities are referred to in this prospectus as
"CMOs." Some CMOs are directly supported by other CMOs, which in turn are
supported by mortgage pools. Investors typically receive payments out of the
interest and principal on the underlying mortgages. The portions of these
payments that investors receive, as well as the priority of their rights to
receive payments, are determined by the specific terms of the CMO class.
When interest rates go down and homeowners refinance their mortgages,
mortgage-backed bonds may be paid off more quickly than investors expect. When
interest rates rise, mortgage-backed bonds may be paid off more slowly than
originally expected. Changes in the rate or "speed" of these prepayments can
cause the value of mortgage-backed securities to fluctuate to a greater degree
and more rapidly than ordinary fixed income securities.
Other asset-backed securities are similar to mortgage-backed securities, except
that the underlying assets are different. These underlying assets may be nearly
any type of financial asset or receivable, such as motor vehicle installment
sales contracts, home equity loans, leases of various types of real and personal
property and receivables from credit cards. Like mortgage-backed securities,
asset-backed securities can change in value in response to interest rate changes
to a greater degree and more rapidly than ordinary fixed income securities.
ZERO COUPON SECURITIES. The Strategic Income Fund and the U.S. Government Income
Fund may invest in certain zero coupon securities that are
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"stripped" U.S. Treasury notes and bonds. The Strategic Income Fund also may
invest in zero coupon and other deep discount securities issued by foreign
governments and domestic and foreign corporations, including certain Brady Bonds
and other foreign debt securities and in payment-in-kind securities. Zero coupon
securities pay no interest to holders prior to maturity, and payment-in-kind
securities pay interest in the form of additional securities. However, a portion
of the original issue discount on zero coupon securities and the "interest" on
payment-in-kind securities are included in the investing Fund's income.
Accordingly, to continue to qualify for tax treatment as a regulated investment
company and to avoid a certain excise tax (see "Taxes" in the Statement of
Additional Information), the Strategic Income Fund or the U.S. Government Income
Fund may be required to distribute an amount that is greater than the total
amount of cash it actually receives. These distributions must be made from the
Funds' respective cash assets or, if necessary, from the proceeds of sales of
portfolio securities. The Strategic Income Fund and the U.S. Government Income
Fund will not be able to purchase additional income-producing securities with
cash used to make such distributions, and their respective current incomes
ultimately may be reduced as a result. Zero coupon and payment-in-kind
securities usually trade at a deep discount from their face or par value and are
subject to greater fluctuations of market value in response to changing interest
rates than are debt obligations of comparable maturities that make current
distributions of interest in cash.
INDEXED SECURITIES. The Strategic Income Fund may invest without limitation in
commercial paper which is indexed to certain specific foreign currency exchange
rates. The terms of such commercial paper provide that its principal amount is
adjusted upwards or downwards (but not below zero) at maturity to reflect
changes in the exchange rate between two currencies while the obligation is
outstanding. The Fund will purchase such commercial paper with the currency in
which it is denominated and, at maturity, will receive interest and principal
payments thereon in that currency, but the amount of principal payable by the
issuer at maturity will change in proportion to the change (if any) in the
exchange rate between the two specified currencies between the date the
instrument is issued and the date the instrument matures. While such commercial
paper entails the risk of loss of principal, the potential for realizing gains
as a result of changes in foreign currency exchange rates enables the Strategic
Income Fund to hedge (or cross-hedge) against a decline in the U.S. dollar value
of investments denominated in foreign currencies while seeking to provide an
attractive money market rate of return. The Strategic Income Fund will not
purchase such commercial paper for speculation.
The Strategic Income Fund and the Global Government Income Fund may invest in
certain other indexed securities, which are securities whose prices are indexed
to the prices of other securities, securities indices, currencies, precious
metals or other commodities, or other financial indicators. Indexed securities
typically, but not always, are debt securities or deposits whose value at
maturity or coupon rate is determined by reference to a specific instrument or
statistic. The performance of indexed securities depends to a great extent on
the performance of the security, currency or other instrument to which they are
indexed, and may also be influenced by interest rate changes in the United
States and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values may
decline substantially if the issuer's creditworthiness deteriorates. Indexed
securities may be more volatile than the underlying instruments. New forms of
indexed securities continue to be developed. The Strategic Income Fund and the
Global Government Income Fund may invest in such securities to the extent
consistent with its investment objectives.
OTHER INFORMATION. The investment objective(s) of each Fund may not be changed
without the approval of a majority of the outstanding voting securities of such
Fund. A "majority of the outstanding voting securities" of a Fund means the
lesser of: (i) 67% or more of the shares represented at a meeting at which more
than 50% of the outstanding shares are represented, or (ii) more than 50% of the
outstanding shares. In addition, each Fund has adopted certain investment
limitations that may not be changed without shareholder approval. A complete
description of these limitations is included in the Statement of Additional
Information. Each Fund's other investment policies described herein and in the
Statement of Additional Information may be changed by the Board of Trustees of
the relevant Company, without shareholder approval.
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RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. There can be no assurance that any Fund will achieve its investment
objective. In addition, there can be no assurance that the Money Market Fund
will be able to maintain a stable net asset value of $1.00 per share.
The net asset value of each Fund (other than the Money Market Fund) will
fluctuate reflecting fluctuations in the market value of the Funds' 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 are satisfied. The value of equity securities held by a 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 a Fund generally will fluctuate with
changes in the perceived creditworthiness of the issuers of such securities and
interest rates.
GENERAL RISKS OF FOREIGN INVESTING. All of the Funds (including, to a lesser
extent, the America Fund) are authorized to invest in foreign securities.
Investing in foreign securities entails certain risks. The securities of
non-U.S. issuers generally will not be registered with, nor will 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. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. In addition, certain costs attributable to foreign investing, such as
custody charges, are higher than those attributable to domestic investing. The
respective Funds' interest and dividends from foreign issuers may be subject to
non-U.S. withholding taxes, thereby reducing the respective Funds' net
investment income.
In addition, 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 Funds, political or social instability,
or diplomatic or economic developments which could affect the Funds' 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, rates of inflation, rates of savings and capital reinvestment,
resource self-sufficiency and balance of payments positions.
The Funds will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between foreign currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Funds' shares, and also may affect the value of dividends and interest earned by
the Funds and gains and losses realized by them.
SPECIAL RISKS OF THE INFRASTRUCTURE FUND, THE NATURAL RESOURCES FUND AND THE
TELECOMMUNICATION FUND. Because these Funds focus their investments on
particular industries, an investment in any of them may be more volatile than an
investment in an investment company that does not concentrate its investments in
such a manner. Moreover, the value of the shares of each such Fund will be
specially susceptible to factors affecting the industries in which it focuses.
Accordingly, these Funds should not be considered a complete investment program.
While the holdings of the Telecommunications Fund, the Infrastructure Fund and
the Natural Resources Fund normally will include securities of established
suppliers of traditional products and services, each of these Funds may invest
in smaller companies which can benefit from the development of new products and
services. These smaller companies may present greater opportunities for capital
appreciation, but may also involve greater risks than large, established
issuers. Such smaller companies may have limited product lines, markets or
financial resources, and their securities may trade less frequently and in more
limited volume than the securities of larger, more established companies. As a
result, the prices of the
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GT GLOBAL VARIABLE INVESTMENT FUNDS
securities of such smaller companies may fluctuate to a greater degree than the
prices of the securities of other issuers.
INFRASTRUCTURE FUND. Infrastructure industries may be subject to greater
political, environmental and other governmental regulation than many other
industries. The nature of such regulation continues to evolve in both the United
States and foreign countries, and changes in governmental policy and the need
for regulatory approvals may have a material effect on the products and services
offered by companies in the infrastructure industries. Electric, gas, water and
most telecommunications companies in the United States, for example, are subject
to both federal and state regulation affecting permitted rates of return and the
kinds of services that may be offered. Governmental regulation may also hamper
the development of new technologies.
In addition, many infrastructure companies have historically been subject to the
risks attendant to increases in fuel and other operating costs, high interest
costs on borrowed funds, costs associated with compliance with environmental and
other safety regulations and changes in the regulatory climate. Further,
competition is intense for many infrastructure companies. As a result, many of
these companies may be adversely affected in the future and such companies may
be subject to increased share price volatility. In addition, many companies have
diversified into oil and gas exploration and development, and therefore returns
may be more sensitive to energy prices. Other infrastructure companies, such as
water supply companies, are in a highly fragmented industry due to local
ownership. Generally these companies are mature and are experiencing little or
no growth. Changes in prevailing interest rates may also affect the
Infrastructure Fund's share values because prices of equity and debt securities
of infrastructure companies often tend to increase when interest rates decline
and decrease when interest rates rise.
NATURAL RESOURCES FUND. Natural resource industries may be subject to greater
political, environmental and other governmental regulation than many other
industries. The nature of such regulation continues to evolve in both the United
States and foreign countries, and changes in governmental policies and the need
for regulatory approvals may have a material effect on the products and services
offered by companies in the natural resource industries. For example, the
exploration, development and distribution of coal, oil and gas in the United
States are subject to significant federal and state regulation, which may affect
rates of return on such investments and the kinds of services that may be
offered. Governmental regulations may also hamper the development of new
technologies.
In addition, many natural resource companies historically have been subject to
significant costs associated with compliance with environmental and other safety
regulations. Further, competition is intense for many natural resource
companies. As a result, many of these companies may be adversely affected in the
future and the value of the securities issued by such companies may be subject
to increased share price volatility. Such companies may also be subject to
irregular fluctuations in earnings due to changes in the availability of money,
the level of interest rates, and other factors.
The value of securities of natural resource companies will fluctuate in response
to market conditions for the particular natural resources with which the issuers
are involved. The price of natural resources will fluctuate due to changes in
worldwide levels of inventory, and changes, perceived or actual, in production
and consumption. With respect to precious metals, such price fluctuations may be
substantial over short periods of time. In addition, the value of natural
resources may fluctuate directly with respect to various stages of the
inflationary cycle and perceived inflationary trends and are subject to numerous
factors, including national and international politics.
TELECOMMUNICATIONS FUND. Telecommunications industries may be subject to greater
governmental regulation than many other industries, and changes in governmental
policies and the need for regulatory approvals may have a material effect on the
products and services offered by companies in the telecommunications industries.
Telephone operating companies in the United States, for example, are subject to
both federal and state regulation affecting permitted rates of return and the
kinds of services that may be offered. Certain types of companies in the
telecommunications industries are engaged in fierce competition for market share
that could result in increased share price volatility.
SPECIAL RISKS OF EMERGING MARKETS. The Latin America Fund and the Emerging
Markets Fund concentrate their investments in emerging markets. Most of the
other Funds also may invest a portion of their assets in emerging markets.
Investing in emerging markets involves risks relating to potential political and
economic instability within such
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GT GLOBAL VARIABLE INVESTMENT FUNDS
markets and the risks of expropriation, nationalization, confiscation of assets
and property or the imposition of restrictions on foreign investment and on
repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation in any emerging market, the Funds could
lose their entire investment in that market.
Investors are strongly advised to consider carefully the special risks involved
in emerging markets, which are in addition to the usual risks of investing in
developed foreign markets around the world.
Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited. In addition, the securities of non-U.S. issuers generally are not
registered with the SEC, nor are the issuers thereof usually subject to the
SEC's reporting requirements. Accordingly, there may be less publicly available
information about foreign securities and issuers than is available with respect
to U.S. securities and issuers. Foreign companies generally are not subject to
uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to the U.S. companies. A Fund's net
investment income and/or capital gains from its foreign investment activities
also may be subject to non-U.S. withholding taxes.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for a Fund's portfolio securities in such
markets may not be readily available. Section 22(e) of the 1940 Act permits a
registered investment company to suspend redemption of its shares for any
period, during which an emergency exists, as determined by the SEC. Accordingly,
if a Fund believes that appropriate circumstances warrant, it will promptly
apply to the SEC for a determination that an emergency exists within the meaning
of Section 22(e) of the 1940 Act. During the period commencing from a Fund's
identification of such conditions until the date of SEC action, the Fund's
portfolio securities in the affected markets will be valued at fair value as
determined in good faith by or under the direction of the relevant Company's
Board of Trustees.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of a Fund to make intended securities purchases due to settlement
problems could cause the Fund to forego attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result either 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.
SPECIAL RISKS OF PACIFIC REGION COUNTRIES. The New Pacific Fund invests
primarily in equity securities of issuers located in Pacific region countries
other than Japan. Certain of the risks associated with international investments
are heightened for investments in these countries. For example, some of the
currencies of these 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, Hong Kong reverted to Chinese Administration on July 1, 1997. The
long-term effects of this reversion are not known at this time.
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However, a Fund's investments in Hong Kong may now be subject to the same or
similar risks as any investment in China. Investments in Hong Kong may become
subject to expropriation, nationalization or confiscation, in which case New
Pacific 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 economy.
LOWER QUALITY DEBT SECURITIES. There are no credit quality limitations placed on
the debt securities in which the Latin America Fund may invest. In addition, the
Infrastructure Fund, the Natural Resources Fund and the Emerging Markets Fund
may each invest up to 20% of its total assets, the Telecommunications Fund may
invest up to 5% of its assets, and the Strategic Income Fund may invest up to
50% of its assets, in below investment grade debt securities. Finally, each
Global Growth Fund may invest up to 35% of its assets in debt securities rated
no lower than investment grade. Investment grade debt securities are debt
securities rated BBB or higher by S&P or Baa or higher by Moody's or, if
unrated, deemed to be of equivalent quality in the judgment of the Manager.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC and C by S & P or debt securities
rated Ba, B, Caa, Ca or C by Moody's is regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation. While such lower
quality debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions. Debt rated C by Moody's or S&P is the lowest rated debt that is not
in default as to principal or interest, and such issues so rated can be regarded
as having extremely poor prospects of ever attaining any real investment
standing. Lower quality debt securities are also generally considered to be
subject to greater risk than securities with higher ratings with regard to a
deterioration of general economic conditions. These lower quality debt
securities are the equivalent of high yield, high risk bonds, commonly known as
"junk bonds." The Infrastructure Fund and the Natural Resources Fund will not
invest in securities in default as to principal and interest.
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from a Fund. If an issuer exercises these provisions in a declining
interest rate market, a Fund may have to replace the security with a lower
yielding security, resulting in a decreased return for investors. In addition, a
Fund may have difficulty disposing of lower quality securities because they may
have a thin trading market. There may be no established retail secondary market
for many of these securities, and each of the Funds anticipates that such
securities could be sold only to a limited number of dealers or institutional
investors. The lack of a liquid secondary market also may have an
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GT GLOBAL VARIABLE INVESTMENT FUNDS
adverse impact on market prices of such instruments and may make it more
difficult for a Fund to obtain accurate market quotations for purposes of
valuing the Fund's portfolio investments. The Infrastructure Fund, the Natural
Resources Fund, the Telecommunications Fund and the Strategic Income Fund may
also acquire lower quality debt securities during an initial underwriting or
which are sold without registration under applicable securities laws. Such
securities involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower rated debt securities in which the Funds may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession. The Funds may also incur additional expenses to the extent
they are required to seek recovery upon a default in the payment of principal or
interest on portfolio holdings, and the Funds may have limited legal recourse in
the event of a default.
As of December 31, 1997, the Strategic Income Fund had % of its total net
assets invested in debt securities that received a rating from Moody's and %
of its total net assets invested in debt securities that were not so rated. In
addition, the Strategic Income Fund had % of its total net assets in cash and
net receivables. The Strategic Income Fund had the following percentages of its
total net assets invested in rated securities: Aaa-- %, Aa-- %, A-- %,
Baa-- %, Ba-- %, B-- %, Caa-- %, Ca-- %, C-- %. Included under the
unrated category are securities composing % of the Strategic Income Fund's
total net assets which, while unrated, have been determined by the Manager to be
of comparable quality to securities in the following rating categories:
Baa-- %, BA-- %, B-- %. The allocation of the investments of the Strategic
Income Fund by rating on any given date will vary and should not be considered
representative of the Strategic Income Fund's future portfolio composition.
SOVEREIGN DEBT. The Latin America Fund, the Emerging Markets Fund and the
Strategic Income Fund may invest in sovereign debt securities of emerging market
governments, including Brady Bonds. Investments in such securities involve
special risks. The issuer of the debt or the governmental authorities that
control the repayment of the debt may be unable or unwilling to repay principal
or interest when due in accordance with the terms of such debt. Periods of
economic uncertainty may result in the volatility of market prices of sovereign
debt obligations and, in turn, a Fund's net asset value, to a greater extent
than the volatility inherent in domestic fixed income securities.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which the
sovereign debtor may be subject. Emerging market governments could default on
their Sovereign Debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
abroad to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a sovereign debtor's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing sovereign debt could adversely affect a Fund's investments.
Emerging markets are faced with social and political issues, and some of them
have experienced high rates of inflation in recent years and have extensive
internal debt. Among other effects, high inflation and internal debt service
requirements may adversely affect the cost and availability of future domestic
sovereign borrowing to finance governmental programs, and may have other adverse
social, political and economic consequences. Political changes or a
deterioration of a country's domestic economy or balance of trade may affect the
willingness of countries to service their sovereign debt. Although the Manager
intends to manage the respective Funds in a manner that will minimize the
exposure to such risks, there can be no assurance that adverse political changes
will not cause a Fund to suffer a loss of interest or principal on any of its
holdings.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
In recent years, some of the emerging market countries in which the Funds expect
to invest have encountered difficulties in servicing their sovereign debt
obligations. Some of these countries have withheld payments of interest on
and/or principal of sovereign debt. These difficulties have also led to
agreements to restructure external debt obligations -- in particular, commercial
bank loans, typically by rescheduling principal payments, reducing interest
rates and extending new credits to finance interest payments on existing debt.
In the future, holders of emerging market sovereign debt securities may be
requested to participate in similar rescheduling of such debt. Certain emerging
market countries are among the largest debtors to commercial banks and foreign
governments. Currently, Brazil, Mexico and Argentina are the largest debtors
among developing countries. At times certain emerging market countries have
declared moratoria on the payment of principal and interest on external debt;
such a moratorium is currently in effect in certain emerging market countries.
There is no bankruptcy proceeding by which a creditor may collect in whole or in
part sovereign debt on which an emerging market government has defaulted.
The ability of emerging market governments to make timely payments on their
sovereign debt is likely to be influenced strongly by a country's balance of
trade and its access to trade and other international credits. A country whose
exports are concentrated in a few commodities could be vulnerable to a decline
in the international prices of one or more of such commodities. Increased
protectionism on the part of a country's trading partners could also adversely
affect its exports. Such events could diminish a country's trade account
surplus, if any. To the extent that a country receives payment for its exports
in currencies other than hard currencies, its ability to make hard currency
payments could be affected.
Investors should also be aware that certain sovereign debt instruments in which
the Funds may invest involve great risk. As noted above, sovereign debt
obligations issued by emerging market governments generally are deemed to be the
equivalent in terms of quality to securities rated below investment grade by
Moody's and S&P. Such securities are regarded as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligations and involve major risk exposure to
adverse conditions. Some of such securities with respect to which the issuer
currently may not be paying interest or may be in payment default, may be
comparable to securities rated D by S&P or C by Moody's. A Fund may have
difficulty disposing of and valuing certain sovereign debt obligations because
there may be a limited trading market for such securities. Because there is no
liquid secondary market for many of these securities, the Funds anticipate that
such securities could be sold only to a limited number of dealers or
institutional investors.
RISKS OF MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The yield characteristics
of mortgage-backed and asset-backed securities differ from those of traditional
bonds. Among the major differences are that interest and principal payments are
made more frequently (usually monthly) and that principal may be prepaid at any
time because the underlying mortgage loans or other assets generally may be
prepaid at any time. Generally, prepayments on fixed-rate mortgage loans will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. Mortgage-backed and asset-backed securities may also
decrease in value as a result of increases in interest rates and, because of
prepayments, may benefit less than other bonds from declining interest rates.
Reinvestments of prepayments may occur at lower interest rates than the original
investment, thus adversely affecting a Fund's yield. Actual prepayment
experience may cause the yield of a mortgage-backed security to differ from what
was assumed when the Fund purchased the security. The market for privately
issued mortgage-backed and asset-backed securities is smaller and less liquid
than the market for U.S. government mortgage-backed securities.
CMO classes may be specially structured in a manner that provides any of a wide
variety of investment characteristics, such as yield, effective maturity and
interest rate sensitivity. As market conditions change, however, and especially
during periods of rapid or unanticipated changes in market interest rates, the
attractiveness of some CMO classes and the ability of the structure to provide
the anticipated investment characteristics may be significantly reduced. These
changes can result in volatility in the market value, and in some instances
reduced liquidity, of the CMO class.
Certain classes of CMOs are structured in a manner that makes them extremely
sensitive to changes in prepayment rates. Interest-only ("IO") and
principal-only ("PO") classes are examples of this. IOs are entitled to receive
all or a portion of the interest, but none (or only a nominal amount) of
Prospectus Page 36
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
the principal payments, from the underlying mortgage assets. If the mortgage
assets underlying an IO experience greater than anticipated principal
prepayments, then the total amount of interest payments allocable to the IO
class, and therefore the yield to investors, generally will be reduced. In some
instances, an investor in an IO may fail to recoup all of his or her initial
investment, even if the security is government guaranteed or is considered to be
of the highest credit quality. Conversely, PO classes are entitled to receive
all or a portion of the principal payments, but none of the interest, from the
underlying mortgage assets. PO classes are purchased at substantial discounts
from par, and the yield to investors will be reduced if principal payments are
slower than expected. Some IOs and POs, as well as other CMO classes, are
structured to have special protections against the effects of prepayments. These
structural protections, however, normally are effective only within certain
ranges of prepayment rates and thus will not protect investors in all
circumstances.
Inverse floating rate CMO classes also may be extremely volatile. These classes
pay interest at a rate that decreases when a specified index of market rates
increases.
During 1994, the value and liquidity of many mortgage-backed securities declined
sharply due primarily to increases in interest rates. There can be no assurance
that such declines will not recur. The market value of certain mortgage-backed
securities, including IO and PO classes of mortgage-backed securities, can be
extremely volatile and these securities may become illiquid.
RISKS OF THE MONEY MARKET FUND. In periods of declining interest rates, the
Money Market Fund's yield will tend to be somewhat higher than prevailing market
rates; conversely, in periods of rising interest rates, the Money Market Fund's
yield will tend to be somewhat lower than those rates. Also, when interest rates
are falling, the new money flowing into the Money Market Fund from the net sale
of its shares likely will be invested by the Fund in instruments producing lower
yields than the balance of the securities held by the Fund's portfolio, thereby
reducing its yield. The opposite generally will be true in periods of rising
interest rates. The Money Market Fund is designed to provide maximum current
income consistent with the liquidity and safety afforded by investment in a
portfolio of high quality money market instruments; the Money Market Fund's
yield may be lower than that produced by funds investing in lower quality and/or
longer-term securities.
ILLIQUID SECURITIES. Each Fund may invest up to 15% (10% in the case of the
Money Market Fund) of its net assets in securities for which no readily
available market exists, so-called "illiquid securities." The Money Market Fund
may invest up to 10% of its net assets in illiquid securities. The
Infrastructure Fund, the Natural Resources Fund, the Telecommunications Fund and
the Latin America Fund may invest in joint ventures, cooperatives, partnerships
and state enterprises which are illiquid (collectively, "Special Situations").
The Manager believes that investments by these Funds in Special Situations could
enable them to achieve capital appreciation substantially exceeding the
appreciation each Fund would realize if it did not make such investments.
However, in order to limit investment risk, each of these Funds will invest no
more than 5% of its total assets in Special Situations.
Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid restricted securities often sell
at a price lower than similar securities that are not subject to restrictions on
resale.
- --------------------------------------------------------------------------------
CURRENCY, OPTIONS AND
FUTURES STRATEGIES
- --------------------------------------------------------------------------------
Each Fund (except the Money Market Fund) may use forward currency contracts,
futures contracts, options on securities, options on indices, options on
currencies and options on futures contracts to attempt to hedge against the
overall level of investment and currency risk normally associated with the Fund.
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
Prospectus Page 37
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
securities). The Funds may enter into such investments up to the full value of
their portfolio assets. See "Options, Futures and Forward Currency Strategies"
in the Statement of Additional Information.
To attempt to increase return, the Growth & Income Fund, the Strategic Income
Fund, the Global Government Income Fund and the U.S. Government Income 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. Each of these Funds is also authorized to write put options to
attempt to enhance return, although they don't have the current intention of so
doing.
To attempt to hedge against adverse movements in exchange rates between
currencies, each Fund (except the Money Market Fund) may enter into forward
currency contracts for the purchase or sale of a specified currency at a
specified future date. Such contracts may involve the purchase or sale of a
foreign currency against the U.S. dollar or may involve two foreign currencies.
Each such Fund may enter into forward currency contracts either with respect to
specific transactions or with respect to that Fund's portfolio positions. Each
Fund also may purchase and sell put and call options on currencies to hedge
against movements in exchange rates.
In addition, each Fund (except the Money Market 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. Each such Fund, except for the
Strategic Income Fund, the Global Government Income Fund and the U.S. Government
Income Fund, also may purchase and sell put and call options on stock indexes to
hedge against overall fluctuations in the securities markets generally or in a
specific market sector.
Further, each Fund (except the Strategic Income Fund, the Global Government
Income Fund, the U.S. Government Income Fund and the Money Market Fund) may sell
stock index futures contracts and may purchase put options or write call options
on such futures contracts to protect against a general stock market decline or a
decline in a specific market sector that could affect adversely the Fund's
holdings. Such Funds also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. Each Fund (except the Money Market 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.
These practices may result in the loss of principal under certain conditions. In
addition, certain provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), have the effect of limiting the extent to which the Funds may
enter into forward contracts or futures contracts or engage in options
transactions. See "Taxes" in the Statement of Additional Information.
Although the Funds might not employ any of the foregoing strategies, the use of
foreign currency transactions, options and futures involve certain risks which
include: (1) dependence on the Manager's ability to predict movements in the
prices of individual securities, fluctuations in the general securities markets
or in the appropriate market sector and movements in interest rates and currency
markets; (2) imperfect correlation or even no correlation between movements in
the price of options, forward contracts, futures contracts or options thereon
and movements in the price of the currency or security hedged or used for cover;
(3) the fact that skills and techniques needed to trade options, futures
contracts and options thereon or to use forward currency contracts are different
from those needed to select the securities in which the Funds invests; (4) lack
of assurance that a liquid secondary market will exist for any particular
option, futures contract or option thereon at any particular time; (5) the
possible loss of principal under certain conditions; and (6) the possible
inability of a Fund to purchase or sell a portfolio security at a time when it
would otherwise be favorable for it to do so, or the possible need for a Fund to
sell a security at a disadvantageous time, due to the need for a Fund to
maintain "cover" or to set aside securities in connection with hedging
transactions.
SWAPS, CAPS, FLOORS AND COLLARS. The Strategic Income Fund may enter into
interest rate, currency and index swaps, and purchase or sell related caps,
floors and collars and other derivative instruments. The Strategic Income Fund
expects to enter into these transactions primarily to preserve a return or
spread on a particular investment or portion of its portfolio, to protect
against currency fluctuations, as a technique for managing the
Prospectus Page 38
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
portfolio's duration (i.e., the price sensitivity to changes in interest rates)
or to protect against any increase in the price of securities it anticipates
purchasing at a later date. The Strategic Income Fund intends to use these
transactions as hedges, and will not sell interest rate caps or floors if it
does not own securities or other instruments providing an income stream roughly
equivalent to what it may become obligated to pay.
Interest rate swaps involve the exchange by the Strategic Income Fund with
another party of their respective commitments to pay or receive interest (for
example, an exchange of floating rate payments for fixed rate payments) with
respect to a notional amount of principal. A currency swap is an agreement to
exchange cash flows on a notional amount based on changes in the values of the
reference indices.
The purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling the cap to the extent that a specified
index exceeds a predetermined interest rate. The purchase of an interest rate
floor entitles the purchaser to receive payments of interest on a notional
principal amount from the party selling the interest rate floor to the extent
that a specified index falls below a predetermined interest rate or amount. A
collar is a combination of a cap and a floor that preserves a certain return
with a predetermined range of interest rates or values.
- --------------------------------------------------------------------------------
HOW TO INVEST
- --------------------------------------------------------------------------------
Shares of the Funds currently are offered to Separate Accounts pursuant to the
insurance laws of the Participating Insurance Companies' respective
jurisdictions.
The owners of VA Contracts may allocate premium payments among the general
accounts of the Participating Insurance Companies and the divisions of the
Separate Accounts that correspond to the Funds. Individuals may not pay variable
annuity premiums directly to the Funds. The Separate Accounts are registered
with the SEC as unit investment trusts, each having a prospectus of its own.
Shares of the Funds are offered and redeemed at their respective net asset
values without the addition of any sales load or redemption charge next
determined following receipt by a Separate Account of premium payments,
surrender requests under policies, loan payments, transfer requests, and similar
or related transactions. The Funds do not issue share certificates. See
"Calculation of Net Asset Value."
- --------------------------------------------------------------------------------
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund calculates its net asset value as of 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) each Business Day. Each Fund's net asset value per share is computed by
determining the value of its total assets, subtracting all of its liabilities,
and dividing the result by the total number of shares outstanding at such time.
Equity securities held by the Funds are valued at the last sale price on the
exchange or in the over-the-counter ("OTC") market in which such securities are
primarily traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. Long-term
debt obligations are valued at the mean of representative quoted bid or asked
prices for such securities or, if such prices are not available, at prices for
securities of comparable maturity, quality and type; however, when the Manager
deems
Prospectus Page 39
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
it appropriate, prices obtained from a bond pricing service will be used.
Short-term debt investments are amortized to maturity based on their cost,
adjusted for foreign exchange translation and market fluctuations, provided such
valuations represent fair value. When market quotations for futures and options
positions held by a Fund are readily available, those positions are valued based
upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under
direction of the respective Company's Board of Trustees. Securities and other
assets quoted in foreign currencies are valued in U.S. dollars based on the
prevailing exchange rates on that day.
Certain of the Funds' portfolio securities from time to time may be listed
primarily on foreign exchanges that trade on days when the NYSE is closed (such
as Saturday). As a result, the net asset value of a Fund's shares may be
affected significantly by such trading on days when shareholders cannot purchase
or redeem shares of that Fund.
The Money Market Fund uses the amortized cost method of valuing its investments,
pursuant to which the market value of an instrument is approximated by
amortizing the difference between the acquisition cost and value at maturity of
the instrument on a straight-line basis over its remaining life. All cash,
receivables and current payables are carried at their face value.
The Money Market Fund intends to use its best efforts to maintain its net asset
value at $1.00 per share. There can be no assurance that the Money Market Fund
will be able to maintain a stable price of $1.00 per share.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. The Money Market Fund declares dividends from
net investment income on each day it determines its net asset value, which are
payable to shareholders of record as of the close of regular trading on the NYSE
on the preceding business day. Dividends are usually paid on the last calendar
day of each month. The Money Market Fund's net investment income consists of
accrued interest and earned discount (including both original issue and market
discounts), less amortization of market premium and applicable expenses, and is
calculated immediately prior to the determination of its net asset value per
share. The Money Market Fund generally distributes to its shareholders any net
short-term capital gain annually after the end of its fiscal year on December 31
but may make earlier distributions of that gain if necessary to maintain its net
asset value per share at $1.00 or to avoid income or excise taxes. The Money
Market Fund does not expect to realize long-term capital gain.
The Strategic Income Fund, the Global Government Income Fund and the U.S.
Government Income Fund declare and pay dividends from net investment income, if
any, and may distribute net short-term capital gain, if any, monthly. The Growth
& Income Fund declares and pays dividends from net investment income, if any,
and may pay net short-term capital gain, if any, quarterly. Each other Fund
declares and pays dividends from net investment income, if any, annually.
All Funds (except the Money Market Fund) also annually distribute to their
shareholders substantially all of their net capital gain (i.e., the excess of
net long-term capital gain over short-term capital loss) and net gains from
foreign currency transactions, if any. Dividends and other distributions from a
Fund are paid in additional shares of that Fund at net asset value per share,
unless the Transfer Agent (defined below) is instructed otherwise.
TAXES. Each Fund intends to continue to qualify for treatment as a regulated
investment company ("RIC") under the Code. In each taxable year that a Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transactions and net short-term capital gain) and net capital gain that it
distributes to its shareholders. Each Fund will annually distribute to its
shareholders at least 90% of its investment company taxable income.
Prospectus Page 40
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
Fund shares are offered only to Separate Accounts established to fund VA
Contracts. Under the Code, no tax is imposed on an insurance company with
respect to income of a qualifying separate account properly allocable to the
value of eligible variable annuity or variable life insurance contracts.
Each Fund intends to continue to comply with the diversification requirements
imposed by section 817(h) of the Code and the regulations thereunder. These
requirements, which are in addition to the diversification requirements imposed
on the Funds by the 1940 Act and Subchapter M of the Code, place certain
limitations on the amount of assets of each Separate Account -- and, because
section 817(h) and those regulations treat each Fund's assets as assets of the
related Separate Accounts, of each Fund -- that can be invested in securities of
a single issuer.
Specifically, the regulations provide in part that, except as permitted by the
"safe harbor" described below, as of the end of each calendar quarter or within
30 days thereafter, no more than 55% of the total assets of a Fund may be
invested in the securities of any one issuer. For this purpose, all securities
of the same issuer are consolidated, and while each U.S. government agency and
instrumentality is considered a separate issuer, a particular foreign government
and its agencies, instrumentalities and political subdivisions are all
considered to be the same issuer. Section 817(h) provides, as a safe harbor,
that adequate diversification will exist for a separate account if the
diversification requirements under Subchapter M are satisfied and no more than
55% of the value of the separate account's total assets are cash and cash items,
government securities and securities of other RICs. Failure of a Fund to satisfy
the section 817(h) requirements would result in treatment of the VA Contract
holders other than as described in the applicable VA Contracts prospectus.
The foregoing is only a summary of some of the important federal income tax
considerations generally affecting the Funds and the Separate Accounts. For
further information, see the Statement of Additional Information and the
applicable VA Contract prospectus.
Prospectus Page 41
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
Each Company's Board of Trustees has overall responsibility for the operation of
the Funds, organized as series of that Company. Pursuant to such responsibility,
the Board of each Company has approved contracts with various financial
organizations to provide certain services required by its Funds. See "Trustees
and Executive Officers" in the Statement of Additional Information for a
complete description of the Trustees of the Funds.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by Chancellor LGT
Asset Management, Inc. (the "Manager") as each Fund's investment manager and
administrator include, but are not limited to, determining the composition of
each Fund's investment 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 each Fund's operation.
For these services, the Money Market Fund pays the Manager an investment
management and administration fee at the annualized rate of 0.50% of that Fund's
average daily net assets. The America Fund, the Strategic Income Fund, the
Global Government Income Fund and the U.S. Government Income Fund each pays the
Manager an investment management and administration fee at the annualized rate
of 0.75% of the Fund's average daily net assets. Each of the other Funds pays
the Manager an investment management and administration fee at the annualized
rate of 1.00% of its average daily net assets. All fees are computed daily and
paid monthly. These rates are higher than those paid by most mutual funds.
The Manager also serves as each Fund's pricing and accounting agent. For these
services the Manager receives a fee at an annual rate derived by applying 0.03%
to the first $5 billion of assets of GT Global 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 Mutual Funds. The Manager and its worldwide asset management affiliates have
provided investment management and/or administration services to institutional,
corporate and individual clients around the world since 1969. The U.S. offices
of the Manager are located at 50 California Street, 27th Floor, San Francisco,
CA 94111 and 1166 Avenue of the Americas, New York, NY 10036.
The Manager and its worldwide affiliates, including LGT Bank in Liechtenstein,
compose Liechtenstein Global Trust. Liechtenstein Global Trust is a provider of
global asset management and private banking products and services to individual
and institutional investors. Liechtenstein Global Trust is controlled by the
Prince of Liechtenstein Foundation, which serves as a parent organization for
the various business enterprises of the Princely Family of Liechtenstein. The
principal business address of the Prince of Liechtenstein Foundation is
Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of December 31, 1997, the Manager and its worldwide affiliates managed
approximately $ billion in assets. In the United States, as of December 31,
1997, the Manager managed or administered approximately $ billion of assets of
the GT Global Mutual Funds. As of December 31, 1997, assets entrusted to
Liechtenstein Global Trust totaled approximately $ 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 Mutual Funds, the Manager employs a team approach, taking
advantage of its investment resources around the world in seeking each Fund's
investment objective.
Prospectus Page 42
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
The investment professionals primarily responsible for the portfolio management
of each Fund are as follows:
NEW PACIFIC FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Peter Eadon-Clarke Portfolio Manager since Chief Investment Officer for the Pacific Rim (excluding Japan) for
Hong Kong 1997 LGT Asset Management Ltd. (Hong Kong), an affiliate of the Manager,
and Portfolio Manager for the Manager since 1992. Prior thereto,
Mr. Eadon-Clarke was an Associate Director at HSBC Asset Management
in Hong Kong from 1984 to 1992. From 1980 to 1984, Mr. Eadon-Clarke
was a Senior Fund Manager for Colonial Mutual Life (London).
</TABLE>
EUROPE FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Anna Powell Portfolio Manager since Portfolio Manager for LGT Asset Management PLC (London) ("LGT Asset
London 1995 Management"), an affiliate of the Manager, and the Manager since
1995. From 1989 to 1995, Ms. Powell was a Portfolio Manager for
Robert Fleming & Co., Ltd. (London).
</TABLE>
LATIN AMERICA FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Allan Conway Portfolio Manager since Mr. Conway joined the Manager and LGT Asset Management in January
London 1997 1997 as Head of the Global Emerging Markets Equity team. From 1992
to 1997, Mr. Conway was director of International Equities at
Hermes Investment Management ("Hermes"), and from 1982 to 1992 was
a Portfolio Manager, and eventually Head of Overseas Equities, at
Provident Mutual.
David Manuel Portfolio Manager since Mr. Manuel has been a Portfolio Manager for the Manager and LGT
London 1997 Asset Management since November 1997. From 1987 to 1997, he was an
Investment Analyst and Portfolio Manager and, starting in 1994,
Head of Latin American Equities for Abbey Life Investment Services
Ltd. (London).
</TABLE>
Prospectus Page 43
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Allan Conway Portfolio Manager since Mr. Conway joined the Manager and LGT Asset Management in January
London 1997 1997 as Head of the Global Emerging Markets Equity team. From 1992
to 1997, Mr. Conway was director of International Equities at
Hermes Investment Management ("Hermes"), and from 1982 to 1992 was
a Portfolio Manager, and eventually Head of Overseas Equities, at
Provident Mutual.
Hugh Hunter Portfolio Manager since Mr. Hunter has been a Portfolio Manager for the Manager and LGT
London 1997 Asset Management since June 1997. From 1987 to 1997, he was Head of
Quantitative Emerging Strategy at ING-Barings (Hong Hong)
("Barings").
Aziz Minhas Portfolio Manager since Mr. Minhas has been a Portfolio Manager for the Manager and LGT
London 1997 Asset Management since December 1997. Prior thereto, he was an
Investment Analyst and then a Senior Investment Analyst with Abu
Dhabi Investment Authority (London) from 1990 to 1997.
Darren Read Portfolio Manager since Mr. Read has been a Portfolio Manager for the Manager and LGT Asset
London 1997 Management since May 1997. From 1995 to 1997, Mr. Read was a Senior
Investment Analyst at Hermes responsible for stock selection and
strategic asset allocation input in a number of emerging markets.
Prior thereto, Mr. Read was a Chartered Accountant in the Financial
Markets Division of Arthur Andersen from 1991 to 1995.
Christine Rowley Portfolio Manager since Ms. Rowley has been a Portfolio Manager for the Manager, LGT Asset
London 1997 Management and LGT Asset Management Ltd. (Hong Kong) since 1992. In
this position, Ms. Rowley managed Asian emerging market portfolios
and, commencing in 1997, global emerging market portfolios. Prior
thereto, Ms. Rowley was an Analyst with the Bank of England from
1989 to 1990.
Mark Thorogood Portfolio Manager since Mr. Thorogood joined the Manager and LGT Asset Management in May
London 1997 1997 as a Portfolio Manager. Prior thereto, he worked for Barings
from 1994 to 1997 as a proprietary Trader. From 1987 to 1994, Mr.
Thorogood was at Provident Mutual, first as an Analyst, and then as
a Portfolio Manager covering the Japanese and Asian Equity Markets.
</TABLE>
Prospectus Page 44
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
AMERICA FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Brent W. Clum* Portfolio Manager since Portfolio Manager for the Manager since 1997. Senior Equity Research
New York 1997 Analyst for the Manager from 1995 to 1997. Prior thereto, Mr. Clum
was a Vice President and Analyst at T. Rowe Price from 1990 to
1995. Mr. Clum is a Chartered Financial Analyst and a Certified
Public Accountant.
</TABLE>
INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Brian T. Nelson* Portfolio Manager since Portfolio Manager for the Manager since September 1997. Senior
San Francisco 1997 Equity Research Analyst for the Manager from 1995 to September
1997. From 1988 to 1995, Mr. Nelson was an Equity Research Analyst
and eventually a Co-Portfolio Manager for Franklin Resources, Inc.
(San Mateo, CA).
</TABLE>
NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Derek H. Webb Portfolio Manager since Head of the Theme Funds since 1996 and Portfolio Manager for the
San Francisco Fund inception in 1995 Manager since 1994. Prior thereto, Mr. Webb was an Analyst for the
Manager from 1992 to 1994.
</TABLE>
TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Michael J. Mahoney Portfolio Manager since Portfolio Manager for the Manager since 1993. From 1991 to 1993, Mr.
San Francisco Fund inception in 1993 Mahoney was an Investment Analyst for the
Manager.
</TABLE>
- --------------
*Employees of Chancellor Capital prior to October 31, 1996.
Prospectus Page 45
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Paul Griffiths Portfolio Manager since Portfolio Manager for LGT Asset Management and the Manager since
London 1995 1994; from 1993 to 1994, Global Bond Fund Manager, Lazard
Investors; from 1991 to 1993, Global Bond Fund Manager, Sanwa
International PLC.
Nicholas S. Train Portfolio Manager since Head of Investments for the United Kingdom and Europe for the
London Fund inception in 1993 Manager since 1997. Prior thereto, Mr. Train was a Portfolio
Manager for the Manager since 1991.
</TABLE>
STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Michael Mabbutt Portfolio Manager since Head of Emerging Market Debt for the Manager since April 1997, and
London 1997 Portfolio Manager for LGT Asset Management since December 1996.
Prior thereto, Mr. Mabbutt was a Senior Portfolio Manager for
Emerging Market Debt at Baring Asset Management (London) from 1992
to December 1996. From 1986 to 1991, Mr. Mabbutt was a fixed income
Investment Manager for Norwich Union Life Insurance Society.
Cheng-Hock Lau* Portfolio Manager since Mr. Lau has been Chief Investment Officer for Global Fixed Income
New York 1996 for the Manager since November 1996, and was a Senior Portfolio
Manager for global/international fixed income for the Manager from
July 1995 to November 1996. Prior thereto, Mr. Lau was a Senior
Vice President and Senior Portfolio Manager for Fiduciary Trust
Company International from 1993 to 1995, and Vice President at
Bankers Trust Company from 1991 to 1993.
</TABLE>
INTERNATIONAL FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Roger Yates Portfolio Manager since Mr. Yates has been Global Chief Investment Officer for the Manager
London 1996 since October 1997. He was International Chief Investment Officer
for the Manager from September 1996 to October 1997. From 1994 to
1996, Mr. Yates was the Chief Investment Officer and Portfolio
Manager for Europe and the United Kingdom for the Manager. From
1988 to 1994, Mr. Yates was an Investment Manager for Morgan
Grenfell Asset Management.
Michael Lindsell Portfolio Manager since Head of Investment Strategy for Global Equities for the Manager
London 1997 since 1996. From 1992 to 1996, Mr. Lindsell was Chief Investment
Officer for Japan for LGT Asset Management Ltd. (Hong Kong) as well
as Portfolio Manager for the Manager. Prior thereto, Mr. Lindsell
was a Director of Warburg Asset Management (Tokyo).
</TABLE>
- --------------
*Employee of Chancellor Capital prior to October 31, 1996.
Prospectus Page 46
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
John W. Geissinger* Portfolio Manager since Mr. Geissinger has been a Senior Portfolio Manager and Head of the
New York 1997 Investment Grade Fixed Income Group for the Manager since 1993.
Prior thereto, Mr. Geissinger was a Portfolio Manager at the Putnam
Companies from 1987 until 1993.
</TABLE>
GLOBAL GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Cheng-Hock Lau* Portfolio Manager since Mr. Lau has been Chief Investment Officer for Global Fixed Income
New York 1996 for the Manager since November 1996, and was a Senior Portfolio
Manager for global/international fixed income for the Manager from
July 1995 to November 1996. Prior thereto, Mr. Lau was a Senior
Vice President and Senior Portfolio Manager for Fiduciary Trust
Company International from 1993 to 1995, and Vice President at
Bankers Trust Company from 1991 to 1993.
Michael Mabbutt Portfolio Manager since Head of Emerging Market Debt for the Manager since April 1997, and
London 1997 Portfolio Manager for LGT Asset Management since December 1996.
Prior thereto, Mr. Mabbutt was a Senior Portfolio Manager for
Emerging Market Debt at Baring Asset Management (London) from 1992
to December 1996. From 1986 to 1991, Mr. Mabbutt was a fixed income
Investment Manager for Norwich Union Life Insurance Society.
</TABLE>
MONEY MARKET FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
John W. Geissinger* Portfolio Manager since Mr. Geissinger has been a Senior Portfolio Manager and Head of the
New York 1997 Investment Grade Fixed Income Group for the Manager since 1993.
Prior thereto, Mr. Geissinger was a Portfolio Manager at the Putnam
Companies from 1987 until 1993.
Heidi Koch* Portfolio Manager since Portfolio Manager for the Manager since 1991.
New York 1997
</TABLE>
- --------------
*Employees of Chancellor Capital prior to October 31, 1996.
Prospectus Page 47
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
In placing orders for the Funds' securities transactions, the Manager seeks to
obtain the best net results. Brokerage transactions for the Funds may be
executed through affiliates of Liechtenstein Global Trust. High portfolio
turnover (over 100%) involves correspondingly greater brokerage commissions and
other transaction costs that the Funds will bear directly and could result in
the realization of net capital gains which would be taxable when distributed to
shareholders.
FUND EXPENSES. Each Fund pays all of its respective expenses not assumed by the
Manager and other agents.
The Manager has undertaken to limit the total operating expenses (exclusive of
brokerage commissions, interest, taxes and extraordinary items) of each of the
New Pacific Fund, the Europe Fund, the International Fund, the Emerging Markets
Fund, the Latin America Fund, the Infrastructure Fund, the Natural Resources
Fund, the Telecommunications Fund, and the Growth & Income Fund to 1.25% of
their respective net assets. In addition, the Manager has undertaken to limit
the total operating expenses (exclusive of brokerage commissions, interest,
taxes and extraordinary items) of each of the America Fund, the Strategic Income
Fund, the Global Government Income Fund, and the U.S. Government Income Fund to
1.00% of their respective net assets. Likewise, the Manager has undertaken to
limit the total operating expenses (exclusive of brokerage commissions,
interest, taxes and extraordinary items) of the Money Market Fund to 0.75% of
its net assets. These undertakings may be changed or eliminated in the future.
From time to time, the Manager in its sole discretion may waive its fees and/or
voluntarily assume certain Fund expenses. All general expenses of each Company
and joint expenses of the Funds (see "Other Information") are allocated among
the Funds on a basis deemed fair and equitable.
Prospectus Page 48
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
OTHER INFORMATION
- --------------------------------------------------------------------------------
DIVERSIFICATION STANDARDS. Each of the following Funds is a series of a
"diversified" investment company under the 1940 Act: the New Pacific Fund, the
Europe Fund, the America Fund, the Infrastructure Fund, the Natural Resources
Fund, the Telecommunications Fund, the U.S. Government Income Fund, the
International Fund, the Emerging Markets Fund, and the Money Market Fund. This
means that with respect to 75% of each Fund's total assets, no more than 5% will
be invested in the securities of any one issuer, and each Fund will purchase no
more than 10% of the voting securities of any one issuer.
Each of the following Funds is a series of a "non-diversified" investment
company under the 1940 Act: the Latin America Fund, the Growth & Income Fund,
the Strategic Income Fund and the Global Government Income Fund. Each such Fund,
however, intends to continue to qualify as a regulated investment company for
federal income tax purposes. This means, in general, that more than 5% of the
Fund's total assets may be invested in securities of one issuer but only if, at
the close of each quarter of the Fund's taxable year, the aggregate amount of
such holdings does not exceed 50% of the value of its total assets and no more
than 25% of the value of its total assets is invested in the securities of a
single issuer. Because each such Fund is permitted to invest a greater
proportion of its assets in the securities of a smaller number of issuers, each
such Fund may be subject to greater investment and credit risk with respect to
its portfolio than a Fund that is more broadly diversified.
ORGANIZATION OF THE COMPANIES. Each Company is organized as a Massachusetts
business trust and is registered with the SEC as an open-end management
investment company. Each Company and each Fund, except the Telecommunications
Fund, the Emerging Markets Fund, the International Fund, the Infrastructure Fund
and the Natural Resources Fund, commenced operations on February 10, 1993. The
Telecommunications Fund commenced operations on October 18, 1993. The Emerging
Markets Fund and the International Fund commenced operations on July 5, 1994.
The Infrastructure Fund and the Natural Resources Fund commenced operations on
January 31, 1995.
From time to time, each Company's Board of Trustees may, in its discretion,
establish additional series and issue shares of additional series of the
Company's shares of beneficial interest. Shares of each Fund are entitled to one
vote per share (with proportional voting for fractional shares). Shareholders
have no preemptive or conversion rights.
On any matter submitted to a vote of shareholders, shares of each Fund will be
voted by a Fund's shareholders individually when the matter affects the specific
interest of that Fund only, such as approval of its investment management
arrangements. The shares of each Fund and of the Company's other Funds will be
voted in the aggregate on other matters, such as the election of Trustees and
ratification of that Company's Board of Trustees' selection of the Company's
independent accountants. In accordance with current law, the Funds anticipate
that when a Participating Insurance Company issues a VA Contract that invests in
a Company, VA Contract holders will be asked for instructions on how to vote,
and shares will be voted by a Participating Insurance Company in accordance with
the voting instructions received. For further information on voting rights, see
the VA Contract prospectus.
Normally there will be no annual meetings of shareholders in any year, except as
required under the 1940 Act. Either Company would be required to hold a
shareholders meeting in the event that at any time less than a majority of that
Company's Trustees holding office had been elected by shareholders. Trustees
shall continue to hold office until their successors are elected and have
qualified. Shares of either 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 Trustees can elect all the Trustees. A Trustee may be removed upon a
majority vote of the shareholders qualified to vote in the election.
Shareholders holding 10% of a Company's outstanding voting shares may call a
meeting of shareholders for the purpose of voting upon the question of removal
of any Trustee or for any other purpose. The 1940 Act requires each Company to
assist shareholders in calling such a meeting.
Prospectus Page 49
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
Pursuant to each Company's Declaration of Trust, each Company may issue an
unlimited number of shares for each of its Funds. Each share of a Fund
represents an interest in that Fund only, has no par value, 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 Trustees.
Effective July 5, 1994, the name of "G.T. Global: Variable Pacific Fund" was
changed to "G.T. Global: Variable New Pacific Fund" and its investment policy
was revised by the Board of Trustees to remove Japan from the Fund's Primary
Investment Area.
Currently, owners of VA Contracts issued by the Participating Insurance
Companies for which shares of one or more Funds are the investment vehicle will
receive from such Participating Insurance Company unaudited semi-annual
financial statements and audited year-end financial statements certified by the
Fund's independent accountants. Each report will show the investments owned by
the Fund and the market values thereof as determined by the Trustees and will
provide other information about the Fund and its operations.
PERFORMANCE INFORMATION. The Funds, from time to time, may include information
on their investment results and/or comparisons of their investment results to
various unmanaged indices or results of other mutual funds or groups of mutual
funds whose shares are offered to insurance company separate accounts, in
advertisements, sales literature or reports furnished to present or prospective
shareholders.
In such materials, the Funds may quote their average annual total return
("Standardized Return"). Standardized Return 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. If a one-, five-and/or ten-year
period has not yet elapsed, data will be provided as of the end of a shorter
period corresponding to the life of a Fund. Standardized Return assumes the
reinvestment of all dividends and other distributions.
In addition, in order to more completely represent the Funds' performance or
more accurately compare such performance to other measures of investment return,
the Funds also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation) and
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
The Strategic Income Fund, the Global Government Income Fund and the U.S.
Government Income Fund also may refer in advertising and promotional materials
to their respective yields, which will fluctuate over time. A Fund's yield shows
the rate of income that it earns on its investments, expressed as a percentage
of the public offering price of its shares. A Fund calculates yield by
determining the interest income it earned from its portfolio investments for a
specified thirty-day period (net of expenses), dividing such income by the
average number of shares outstanding, and expressing the result as an annualized
percentage based on the public offering price at the end of that thirty-day
period. Yield accounting methods differ from the methods used for other
accounting purposes. Accordingly, a Fund's yield may not equal the dividend
income actually paid to investors or the income reported in the Fund's financial
statements.
From time to time the Money Market Fund may advertise its "yield" and "effective
yield" in advertisements or promotional materials. The "yield" of the Money
Market Fund refers to the income generated by an investment in the Fund over a
seven-day period (which period will be stated in the advertisement). This income
is then "annualized." That is, the amount of income generated by the investment
during that week is assumed to be generated each week over a 52-week period and
is shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The "effective yield" will be slightly higher than
the "yield" because of the compounding effect of this assumed reinvestment. The
Statement of Additional Information describes the methods used to calculate the
Money Market Fund's yield and effective yield.
In addition to "yield" and "effective yield," advertisements or promotional
materials also may include other performance data of the Money Market Fund which
may consist of: (1) the actual return or total income (including realized net
Prospectus Page 50
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
short-term capital gain, if any) generated by a hypothetical investment in the
Fund year-by-year since the commencement of the Fund's operations; (2) the
compounded return or total income generated by a hypothetical investment in the
Fund year by year for the same period, assuming reinvestment of all dividends
and any other distributions; and (3) the cumulative return (or overall change in
account value) of a hypothetical investment in the Fund year by year over the
same period, also assuming reinvestment of all dividends and any other
distributions.
The Funds' performance data reflects past performance and is not necessarily
indicative of future results. The Funds' investment results will vary from time
to time depending upon market conditions, the composition of their portfolio and
their operating expenses. Yield and performance information of any Fund will not
be compared with such information for funds that offer their shares directly to
the public, because Fund data do not reflect charges imposed by a Participating
Insurance Company on the VA Contracts. The effective yield and total return for
a Fund should be distinguished from the rate of return of a corresponding
division of a separate account of such Participating Insurance Company, which
rate will reflect the deduction of additional charges, including mortality and
expense risk charges, and will therefore be lower. Accordingly, performance
figures for a Fund will only be advertised if comparable performance figures for
the corresponding division of the separate account are included in the
advertisement. VA Contract holders should consult their Participating Insurance
Company's VA Contract prospectus for further information. Each Fund's results
also should be considered relative to the risks associated with its investment
objectives and policies.
Calculations of a Fund's yield or performance information may reflect any
undertaking that may be in effect. See "Management" and "Investment Results" in
the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Reporting and general transfer agent functions for the Funds and
servicing of the Separate Accounts are performed by GT Global Investor Services,
Inc. (the "Transfer Agent"). The Transfer Agent is an affiliate of the Manager,
a subsidiary of Liechtenstein Global Trust, and maintains its offices at
California Plaza, 2121 N. California Boulevard, Suite 450, Walnut Creek, CA
94596.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
02110, is custodian of each Fund's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Companies. Kirkpatrick
& Lockhart LLP also acts as counsel to the Manager, GT Global, Inc. and the
Transfer Agent in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Companies' and the Funds' 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 Funds, assists in the
preparation of the Funds' federal and state income tax returns and consults with
the Companies and the Funds as to matters of accounting, regulatory filings, and
federal and state income taxation.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUNDS'
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUNDS' SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
Prospectus Page 51
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 52
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 53
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 54
<PAGE>
GENERAL AMERICAN
GA0597/VARPR705028M.228
SELIC
SELPR705002M.229
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
GT GLOBAL VARIABLE NEW PACIFIC FUND
GT GLOBAL VARIABLE EUROPE FUND
GT GLOBAL VARIABLE LATIN AMERICA FUND
GT GLOBAL VARIABLE AMERICA FUND
GT GLOBAL VARIABLE INTERNATIONAL FUND
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
GT GLOBAL VARIABLE EMERGING MARKETS FUND
GT GLOBAL VARIABLE GROWTH & INCOME FUND
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
GT GLOBAL MONEY MARKET FUND
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
April 1, 1998
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the GT Global Variable
Investment Funds (individually a "Fund," and collectively, the "Funds"). Each
Fund is organized as a separate series of either G.T. Global Variable Investment
Series ("Investment Series") or G.T. Global Variable Investment Trust
("Investment Trust") (individually, a "Company," and collectively, the
"Companies"). This Statement of Additional Information which is not a
prospectus, supplements and should be read in conjunction with the Funds'
current Prospectus dated April 1, 1998, a copy of which is available without
charge by writing to the above address or by calling the Funds at the toll-free
phone number printed above. Shares of each Fund are offered only to separate
accounts ("Separate Accounts") that fund certain variable annuity contracts ("VA
Contracts") offered by certain life insurance companies ("Participating
Insurance Companies").
Chancellor LGT Asset Management, Inc. (the "Manager") serves as the Funds'
Investment Manager and Administrator. The Funds' Transfer Agent is GT Global
Investor Services, Inc. ("GT Services" or the "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objectives and Policies....................................................................................... 2
Options, Futures and Currency Strategies................................................................................. 11
Risk Factors............................................................................................................. 20
Investment Limitations................................................................................................... 26
Execution of Portfolio Transactions...................................................................................... 36
Trustees and Executive Officers.......................................................................................... 40
Management............................................................................................................... 42
Valuation of Shares...................................................................................................... 46
Information Relating to Sales and Redemptions............................................................................ 47
Taxes.................................................................................................................... 48
Additional Information................................................................................................... 50
Investment Results....................................................................................................... 51
Description of Debt Ratings.............................................................................................. 59
Appendix................................................................................................................. 62
Financial Statements..................................................................................................... 63
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
The investment objective of each of the following Funds as defined in the
Prospectus, is long-term growth of capital: GT GLOBAL VARIABLE NEW PACIFIC FUND
("New Pacific Fund"), GT GLOBAL VARIABLE INTERNATIONAL FUND ("International
Fund"), GT GLOBAL VARIABLE EUROPE FUND ("Europe Fund") and GT GLOBAL VARIABLE
AMERICA FUND ("America Fund"). GT GLOBAL VARIABLE LATIN AMERICA FUND ("Latin
America Fund") seeks capital appreciation. The investment objective of each of
GT GLOBAL VARIABLE EMERGING MARKETS FUND ("Emerging Markets Fund") and GT GLOBAL
VARIABLE TELECOMMUNICATIONS FUND ("Telecommunications Fund") is long-term growth
of capital. The investment objective of each of GT GLOBAL VARIABLE
INFRASTRUCTURE FUND ("Infrastructure Fund") and GT GLOBAL VARIABLE NATURAL
RESOURCES FUND ("Natural Resources Fund") is long-term capital growth. The
investment objectives of GT GLOBAL VARIABLE GROWTH & INCOME FUND ("Growth &
Income Fund") are long-term capital appreciation together with current income.
GT GLOBAL VARIABLE STRATEGIC INCOME FUND ("Strategic Income Fund") seeks high
current income as its primary investment objective. The Strategic Income Fund's
secondary investment objective is capital appreciation. GT GLOBAL VARIABLE
GLOBAL GOVERNMENT INCOME FUND ("Global Government Income Fund") seeks high
current income as its primary investment objective. The Global Government Income
Fund's secondary investment objectives are capital appreciation and protection
of principal through active management of the maturity structure and currency
exposure. The investment objective of GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME
FUND ("U.S. Government Income Fund") is a high level of current income,
consistent with the preservation of capital. The investment objective of GT
GLOBAL MONEY MARKET FUND ("Money Market Fund") is maximum current income
consistent with liquidity and conservation of capital.
SELECTION OF INVESTMENTS
GENERAL. Each Fund seeks to achieve its investment objective(s) through a
distinct set of investment policies. In determining the appropriate distribution
of investments among various countries and geographic regions for the Funds, the
Manager ordinarily considers the following factors: prospects for relative
economic growth between the different countries in which each Fund may invest;
expected levels of inflation; government policies influencing business
conditions; the outlook for currency relationships; and the range of the
individual investment opportunities available to international investors.
In analyzing companies for possible investment by each Fund, the Manager
ordinarily looks for one or more of the following characteristics: above-average
earnings growth per share; high return on invested capital; healthy balance
sheet; sound financial and accounting policies and overall financial strength;
strong competitive advantages; effective research and product development and
marketing; efficient service; pricing flexibility; strength of management; and
general operating characteristics which will enable the companies to compete
successfully in their respective marketplaces. In certain countries,
governmental restrictions and other limitations on investment may affect the
maximum percentage of equity ownership in any one company by a Fund or the Funds
in the aggregate. In addition, in some instances only special classes of
securities may be purchased by foreigners and the market prices, liquidity and
rights with respect to those securities may vary from shares owned by nationals.
In certain countries, governmental and other restrictions on investment may
affect a Fund's ability to invest in such countries. In addition, in some
instances only special classes of securities may be purchased by foreigners and
the market price, liquidity and rights with respect to those securities may vary
from shares owned by nationals. At this time, the Manager is not aware of the
existence of any investment or exchange control regulations which might
substantially impair the operations of the Funds as described in the Prospectus
and this Statement of Additional Information. Restrictions may in the future,
however, make it undesirable to invest in certain countries. None of the Funds
has a present intention of making any significant investment in any country or
stock market in which the Manager considers the political or economic situation
to threaten a Fund with substantial or total loss of its investment in such
country or market.
THE EMERGING MARKETS FUND. The Emerging Markets Fund does not consider the
following countries to be emerging markets: Australia, Austria, Belgium, Canada,
Denmark, England, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland and United States.
In determining what countries constitute emerging markets the Manager will
consider, among other things, data analysis, and classification of countries
Statement of Additional Information Page 2
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
published or disseminated by the International Bank for Reconstruction and
Development (commonly known as the World Bank) and the International Finance
Corporation.
THE NATURAL RESOURCES FUND. With respect to the Natural Resources Fund, the
Manager has identified four areas that it expects will create investment
opportunities: (i) improving supply/demand fundamentals, which may result in
higher commodity prices; (ii) privatization of state-owned natural resource
businesses; (iii) management which can improve production efficiencies without
correspondingly increasing commodity prices; and (iv) service companies with
emerging technologies that can enhance productivity or reduce production costs.
Of course, there is no certainty that these factors will produce the anticipated
results.
THE TELECOMMUNICATIONS FUND. With respect to the Telecommunications Fund,
the Manager has identified four areas that it expects will create investment
opportunities and lead to growth in the sector: (i) the deregulation of
companies in the industry, which will allow competition to promote greater
efficiencies; (ii) the privatization of state-owned telecommunications
businesses; (iii) the development of infrastructure in underdeveloped countries
and upgrading of services in other countries; and (iv) emerging technologies,
that will enhance productivity and reduce costs in the telecommunications
industry. Of course, there is no certainty that these factors will produce the
anticipated results.
THE GROWTH & INCOME FUND. With respect to the Growth & Income Fund, 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. In evaluating possible
equity investments, 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 which, for instance, has improved its sales or
earnings or of an issuer the balance sheet and financial condition of which are
improving. The Manager seeks to avoid investing in equity securities that appear
overly speculative or risky, even if they have otherwise attractive features or
investment potential.
In evaluating debt securities considered for investment by the Growth & Income
Fund, the Manager analyzes their yield, maturity, issue classification and
quality characteristics, coupled with expectations regarding the local and world
economies, movements in the general level and term of interest rates, currency
values, political developments, and variations of the supply of funds available
for investment in the world bond market relative to the demands placed upon it.
The Manager may increase the average maturity of the portion of the Fund's
holdings invested in debt obligations when it expects interest rates to decline,
and may decrease such maturity when it expects interest rates to rise. There are
no limitations on the maximum or minimum maturities of the debt securities
considered by the Growth & Income Fund for investment or on the average weighted
maturity of the debt portion of the Fund's holdings. Should the rating of a debt
security be revised while such security is owned by the Growth & Income Fund,
the Manager will evaluate what action, if any, is appropriate with respect to
such security. See "Description of Debt Ratings."
THE LATIN AMERICA FUND. Several Latin American countries have adopted debt
conversion programs, pursuant to which investors may use external debt of a
country, directly or indirectly, to make investments in local companies. The
terms of the various programs vary from country to country, although each
program includes significant restrictions on the application of the proceeds
received in the conversion and on the remittance of profits on the investment
and of the invested capital. The Latin America Fund intends to acquire Sovereign
Debt to hold and trade in appropriate circumstances, as well as to use to
participate in Latin American debt conversion programs. See "Risk Factors" in
the Funds' Prospectus and "Risk Factors" below. The Manager will evaluate
opportunities to enter into debt conversion transactions as they arise but does
not currently intend to invest more than 5% of the Latin America Fund's assets
in such programs.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES
The Strategic Income Fund, Global Government Income Fund and U.S. Government
Income Fund may invest in mortgage-backed securities, including fixed-rate
mortgage obligations, adjustable rate mortgage obligations ("ARMs") and
collateralized mortgage obligations ("CMOs"). Each of these Funds may also
invest in asset-backed securities.
Mortgage-backed securities represent direct or indirect participations in, or
are secured by and payable from, mortgage loans secured by real property and
include single- and multi-class pass-through securities and collateralized
mortgage obligations. Multi-class pass-through securities and collateralized
mortgage obligations are collectively referred to herein as CMOs. The U.S.
government mortgage-backed securities in which the Funds may invest include
mortgage-backed securities issued or guaranteed as to the payment of principal
and interest (but not as to market value) by the Government National Mortgage
Association ("GNMA"), Fannie Mae, or the Federal Home Loan Mortgage Corporation
("Freddie
Statement of Additional Information Page 3
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
Mac"). Other mortgage-backed securities are issued by private issuers, generally
originators of and investors in mortgage loans, including savings associations,
mortgage bankers, commercial banks, investment bankers and special purpose
entities (collectively "Private Mortgage Lenders"). Payments of principal and
interest (but not the market value) of such private mortgage-backed securities
may be supported by pools of mortgage loans or other mortgage-backed securities
that are guaranteed, directly or indirectly, by the U.S. government or one of
its agencies or instrumentalities, or they may be issued without any government
guarantee of the underlying mortgage assets but with some form of non-government
credit enhancement. New types of mortgage-backed securities are developed and
marketed from time to time and, consistent with its investment limitations, a
Fund expects to invest in those new types of mortgage-backed securities that the
Manager believes may assist a Fund in achieving its investment objective.
Similarly, a Fund may invest in mortgage-backed securities issued by new or
existing governmental or private issuers other than those identified herein.
Asset-backed securities have structural characteristics similar to
mortgage-backed securities. However, the underlying assets are not first lien
mortgage loans or interests therein, but include assets such as motor vehicle
installment sale contracts, other installment sale contracts, home equity loans,
leases of various types of real and personal property and receivables from
revolving credit (credit card) agreements. Such assets are securitized through
the use of trusts or special purpose corporations. Payments or distributions of
principal and interest may be guaranteed up to a certain amount and for a
certain time period by a letter of credit or pool insurance policy issued by a
financial institution unaffiliated with the issuer, or other credit enhancements
may be present.
The yield characteristics of mortgage-backed and asset-backed securities differ
from those of traditional debt securities. Among the major differences are that
interest and principal payments are made more frequently, usually monthly, and
that principal may be prepaid at any time because the underlying mortgagee loans
or other obligations generally may be prepaid at any time. Prepayments on a pool
of mortgage loans are influenced by a variety of economic, geographic, social
and other factors, including changes in mortgagors' housing needs, job
transfers, unemployment, mortgagors' net equity in the mortgaged properties and
servicing decisions. Generally, however, prepayments on fixed-rate mortgage
loans will increase during a period of falling interest rates and decrease
during a period of rising interest rates. Similar factors apply to prepayments
on asset-backed securities, but the receivables underlying asset-backed
securities generally are of a shorter maturity and thus are less likely to
experience substantial prepayments. Such securities, however, often provide that
for a specified time period the issuers will replace receivables in the pool
that are repaid with comparable obligations. If the issuer is unable to do so,
repayment of principal on the asset-backed securities may commence at an earlier
date. Mortgage-backed and asset-backed securities may decrease in value as a
result of increases in interest rates and may benefit less than other
fixed-income securities from declining interest rates because of the risk of
prepayment.
The rate of interest on mortgage-backed securities is lower than the interest
rates paid on the mortgages included in the underlying pool due to the annual
fees paid to the servicer of the mortgage pool for passing through monthly
payments to certificateholders and to any guarantor, and due to any yield
retained by the issuer. Actual yield to the holder may vary from the coupon
rate, even if adjustable, if the mortgage-backed securities are purchased or
traded in the secondary market at a premium or discount. In addition, there is
normally some delay between the time the issuer receives mortgage payments from
the servicer and the time the issuer makes the payments on the mortgage-backed
securities, and this delay reduces the effective yield to the holder of such
securities.
Yields on pass-through securities are typically quoted by investment dealers and
vendors based on the maturity of the underlying instruments and the associated
average life assumption. The average life of a pass-through pool varies with the
maturities of the underlying mortgage loans. A pool's term may be shortened by
unscheduled or early payments of principal on the underlying mortgages. Because
prepayment rates of individual pools vary widely, it is not possible to predict
accurately the average life of a particular pool. In the past, a common industry
practice was to assume that prepayments on pools of fixed rate 30-year mortgages
would result in a 12-year average life for the pool. At present, mortgage pools,
particularly those with loans with other maturities or different
characteristics, are priced on an assumption of average life determined for each
pool. In periods of declining interest rates, the rate of prepayment tends to
increase, thereby shortening the actual average life of a pool of
mortgage-related securities. Conversely, in periods of rising interest rates,
the rate of prepayment tends to decrease, thereby lengthening the actual average
life of the pool. However, these effects may not be present, or may differ in
degree, if the mortgage loans in the pools have adjustable interest rates or
other special payment terms, such as a prepayment charge. Actual prepayment
experience may cause the yield of mortgage-backed securities to differ from the
assumed average life yield. Reinvestment of prepayments may occur at lower
interest rates than the original investment, thus adversely affecting the yield
of a Fund.
GNMA CERTIFICATES. GNMA guarantees certain mortgage pass-through
certificates ("GNMA certificates"), issued by Private Mortgage Lenders and
representing ownership interests in individual pools of residential mortgage
loans. These
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securities are designed to provide monthly payments of interest and principal to
the investor. Timely payment of interest and principal is backed by the full
faith and credit of the U.S. government. Each mortgagor's monthly payments to
his lending institution on his residential mortgage are "passed through" to
certificateholders such as the Funds. Mortgage pools consist of whole mortgage
loans or participations in loans. The terms and characteristics of the mortgage
instruments are generally uniform within a pool but may vary among pools.
Lending institutions that originate mortgages for the pools are subject to
certain standards, including credit and other underwriting criteria for
individual mortgages included in the pools.
FANNIE MAE CERTIFICATES. Fannie Mae facilitates a national secondary market
in residential mortgagee loans insured or guaranteed by U.S. government agencies
and in privately insured or uninsured residential mortgage loans (sometimes
referred to as "conventional mortgage loans" or "conventional loans") through
its mortgage purchase and mortgage-backed securities sales activities. Fannie
Mae issues guaranteed mortgage pass-through certificates ("Fannie Mae
certificates"), which represent pro rata shares of all interest and principal
payments made and owed on the underlying pools. Fannie Mae guarantees timely
payment of interest and principal on Fannie Mae certificates. The Fannie Mae
guarantee is not backed by the full faith and credit of the U.S. government.
FREDDIE MAC CERTIFICATES. Freddie Mac also facilitates a secondary market
for conventional residential and U.S. government-insured mortgage loans through
its mortgage purchase and mortgage-backed securities sales activities. Freddie
Mac issues two types of mortgage pass-through securities: mortgage participation
certificates ("PCs") and guaranteed mortgage certificates ("GMCs"). Each PC
represents a pro rata share of all interest and principal payments made and owed
on the underlying pool. Freddie Mac generally guarantees timely monthly payment
of interest on PCs and the ultimate payment of principal, but it also has a PC
program under which it guarantees timely payment of both principal and interest.
GMCs also represent a pro rata interest in a pool of mortgages. These
instruments, however, pay interest semi-annually and return principal once a
year in guaranteed minimum payments. The Freddie Mac guarantee is not backed by
the full faith and credit of the U.S. government.
PRIVATE, RTC AND SIMILAR MORTGAGE-BACKED SECURITIES. Mortgage-backed
securities issued by Private Mortgage Lenders are structured similarly to the
pass-through certificates and collateralized mortgage obligations ("CMOs")
issued or guaranteed by GNMA, Fannie Mae and Freddie Mac. Such mortgage-backed
securities may be supported by pools of U.S. government or agency insured or
guaranteed mortgage loans or by other mortgage-backed securities issued by a
government agency or instrumentality; but they generally are supported by pools
of conventional (i.e., non-government guaranteed or insured) mortgage loans.
Since such mortgage-backed securities normally are not guaranteed by an entity
having the credit standing of GNMA, Fannie Mae and Freddie Mac, they normally
are structured with one or more types of credit enhancement. See "-- Types of
Credit Enhancement." These credit enhancements do not protect investors from
changes in market value.
The Resolution Trust Corporation ("RTC"), which was organized by the U.S.
government in connection with the savings and loan crisis, held assets of failed
savings associations as either a conservator or receiver for such associations,
or it acquired such assets in its corporate capacity. These assets included,
among other things, single family and multifamily mortgage loans, as well as
commercial mortgage loans. In order to dispose of such assets in an orderly
manner, RTC established a vehicle registered with the SEC through which it sold
mortgage-backed securities. RTC mortgage-backed securities represent pro rata
interests in pools of mortgage loans that RTC held or acquired, as described
above, and are supported by one or more of the types of private credit
enhancements used by Private Mortgage Lenders.
COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTI-CLASS MORTGAGE
PASS-THROUGHS. CMOs are debt obligations that are collateralized by mortgage
loans or mortgage pass-through securities (such collateral collectively being
called "Mortgage Assets"). CMOs may be issued by Private Mortgage Lenders or by
government entities such as Fannie Mae or Freddie Mac. Multi-class mortgage
pass-through securities are interests in trusts that are comprised of Mortgage
Assets and that have multiple classes similar to those in CMOs. Unless the
context indicates otherwise, references herein to CMOs include multi-class
mortgage pass-through securities. Payments of principal of, and interest on, the
Mortgage Assets (and in the case of CMOs, any reinvestment income thereon)
provide the funds to pay debt service on the CMOs or to make scheduled
distributions on the multi-class mortgage pass-through securities.
In a CMO, a series of bonds or certificates is issued in multiple classes. Each
class of CMO, also referred to as a "tranche," is issued at a specific fixed or
floating coupon rate and has a stated maturity or final distribution date.
Principal prepayments on the Mortgage Assets may cause CMOs to be retired
substantially earlier than their stated maturities or final distribution dates.
Interest is paid or accrues on all classes of a CMO (other than any PO class) on
a monthly, quarterly or semi-annual basis. The principal and interest on the
Mortgage Assets may be allocated among the several classes of a CMO in many
ways. In one structure, payments of principal, including any principal
prepayments, on the Mortgage
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Assets are applied to the classes of a CMO in the order of their respective
stated maturities or final distribution dates so that no payment of principal
will be made on any class of the CMO until all other classes having an earlier
stated maturity or final distribution date have been paid in full. In some CMO
structures, all or a portion of the interest attributable to one or more of the
CMO classes may be added to the principal amounts attributable to such classes,
rather than passed through to certificateholders on a current basis, until other
classes of the CMO are paid in full.
Parallel pay CMOs are structured to provide payments of principal on each
payment date to more than one class. These simultaneous payments are taken into
account in calculating the stated maturity date or final distribution date of
each class, which, as with other CMO structures, must be retired by its stated
maturity date or final distribution date but may be retired earlier.
Some CMO classes are structured to pay interest at rates that are adjusted in
accordance with a formula, such as a multiple or fraction of the change in a
specified interest rate index, so as to pay at a rate that will be attractive in
certain interest rate environments but not in others. For example, an inverse
floating rate CMO class pays interest at a rate that increases as a specified
interest rate index decreases but decreases as that index increases. For other
CMO classes, the yield may move in the same direction as market interest rates
- -- i.e., the yield may increase as rates increase and decrease as rates decrease
- -- but may do so more rapidly or to a greater degree. The market value of such
securities generally is more volatile than that of a fixed rate obligation. Such
interest rate formulas may be combined with other CMO characteristics. For
example, a CMO class may be an "inverse IO," on which the holders are entitled
to receive no payments of principal and are entitled to receive interest at a
rate that will vary inversely with a specified index or a multiple thereof.
ARM AND FLOATING RATE MORTGAGE-BACKED SECURITIES ARM mortgage-backed
securities are mortgage-backed securities that represent a right to receive
interest payments at a rate that is adjusted to reflect the interest earned on a
pool of mortgage loans bearing variable or adjustable rates of interest (such
mortgage loans are referred to as "ARMs"). Floating rate mortgage-backed
securities are classes of mortgage-backed securities that have been structured
to represent the right to receive interest payments at rates that fluctuate in
accordance with an index but that generally are supported by pools comprised of
fixed-rate mortgage loans. Because the interest rates on ARM and floating rate
mortgage-backed securities are reset in response to changes in a specified
market index, the values of such securities tend to be less sensitive to
interest rate fluctuations than the values of fixed-rate securities.
ARMs generally specify that the borrower's mortgage interest rate may not be
adjusted above a specified lifetime maximum rate or, in some cases, below a
minimum lifetime rate. In addition, certain ARMs specify for limitations on the
maximum amount by which the mortgage interest rate may adjust for any single
adjustment period. ARMs also may limit changes in the maximum amount by which
the borrower's monthly payment may adjust for any single adjustment period. In
the event that a monthly payment is not sufficient to pay the interest accruing
on the ARM, any such excess interest is added to the mortgage loan ("negative
amortization"), which is repaid through future payments. If the monthly payment
exceeds the sum of the interest accrued at the applicable mortgage interest rate
and the principal payment that would have been necessary to amortize the
outstanding principal balance over the remaining term of the loan, the excess
reduces the principal balance of the ARM. Borrowers under ARMs experiencing
negative amortization may take longer to build up their equity in the underlying
property and may be more likely to default interest. ARMs also may be subject to
a greater rate of prepayments in a declining interest rate environment.
The rates of interest payable on certain ARMs are based on indices, such as the
one-year constant maturity Treasury rate, that reflect changes in market
interest rates. Others are based on indices that tend to lag behind changes in
market interest rates. The values of ARM mortgage-backed securities supported by
ARMs that adjust based on lagging indices tend to be somewhat more sensitive to
interest rate fluctuations than those reflecting current interest rate levels,
although the value of such ARM mortgage-backed securities still tends to be less
sensitive to interest rate fluctuations than fixed-rate securities.
As with ARM mortgage-backed securities, interest rate adjustments on floating
rate mortgage-backed securities may be based on indices that lag behind market
interest rates. Interest rates on floating rate mortgage-backed securities
generally are adjusted monthly. Floating rate mortgage-backed securities are
subject to lifetime interest rate caps, but they generally are not subject to
limitations on monthly or other periodic changes in interest rates or monthly
payments.
TYPES OF CREDIT ENHANCEMENT. To lessen the effect of failures by obligors on
Mortgage Assets to make payments, mortgage-backed securities may contain
elements of credit enhancement. Such credit enhancement falls into two
categories: (1) liquidity protection and (2) protection against losses resulting
after default by an obligor on the underlying assets and collection of all
amounts recoverable directly from the obligor and through liquidation of the
collateral. Liquidity protection refers to the provision of advances, generally
by the entity administering the pool of assets (usually the bank,
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savings association or mortgage banker that transferred the underlying loans to
the issuer of the security), to ensure that the receipt of payments on the
underlying pool occurs in a timely fashion. Protection against losses resulting
after default and liquidation ensures ultimate payment of the obligations on at
least a portion of the assets in the pool. Such protection may be provided
through guarantees, insurance policies or letters of credit obtained by the
issuer or sponsor, from third parties, through various means of structuring the
transaction or through a combination of such approaches. The Funds will not pay
any additional fees for such credit enhancement, although the existence of
credit enhancement may increase the price of a security. Credit enhancements do
not provide protection against changes in the market value of the security.
Examples of credit enhancement arising out of the structure of the transaction
include "senior-subordinated securities" (multiple class securities with one or
more classes subordinate to other classes as to the payment of principal thereof
and interest thereon, with the result that defaults on the underlying assets are
borne first by the holders of the subordinated class), creation of "spread
accounts" or "reserve funds" (where cash or investments, sometimes funded from a
portion of the payments on the underlying assets, are held in reserve against
future losses) and "over-collateralization" (where the scheduled payments on, or
the principal amount of, the underlying assets exceed that required to make
payment of the securities and pay any servicing or other fees). The degree of
credit enhancement provided for each issue generally is based on historical
information regarding the level of credit risk associated with the underlying
assets. Delinquency or loss in excess of that anticipated could adversely affect
the return on an investment in such a security.
VARIABLE AND FLOATING RATE SECURITIES
The Money Market Fund may purchase variable and floating rate securities with
remaining maturities in excess of 13 months. Such securities must comply with
conditions established by the Securities and Exchange Commission (the "SEC")
under which they may be considered to have remaining maturities of 13 months or
less. The yield of these securities varies in relation to changes in specific
money market rates such as the prime rate. These changes are reflected in
adjustments to the yields of the variable and floating rate securities, and
different securities may have different adjustment rates. To the extent that the
Money Market Fund invests in such variable and floating rate securities, it is
the Manager's view that the Money Market Fund may be able to take advantage of
the higher yield that is usually paid on longer-term securities. The Manager
further believes that the variable and floating rates paid on such securities
may substantially reduce the wide fluctuations in market value caused by
interest rate changes and other factors which are typical of longer-term debt
securities.
DEPOSITORY RECEIPTS
Each Fund, except for the Global Government Income Fund, the U.S. Government
Income Fund and the Money Market Fund, may hold 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 are typically issued
by an American bank or trust company that evidences ownership of underlying
securities issued by a foreign corporation. EDRs, which are sometimes referred
to as Continental Depository Receipts ("CDRs"), are receipts issued in Europe,
typically by foreign banks and trust companies that evidence ownership of either
foreign or domestic securities. Generally, ADRs and ADSs in registered form are
designed for use in U.S. securities markets and EDRs in bearer form are designed
for use in European securities markets. For purposes of the Funds' respective
investment policies, the Funds' 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 with respect to the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such
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as deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Funds may invest in sponsored and unsponsored ADRs.
SAMURAI AND YANKEE BONDS
The New Pacific Fund, the International Fund, the Strategic Income Fund, and the
Global Government Income Fund may invest in yen-denominated bonds sold in Japan
by non-Japanese issuers ("Samurai bonds"), and the America Fund, the Strategic
Income Fund and the Global Government Income Fund may invest in U.S.
dollar-denominated bonds sold in the United States by non-U.S. issuers ("Yankee
bonds"). It is the policy of each Fund to invest in Samurai or Yankee bond
issues only after taking into account considerations of quality and liquidity,
as well as yield.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Funds, except for the Money Market
Fund, in connection with other securities or separately, and may provide the
Funds with the right to purchase at a later date other securities of the issuer.
LENDING OF SECURITIES
For the purpose of realizing additional income, each Fund, except the Money
Market Fund, may make secured loans of securities held by that Fund which amount
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. Each Fund may pay reasonable administrative and custodial fees in
connection with loans of its securities. While the securities loan is
outstanding, the Fund will continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities, as well as interest on the
investment of the collateral or a fee from the borrower. The Fund has a right to
call each loan and obtain the securities within the stated settlement period.
The Fund will not have the right to vote equity securities while they are being
lent, but it may call in a loan in anticipation of any important vote. Loans
will 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 Funds' respective investment policies regarding bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations may, however, be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject a Fund to investment risks that are
different in some respects from those of investments in obligations of domestic
issuers. Although a Fund typically will acquire obligations issued and supported
by the credit of U.S. or foreign banks having total assets at the time of
purchase in excess of $1 billion, this $1 billion figure is not a fundamental
investment policy or restriction of such Fund. For 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.
COMMERCIAL PAPER
U.S. Government Income Fund may invest in commercial paper, which consists of
short-term promissory notes issued by large corporations with a high quality
rating to finance short-term credit needs.
REPURCHASE AGREEMENTS
Each 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 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 assets may be
subject to repurchase agreements at any given time. No Fund will enter into a
repurchase agreement with a maturity of more than seven days if, as a result
more than 15% (10% for the Money Market Fund) of the value of its net assets
would be invested in such repurchase agreements and other illiquid investments.
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BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Fund's (other than the Money Market Fund) 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 borrowing. If market
fluctuations in the value of a Fund's securities 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 securities to restore the 300% asset coverage, even
though from an investment standpoint such sales might be disadvantageous. Each
Fund also may borrow up to 5% of its total assets for temporary or emergency
purposes other than to provide cash to meet redemptions of Fund shares. Any
borrowing by a Fund may cause greater fluctuation in its net asset value than
would be the case if the Fund did not borrow.
Each Fund (except the Money Market Fund and the Strategic Income Fund) currently
is prohibited from borrowing money in order to purchase securities. If a Fund is
permitted to employ 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.
Excluding the Money Market Fund, each Fund may enter into reverse repurchase
agreements. A reverse repurchase agreement is a borrowing transaction in which a
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. Reverse
repurchase agreements involve the risk that the market value of the securities
retained in lieu of sale by a Fund may decline below the price of the securities
the Fund had sold but is obligated to repurchase. In the event the buyer of
securities under a reverse repurchase agreement files for bankruptcy or becomes
insolvent, such buyer or its trustee or receiver may receive an extension of
time to determine whether to enforce the Fund's obligation to repurchase the
securities, and the Fund's use of the proceeds of the reverse repurchase
agreement may effectively be restricted pending such decision.
The Funds (except for the Latin America Fund and the Money Market Fund) also may
engage in "roll" borrowing transactions, which involve the sale of GNMA
certificates or other securities together with a commitment (for which a Fund
may receive a fee) to purchase similar, but not identical, securities at a
future date. Each Fund will set aside 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.
The Strategic Income Fund also may enter into "dollar rolls," in which the Fund
sells fixed income securities for delivery in the current month, and
simultaneously contracts to repurchase substantially similar (same type, coupon
and maturity) securities on a specified future date. During the roll period, the
Strategic Income Fund would forego principal and interest paid on such
securities. The Strategic Income Fund would be compensated by the difference
between the current sales price and the forward price for the future purchase,
as well as by the interest earned on the cash proceeds of the initial sale.
SHORT SALES
The Funds (except for the Money Market Fund, the New Pacific Fund, the
International Fund, the Europe Fund and the America Fund) may make short sales
of securities, although they have no current intention of doing so. Moreover,
the Strategic Income Fund, the Global Government Income Fund, the Growth &
Income Fund and the U.S. Government Income Fund may only make short sales
"against the box."
A short sale is a transaction in which a Fund sells a security in anticipation
that the market price of that security will decline. A 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, or in similar securities, and (ii)
in order to maintain investment flexibility. When a Fund makes a short sale of a
security it does not own, it must borrow the security sold short and deliver it
to the broker-dealer or other intermediary through which it made the short sale.
The Fund may have to pay a fee to borrow particular securities and will often be
obligated to pay over any payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral deposited with the intermediary.
The Fund also will be required to deposit collateral with its custodian to the
extent necessary so that the value of both collateral deposits in the aggregate
is at all times equal to at least 100% of the current market value of the
security sold short. Depending on arrangements made with the intermediary from
which it borrowed the security, regarding payment of any amounts received by the
Fund on such security, the Fund may not receive any payments (including
interest) on its collateral deposited with such intermediary.
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If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss theoretically is unlimited.
The Infrastructure Fund, the Natural Resources Fund, the Telecommunications
Fund, the Emerging Markets Fund, and the Latin America Fund will not make a
short sale if, after giving effect to such sale, the market value of the
securities sold short exceeds 25% of the value of their respective total assets,
or their respective aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of net assets or 2% of the securities of any class of
the issuer. Moreover, the Infrastructure Fund, the Natural Resources Fund, the
Telecommunications Fund and the Latin America Fund may engage in short sales
only with respect to securities listed on a national securities exchange.
A Fund might make a short sale "against the box" in order to hedge against
market risks when the Manager believes that the price of a security may decline,
causing a decline in the value of a security owned by the Fund or a security
convertible into or exchangeable for such security, or when the Manager wants to
sell the security the Fund owns at a current attractive price, but also wishes
to defer recognition of gain or loss for federal income tax purposes. 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 Funds will endeavor to offset these costs
with income from the investment of the cash proceeds of short sales.
TEMPORARY DEFENSIVE STRATEGIES
The Emerging Markets Fund and Latin America Growth Fund may invest in the
following types of money market instruments (I.E., debt instruments with less
than 12 months remaining until maturity) denominated in U.S. dollars or other
currencies (in the case of Latin America Growth Fund, a Latin American
currency): (a) obligations issued or guaranteed by the U.S. or foreign
governments (in the case of Latin America Growth Fund, the government of a Latin
American country), their agencies, instrumentalities or municipalities; (b)
obligations of international organizations designed or supported by multiple
foreign governmental entities to promote economic reconstruction or development;
(c) finance company obligations, corporate commercial paper and other short-term
commercial obligations; (d) bank obligations (including certificates of deposit,
time deposits, demand deposits and bankers' acceptances); (e) repurchase
agreements with respect to the foregoing; and (f) other substantially similar
short-term debt securities with comparable characteristics.
The Emerging Markets Fund and Latin America Growth Fund may invest in commercial
paper rated as low as A-3 by S&P or P-3 by Moody's or, if not rated, determined
by the Manager to be of comparable quality. Obligations rated A-3 and P-3 are
considered by S&P and Moody's, respectively, to have an acceptable capacity for
timely repayment. However, these securities may be more vulnerable to adverse
effects of changes in circumstances than obligations carrying higher
designations.
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OPTIONS, FUTURES AND CURRENCY
STRATEGIES
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SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon the
Manager's ability to predict movements of the overall securities and
currency markets, which requires different skills than predicting changes in
the prices of individual securities. While the Manager is experienced in the
use of these instruments, there can be no assurance that any particular
strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Fund entered into a
short hedge because the Manager projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, a Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (i.e.,
instruments other than purchased options). If a 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
All Funds, other than the Money Market Fund, may write (sell) call options on
securities, currencies and (except for the Strategic Income Fund, the Global
Government Income Fund and the U.S. Government Income Fund) stock indices. Call
options generally will be written on securities and currencies that, in the
opinion of the Manager, are not expected to make any major price moves in the
near future but that, over the long term, are deemed to be attractive
investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). As long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
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Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Fund's investment objective(s). When writing a call option, a Fund, in return
for the premium, gives up the opportunity for profit from a price increase in
the underlying security or currency above the exercise price, and retains the
risk of loss should the price of the security or currency decline. Unlike one
who owns securities or currencies not subject to an option, a 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 a 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. A 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 investment limitations that limit the pledging or mortgaging
of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund will be obligated to
sell the security or currency at less than its market value.
The premium that a Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium a 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 a Fund to write another
call option on the underlying security or currency with either a different
exercise price or expiration date or both.
A 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, indices or currencies at the time
the options are written. From time to time, a Fund may purchase an underlying
security or currency for delivery in accordance with the exercise of an option,
rather than delivering the security or currency currently held by it. In such
cases, additional costs will be incurred.
A 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 Funds, other than the Money Market Fund, may write put options on
securities, currencies and (except for the Strategic Income Fund, the Global
Government Income Fund and the U.S. Government Income Fund) stock indices. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
A Fund generally would write put options in circumstances where the Manager
wishes to purchase the underlying security or currency for the Fund 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 premiums received.
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Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Fund will be obligated
to purchase the security or currency at more than its market value.
PURCHASING PUT OPTIONS
Each Fund, other than the Money Market Fund, may purchase put options on
securities, currencies and (except for the Strategic Income Fund, the Global
Government Income Fund and the U.S. Government Income Fund) stock indices. As
the holder of a put option, a 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. A Fund may enter into closing sale
transactions with respect to such option, exercise such option or permit such
option to expire.
A Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund as a hedging technique in order to protect
against an anticipated decline in the value of the security or currency. Such
hedge protection is provided only during the life of the put option when the
Fund, 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 eventually is
sold.
A 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, a 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
Each Fund, other than the Money Market Fund, may purchase call options on
securities, currencies and (except for the Strategic Income Fund, the Global
Government Income Fund and the U.S. Government Income Fund) stock indices. As
the holder of a call option, a 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. A Fund may enter
into closing sale transactions with respect to such option, exercise such option
or permit such option to expire.
Call options may be purchased by a 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 a 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 Funds in purchasing a large block of securities that would be more
difficult to acquire by direct market purchases. So long as it holds such a call
option, rather than the underlying security or currency itself, a Fund 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.
Each Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options also may be purchased at times to avoid
realizing losses that would result in a reduction of a Fund's current return.
For example, where a 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.
Each 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 a 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 of the
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GT GLOBAL VARIABLE INVESTMENT FUNDS
option. A call option gives a Fund as purchaser the right (but not the
obligation) to purchase a specified amount of currency at the exercise price at
any time until (American style) or on (European style) the expiration date of
the option. A Fund might purchase a currency put option, for example, to protect
itself against a decline in the dollar value of a currency in which it holds or
anticipates holding securities. If the currency's value should decline against
the dollar, the loss in currency value should be offset, in whole or in part, by
an increase in the value of the put. If the value of the currency instead should
rise against the dollar, any gain to the Fund would be reduced by the premium it
had paid for the put option. A currency call option might be purchased, for
example, in anticipation of, or to protect against, a rise in the value against
the dollar of a currency in which the Fund anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC").
Listed options are third-party contracts (i.e., performance of the obligations
of the purchaser and seller is guaranteed by the exchange or clearing
corporation), and have standardized strike prices and expiration dates. OTC
options are two-party contracts with negotiated strike prices and expiration
dates. A Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices, obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.
The staff of the SEC considers purchased OTC options to be illiquid securities.
A 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 a 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.
A Fund's ability to establish and close out positions in exchange-listed options
depends on the existence of a liquid market. Each 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 each 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 a 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 a 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 a 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 a 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. A 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, a Fund
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GT GLOBAL VARIABLE INVESTMENT FUNDS
cannot, as a practical matter, acquire and hold a portfolio containing exactly
the same securities as underlie the index and, as a result, bears a risk that
the value of the securities held will vary from the value of the index.
Even if a Fund could assemble a securities portfolio that exactly reproduced the
composition of the underlying index, it still would not be fully covered from a
risk standpoint because of the "timing risk" inherent in writing index options.
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level on the date when the option is exercised. As with
other kinds of options, the Fund as the call writer will not know that it has
been assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If a 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 Funds, except for the Money Market Fund, may enter into interest rate or
currency futures contracts, and the Funds, except for the Strategic Income Fund,
the Global Government Income Fund, the U.S. Government Income Fund and the Money
Market Fund, may enter into stock index futures contracts ("Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock price levels in order to establish more
definitely the effective return on securities or currencies held or intended to
be acquired by the Funds. The Funds' hedging may include sales of Futures as an
offset against the effect of expected increases in interest rates, or declines
in currency exchange rates or stock prices and purchases of futures as an offset
against the effect of expected declines in interest rates or increases in
currency exchange rates or stock prices.
The Funds 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 Funds' exposure to interest rate and currency exchange rate
fluctuations, a 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 index
Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times during which 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 Funds will be able to
enter into an
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GT GLOBAL VARIABLE INVESTMENT FUNDS
offsetting transaction with respect to a particular Futures Contract at a
particular time. If a 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 Funds' Futures transactions generally will be entered into for hedging
purposes, except as discussed below under "Synthetic Securities"; that is,
Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that a Fund owns, or Futures Contracts will be
purchased to protect the Funds against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a 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 ensure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded and may be significantly modified from time to time by the exchange
during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest and currency rates, which in turn are affected by fiscal and
monetary policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the Fund's securities or currencies 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 option on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Fund 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.
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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 of initial margin deposit requirements in the Futures market are
less onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and short position if the option is a put) at a
specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Fund writes an option on a Futures Contract, it will be required to deposit
initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
A Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATION ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a 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 a 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 each Company's
Board of Trustees without a shareholder vote. This limitation does not limit the
percentage of a 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. A Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
A 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.
A Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. A 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, a Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be
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GT GLOBAL VARIABLE INVESTMENT FUNDS
protected against, a decline in the U.S. dollar relative to other currencies.
Further, a 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. A Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with
guidelines approved by that Company's Board of Trustees.
A Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the overall investments of the Fund. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for a 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 a Fund
to sustain losses on such contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Fund to sell a
currency, the Fund may either sell a security and use the sale proceeds to make
delivery of the currency or retain the security and offset its contractual
obligation to deliver the currency by purchasing a second contract pursuant to
which the Fund will obtain, on the same maturity date, the same amount of the
currency that it is obligated to deliver. Similarly, a 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 Forward Contract and the offsetting Forward Contract.
The cost to a 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 a Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contracts limit the risk of loss
due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A 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.
A Fund might seek to hedge against changes in the value of a particular currency
when no Futures Contract, Forward Contract or option involving that currency is
available or one of such contracts is more expensive than certain other
contracts. In such cases, the Fund may hedge against price movements in that
currency by entering into a contract on another currency or basket of
currencies, the values of which the Manager believes will have a positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
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GT GLOBAL VARIABLE INVESTMENT FUNDS
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, a Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options purchased by a Fund) expose the Fund to an obligation to another party.
A 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. Each 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 a Fund's assets is 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.
SYNTHETIC SECURITY POSITIONS
The Global Government Income Fund and the Strategic Income Fund, each may
utilize, up to 5% of its total assets, combinations of futures on bonds and
forward currency contracts to create investment positions that have
substantially the same characteristics as bonds of the same type as those on
which the futures contracts are written. Investment positions of this type are
generally referred to as "synthetic securities."
For example, in order to establish a synthetic security position for a Fund that
is comparable to owning a Japanese government bond, the Manager might purchase
futures contracts on Japanese government bonds in the desired principal amount
and purchase forward currency contracts for Japanese Yen in an amount equal to
the then current purchase price for such bonds in the Japanese cash market, with
each contract having approximately the same delivery date.
The Manager might roll over the futures and forward currency contract positions
before taking delivery in order to continue the Fund's investment position, or
the Manager might close out those positions, thus effectively selling the
synthetic security. Further, the amount of each contract might be adjusted in
response to market conditions and the forward currency contract might be changed
in amount or eliminated in order to hedge against currency fluctuations.
Further, while these futures and currency contracts remain open, the Funds will
comply with applicable SEC guidelines to set aside cash, U.S. government
securities or other liquid high grade debt securities in a segregated account
with its custodian in an amount sufficient to cover its potential obligations
under such contracts.
The Manager would create synthetic security positions for a Fund when it
believes that it can obtain a better yield or achieve cost savings in comparison
to purchasing actual bonds or when comparable bonds are not readily available in
the market. Synthetic security positions are subject to the risk that changes in
the value of purchased futures contracts may differ from changes in the value of
the bonds that might otherwise have been purchased in the cash market.
Also, while the Manager believes that the cost of creating synthetic security
positions generally will be materially lower than the cost of acquiring
comparable bonds in the cash market, a Fund will incur transaction costs in
connection with each purchase of a futures or forward currency contract. The use
of futures contracts and forward currency contracts to create synthetic security
positions also is subject to substantially the same risks as those that exist
when these instruments are used in connection with hedging strategies.
INTEREST RATE AND CURRENCY SWAPS
The Strategic Income Fund usually will enter into swaps on a net basis, that is,
the two payment streams are netted out in a cash settlement on the payment date
or dates specified in the instrument, with the Fund's receiving or paying, as
the case may be, only the net amount of the two payments. The net amount of the
excess, if any, of the Strategic Income Fund's obligations over its entitlements
with respect to each swap, will be accrued on a daily basis, and an amount of
cash or liquid
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GT GLOBAL VARIABLE INVESTMENT FUNDS
securities having an aggregate net asset value at least equal to the accrued
excess, will be maintained in an account by a custodian that satisfies the
requirement of the 1940 Act. The Strategic Income Fund will also establish and
maintain such segregated accounts with respect to its total obligations under
any swaps that are not entered into on a net basis and with respect to any caps
or floors that are written by the Fund. The Manager and the Strategic Income
Fund believe that swaps, caps and floors do not constitute senior securities
under the 1940 Act and, accordingly, will not treat them as being subject to the
Fund's borrowing restrictions.
The Strategic Income Fund will not enter into any swap, cap, floor, collar or
other derivative transaction unless, at the time of entering into the
transaction, the unsecured long-term debt rating of the counterparty combined
with any credit enhancements is rated at least A by Moody's Investors Service,
Inc. ("Moody's") or Standard & Poor's, a division of The McGraw-Hill Companies,
("S&P"), or has an equivalent rating from a nationally recognized statistical
rating organization or is determined to be of equivalent credit quality by the
Manager. If a counterparty defaults, the Strategic Income Fund may have
contractual remedies pursuant to the agreements related to the transactions. The
swap market has grown substantially in recent years, with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swap market has
become relatively liquid. Caps, floors and collars are more recent innovations
for which standardized documentation has not yet been fully developed, and, for
that reason, they are less liquid than swaps.
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RISK FACTORS
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ILLIQUID SECURITIES
Each Fund may invest up to 15% of its net assets (except for the Money Market
Fund, which may invest up to 10% of its net assets) in illiquid securities.
Securities may be considered illiquid if a Fund cannot reasonably expect within
seven days to sell the securities for approximately the amount at which the Fund
values such securities. See "Investment Limitations." The sale of illiquid
securities if they can be sold at all, generally will require more time and
result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities such as securities eligible for
trading on securities exchanges or in OTC markets. Moreover, restricted
securities, which may be illiquid for purposes of this limitation, often sell,
if at all, at a price lower than similar securities that are not subject to
restrictions on resale.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, 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 might 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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
purchasing Rule 144A-eligible restricted securities held by the Funds, however,
could affect adversely the marketability of such portfolio securities and the
Funds might be unable to dispose of such securities promptly or at favorable
prices.
With respect to liquidity determinations generally, a Company's Board of
Trustees has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act, are liquid or illiquid. Each Board has delegated the function of making
day-to-day determinations of liquidity to the Manager, in accordance with
procedures approved by that Board. The Manager takes into account a number of
factors in reaching liquidity decisions, including, but not limited to: (i) the
frequency of trading in the security; (ii) the number of dealers that make
quotes for the security; (iii) the number of dealers 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 held by each Fund and periodically
reports such determination to the Company's Boards of Trustees.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment; convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, a Fund could lose its entire investment in
any such country.
RELIGIOUS, POLITICAL, OR ETHNIC INSTABILITY. Certain countries in which a
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 a 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 a 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 a Fund. These restrictions or
controls may at times limit or preclude investment in certain securities and may
increase the cost and expenses of a Fund. For example, certain countries require
prior governmental approval before to investments by foreign persons maybe 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. A 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 a 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 foreign issuers of
securities held by the Fund than is available concerning U.S. issuers. In
instances where the financial statements of an issuer are not deemed to reflect
accurately the financial situation of the issuer, the Manager will take
appropriate steps to evaluate the proposed investment, which may include on-site
inspection of the issuer, interviews with its management and consultations with
accountants, bankers and other specialists. There is substantially less publicly
available information about foreign companies than there are reports and ratings
published about U.S. companies and the U.S. government. In addition, where
public information is available, it may be less reliable than such information
regarding U.S. issuers. Issuers of securities in foreign jurisdictions are
generally not subject to the same degree of regulation as are U.S. issuers
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GT GLOBAL VARIABLE INVESTMENT FUNDS
with respect to such matters as restrictions on market manipulation, insider
trading rules, shareholder proxy requirements and timely disclosure of
information.
CURRENCY FLUCTUATIONS. Because each Fund under normal circumstances (except
the Money Market Fund and to a lesser extent, the America Fund) will invest a
substantial portion of its total assets in the securities of foreign issuers
which are denominated in foreign currencies, the strength or weakness of the
U.S. dollar against such foreign currencies will account for part of a 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 a
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders in the Fund. Moreover, if the value
of the foreign currencies in which a Fund receives its income falls relative to
the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates, the pace of business activity in the other countries, and the
United States, and other economic and financial conditions affecting the world
economy.
Although each Fund values its assets daily in terms of U.S. dollars, the Funds
do not intend to convert their holdings of foreign currencies into U.S. dollars
on a daily basis. Each 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 buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at one
rate, while offering a lesser rate of exchange should a 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 United
States, and foreign securities transactions usually are subject to fixed
commissions, which generally are higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of a Fund are
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a security due
to settlement problems either could result in losses to a Fund due to subsequent
declines in value of that security or, if a 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 each
Fund's assets, although the Manager does not believe that such difficulties will
have a material adverse effect on a Fund's trading activities.
Each 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 determining and monitoring the foreign custodian's financial
strength, reputation and standing; maintaining appropriate safeguards concerning
the Fund's investments; and possible difficulties in obtaining and enforcing
judgments against such custodians.
WITHHOLDING TAXES. A 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 when
those taxes may be recaptured. See "Taxes."
CONCENTRATION. To the extent a Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, such Fund may be subject to greater risks and may experience greater
volatility than a fund that is more broadly diversified geographically.
SPECIAL CONSIDERATIONS AFFECTING WESTERN EUROPEAN COUNTRIES. The countries
that are members of the European Economic Community ("Common Market") (Belgium,
Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands,
Portugal, Spain, and the United Kingdom) eliminated certain import tariffs and
quotas and other trade barriers with respect to one another over the past
several years. The Manager believes that this deregulation should improve the
prospects for economic growth in many Western European countries. Among other
things, the deregulation could enable companies domiciled in one country to
avail themselves of lower labor costs existing in other countries. In addition,
this deregulation could benefit companies domiciled in one country by opening
additional markets for their goods and services in other countries. Since,
however, it is not clear what the exact form or effect of these Common Market
reforms
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GT GLOBAL VARIABLE INVESTMENT FUNDS
will be on business in Western Europe, it is impossible to predict the long-term
impact of the implementation of these programs on the securities owned by a
Fund.
SPECIAL CONSIDERATIONS AFFECTING RUSSIA AND EASTERN EUROPEAN COUNTRIES.
Investing in Russia and Eastern European countries involves a high degree of
risk and special considerations not typically associated with investing in the
United States securities markets, and should be considered highly speculative.
Such risks include: (1) delays in settling portfolio transactions and risk of
loss arising out of the system of share registration and custody; (2) the risk
that it may be impossible or more difficult than in other countries to obtain
and/or enforce a judgement; (3) pervasiveness of corruption and crime in the
economic system; (4) currency exchange rate volatility and the lack of available
currency hedging instruments; (5) higher rates of inflation (including the risk
of social unrest associated with periods of hyper-inflation) and high
unemployment; (6) controls on foreign investment and local practices disfavoring
foreign investors and limitations on repatriation of invested capital, profits
and dividends, and on a fund's ability to exchange local currencies for U.S.
dollars; (7) political instability and social unrest and violence; (8) the risk
that the governments of Russia and Eastern European countries may decide not to
continue to support the economic reform programs implemented recently and could
follow radically different political and/or economic policies to the detriment
of investors, including non-market-oriented policies such as the support of
certain industries at the expense of other sectors or investors, or a return to
the centrally planned economy that existed when such countries had a communist
form of government; (9) the financial condition of companies in these countries,
including large amounts of inter-company debt which may create a payments crisis
on a national scale; (10) dependency on exports and the corresponding importance
of international trade; (11) the risk that the tax system in these countries
will not be reformed to prevent inconsistent, retroactive and/or exorbitant
taxation; and (12) the underdeveloped nature of the securities markets.
SPECIAL CONSIDERATIONS AFFECTING JAPAN. Japan's economic growth has declined
significantly since 1990. The general government position has deteriorated as a
result of weakening economic growth and stimulative measures taken to support
economic activity and to restore financial stability. Although the decline in
interest rates and fiscal stimulation packages have helped to contain
recessionary forces, uncertainties remain. Japan is also heavily dependent upon
international trade, so its economy is especially sensitive to trade barriers
and disputes. Japan has had difficult relations with its trading partners,
particularly the United States, where the trade imbalance is the greatest. It is
possible that trade sanctions and other protectionist measures could impact
Japan adversely in both the short and the long term.
The common stocks of many Japanese companies trade at high price-earnings
ratios. Differences in accounting methods make it difficult to compare the
earnings of Japanese companies with those of companies in other countries,
especially in the U.S. In general, however, reported net income in Japan is
understated relative to U.S. accounting standards and this is one reason why
price-earnings ratios of the stocks of Japanese companies have tended
historically to be higher than those for U.S. stocks. In addition, Japanese
companies have tended to have higher growth rates than U.S. companies and
Japanese interest rates have generally been lower than in the U.S., both of
which factors tend to result in lower discount rates and higher price-earnings
ratios in Japan than in the U.S.
The Japanese securities markets are less regulated than those in the United
States. Evidence has emerged from time to time of distortion of market prices to
serve political or other purposes. Shareholders' rights are not always equally
enforced. In addition, Japan's banking industry is undergoing problems related
to bad loans and declining values in real estate.
SPECIAL CONSIDERATIONS AFFECTING PACIFIC REGION COUNTRIES. Certain of the
risks associated with international investments are heightened for investments
in Pacific region countries. For example, some of the currencies at 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.
Many of the Asia Pacific region countries may be subject to a greater degree of
social, political and economic instability than is the case in the United
States. Such instability may result from, among other things, the following: (i)
authoritarian governments or military involvement in political and economic
decision making, and changes in government through extra-constitutional means;
(ii) popular unrest associated with demands for improved political, economic and
social conditions; (iii) internal insurgencies; (iv) hostile relations with
neighboring countries; and (v) ethnic, religious and racial disaffection. Such
social, political and economic instability could significantly disrupt the
principal financial markets in which a Fund invests and adversely affect the
value of a Fund's assets. In addition, there may be the possibility of asset
expropriations or future confiscatory levels of taxation affecting the Funds.
In China, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea
and Thailand, government regulation or a company's charter may limit the maximum
foreign aggregate ownership of equity in any one company. South Korea generally
prohibits foreign investment in Won-denominated debt securities and Sri Lanka
prohibits foreign investment in
Statement of Additional Information Page 23
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GT GLOBAL VARIABLE INVESTMENT FUNDS
government debt securities. South Korea prohibits foreign investment in
specified telecommunications companies and the Philippines prohibits foreign
investment in mass media companies and companies providing certain professional
services. In the Philippines, a Fund may generally invest in "B" shares of
Philippine issuers engaged in partly nationalized business activities, the
market prices, liquidity and rights of which may vary from shares owned by
nationals. Similarly, in China, a Fund may only invest in "B" shares of
securities traded on The Shanghai Securities Exchange and The Shenzhen Stock
Exchange, currently the two officially recognized securities exchanges in China.
"B" shares traded on The Shanghai Securities Exchange are settled in U.S.
dollars, and those traded on The Shenzhen Stock Exchange are generally settled
in Hong Kong dollars.
If, because of restrictions on repatriation or conversion, a Fund were unable to
distribute substantially all of its net investment income and net capital gains
within applicable time periods, the Fund could be subject to federal income and
excise taxes that would not otherwise be incurred and could cease to qualify for
the favorable tax treatment afforded to regulated investment companies ("RICs")
under the Internal Revenue Code of 1986, as amended ("Code"). In such case, it
would become subject to federal income tax on all of its income and net capital
gains.
Several of the Asia Pacific region countries have or in the past have had
hostile relationships with neighboring nations or have experienced internal
insurgency. Thailand has experienced border conflicts with Laos and Cambodia,
and India is engaged in border disputes with several of its neighbors, including
China and Pakistan. An uneasy truce exists between North Korea and South Korea,
and the recurrence of hostilities remains possible. Reunification of North Korea
and South Korea could have a detrimental effect on the economy of South Korea.
Also, China continues to claim sovereignty over Taiwan and recently has
conducted military maneuvers near Taiwan.
The economies of most of the Asia Pacific region countries are heavily dependent
upon international trade and are accordingly affected by protective trade
barriers and the economic conditions of their trading partners, principally the
United States, Japan, China and the European Community. The enactment by the
United States or other principal trading partners of protectionist trade
legislation, reduction of foreign investment in the local economies and general
declines in the international securities markets could have a significant
adverse effect upon the securities markets of the Asia Pacific region countries.
In addition, the economies of some of the Asia Pacific region countries,
Australia and Indonesia, for example, are vulnerable to weakness in world prices
for their commodity exports, including crude oil.
Few of the Asia Pacific region countries have Western-style or fully democratic
governments. Some governments in the region are authoritarian in nature and
influenced by security forces. For example, during the course of the last 25
years, governments in the region have been installed or removed as a result of
military coups, while others have periodically demonstrated repressive police
state characteristics. In several Asia Pacific Region countries, the leadership
ability of the government has suffered as a result of recent corruption
scandals. Disparities of wealth, among other factors, have also led to social
unrest in some of the Asia Pacific region countries, accompanied, in certain
cases, by violence and labor unrest. Ethnic, religious and racial disaffection,
as evidenced in India, Pakistan, and Sri Lanka, for example, have created
social, economic and political problems. Such problems also have occurred in
other regions.
China recently assumed sovereignty over Hong Kong on July 1997. Although China
has committed by treaty to preserve the economic and social freedoms enjoyed in
Hong Kong for fifty years after regaining control of Hong Kong, the continuation
of the current form of the economic system in Hong Kong after the reversion will
depend on the actions of the government of China. In addition, such reversion
has increased sensitivity in Hong Kong to political developments and statements
by public figures in China. Business confidence in Hong Kong, therefore, can be
significantly affected by such developments and statements, which in turn can
affect markets and business performance.
In addition, the Chinese sovereignty over Hong Kong also presents a risk that
the Hong Kong dollar will be devaluated and a risk of possible loss of investor
confidence in the Hong Kong markets and dollar. However, factors exist that are
likely to mitigate this risk. First, China has stated its intention to implement
a "one country, two systems" policy, which would preserve monetary sovereignty
and leave control in the hands of the Hong Kong Monetary Authority ("HKMA").
Second, fixed rate parity with the U.S. dollar is seen as critical to
maintaining investors' confidence in the transition to Chinese rule and,
therefore, it is anticipated that, in the event international investors lose
confidence in Hong Kong dollar assets, the HKMA would intervene to support the
currency, though such intervention cannot be assured. Third, Hong Kong's and
China's sizable combined foreign exchange reserve may be used to support the
value of the Hong Kong dollar, provided that China does not appropriate such
reserves for other uses, which is not anticipated, but cannot be assured.
Finally, China would be likely to experience significant adverse political and
economic consequences if confidence in the Hong Kong dollar and the territory
assets were to be endangered.
Statement of Additional Information Page 24
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GT GLOBAL VARIABLE INVESTMENT FUNDS
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICAN COUNTRIES. Most Latin
American countries have experienced substantial, and in some periods extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have very negative effects on the
economies and securities markets of certain Latin American countries. Certain
Latin American countries are also among the largest debtors to commercial banks
and foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.
Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.
Certain Latin American countries may have managed currencies that are maintained
at artificial levels to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
currency which, in turn, can have a disruptive and negative effect on foreign
investors. For example, in late 1994, the value of the Mexican peso lost more
than one-third of its value relative to the U.S. dollar.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in the
securities of companies in emerging markets may entail special risks relating to
potential political and economic instability and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility into U.S. dollars and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation by any country, a 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.
Statement of Additional Information Page 25
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GT GLOBAL VARIABLE INVESTMENT FUNDS
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
Each Fund is subject to certain fundamental investment limitations that may not
be changed without approval by affirmative vote of the lesser of (i) 67% or more
of the Fund's shares represented at a shareholders' meeting at which more than
50% of the outstanding shares of the Fund are represented at the meeting in
person or by proxy, or (ii) more than 50% of the outstanding shares of the Fund.
Each Fund is also subject to nonfundamental limitations that may be changed by
vote of the applicable Company's Board of Trustees without shareholder approval.
NEW PACIFIC FUND, INTERNATIONAL FUND, EUROPE FUND AND AMERICA FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
No Fund may:
(1) Invest in companies for the purpose of exercising control or
management;
(2) Purchase or sell real estate; provided that a Fund may invest in
securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell interests in oil, gas or other mineral exploration
or development programs, except that a Fund may invest in the securities of
companies that engage in these activities;
(4) Purchase or sell commodities or commodity contracts, except that a
Fund may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in other transactions
in foreign currencies;
(5) Mortgage, pledge or in any other manner transfer as security for any
indebtedness, any of its assets except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of a Fund's assets;
(6) Borrow money in excess of 33 1/3% of a Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(7) Purchase securities on margin or effect short sales, except that a
Fund may obtain such short-term credits as may be necessary for the
clearance of purchases or sales of securities and except in connection with
the use of options, futures contracts, options thereon or forward currency
contracts. A Fund may make deposits of margin in connection with futures and
forward contracts and options thereon;
(8) Participate on a joint or a joint and several basis in any trading
account in securities. (The "bunching" of orders for the sale or purchase of
marketable securities with other accounts under the management of the
Manager to save brokerage costs or average prices among them is not deemed
to result in a securities trading account);
(9) Make loans, except that a Fund may purchase debt securities and
enter into repurchase agreements and make loans of securities;
(10) Purchase or retain the securities of an issuer if, to the knowledge
of the Fund, one or more of the Trustees or officers of that Company or the
Manager individually own beneficially more than 1/2 of 1% of the securities
of such issuer and together own beneficially more than 5% of such
securities;
(11) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of securities, a Fund may be deemed an
underwriter under federal or state securities laws; or
(12) Invest more than 25% of the value of a Fund's total assets in
securities of issuers conducting their principal business activities in any
one industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. government or
any of its agencies or instrumentalities.
Statement of Additional Information Page 26
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GT GLOBAL VARIABLE INVESTMENT FUNDS
NONFUNDAMENTAL INVESTMENT LIMITATIONS.
No Fund may:
(1) Invest more than 15% of its net assets in illiquid securities, a
term which means securities that cannot be disposed of within seven days in
the normal course of business at approximately the amount at which the Fund
has valued the securities and includes, among other things, repurchase
agreements maturing in more than seven days;
(2) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Fund's total
assets; 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 these
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of a Fund's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Fund has
entered into.
A Fund will not knowingly exercise rights or otherwise acquire securities when
to do so would jeopardize the Fund's status under the 1940 Act as a diversified
investment company. A Fund may exchange securities, exercise conversion or
subscription rights, warranties, or other rights to purchase common stock or
other equity securities and may hold, except to the extent limited by the 1940
Act, any such securities so acquired without regard to the Fund's investment
policies and restrictions. The original cost of the securities so acquired will
be included in any subsequent determination of a Fund's compliance with the
investment percentage limitations referred to above and in the Funds'
Prospectus.
INFRASTRUCTURE FUND AND NATURAL RESOURCES FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
Neither Fund may:
(1) Buy or sell real estate (including real estate limited
partnerships); however, each Fund may invest in debt securities secured by
real estate or interests therein or issued by companies which invest in real
estate or interests therein, including real estate investment trusts;
(2) Buy or sell commodities or commodity contracts, except that each
Fund may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in other transactions
in foreign currencies;
(3) Underwrite securities of other issuers, except to the extent that
the disposition of an investment position may technically cause it to be
considered an underwriter as that term is defined under the 1933 Act;
(4) Make loans, except that each Fund may purchase debt securities and
enter into repurchase agreements and may make loans of portfolio securities;
(5) Purchase securities on margin, provided that each Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts;
(6) Borrow money except from banks not in excess of 33 1/3% of the value
of each Fund's total assets, (including the amount borrowed), less all
liabilities and indebtedness (other than the borrowing). This restriction
shall not prevent either Fund from entering into reverse repurchase
agreements, provided that reverse repurchase agreements, and any other
transactions constituting borrowing by a Fund may not exceed one-third of
that Fund's total assets. Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, as described in
the Prospectus and Statement of Additional Information, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities; or
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, each Fund may invest in the
securities of companies that engage in these activities.
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
NONFUNDAMENTAL INVESTMENT LIMITATIONS.
Neither Fund may:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for bona fide hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of a Fund's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Fund has
entered into;
(5) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Fund's total assets.
While borrowings exceed 5% of the Infrastructure Fund's or Natural Resources
Fund's total assets, such Fund will not make any additional investments; or
(6) Invest more than 10% of its total assets in shares of other
investment companies and may not invest more than 5% of its total assets in
any one investment company or acquire more than 3% of the outstanding voting
securities of any one investment company.
TELECOMMUNICATIONS FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
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, other than the telecommunications industry, except that this
limitation shall not apply to securities issued or guaranteed as to
principal and interest by the U.S. government or any of its agencies or
instrumentalities;
(2) Buy or sell real estate (including real estate limited
partnerships); 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;
(3) Purchase or sell commodities or commodity contracts, except that the
Fund may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in other transactions
in foreign currencies;
(4) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposition of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act;
(5) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and may make loans of securities;
(6) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities except that it may make margin deposits in
connection with futures contracts;
(7) Borrow money except from banks not in excess of 33 1/3% of the value
of the Fund's total assets, including the amount borrowed, less all
liabilities and indebtedness (other than the borrowing). This restriction
shall not prevent the Fund from entering into reverse repurchase agreements,
provided that reverse repurchase agreements, and any other transactions
constituting borrowing by the Fund may not exceed one-third of the Fund's
total assets, respectively. Transactions involving options, futures
contracts, options on futures contracts and forward currency contracts, as
described in the Funds' Prospectus and Statement of Additional Information,
and collateral arrangements relating thereto will not be deemed to be
borrowings;
Statement of Additional Information Page 28
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GT GLOBAL VARIABLE INVESTMENT FUNDS
(8) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities; or
(9) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, the Fund may invest in the
securities of companies that engage in these activities.
NONFUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for bona fide hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into; or
(5) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Fund's total
assets. While borrowings exceed 5% of the Fund's total assets, the Fund will
not make any additional investments.
EMERGING MARKETS FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. government or
any of its agencies or instrumentalities;
(2) Purchase or sell real estate, provided that the Fund may invest in
securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell commodities or commodity contracts, except that the
Fund may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in transactions in
foreign currencies;
(4) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund may be
deemed an underwriter under federal or state securities laws;
(5) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(6) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with the use of options, futures contracts, options thereon or
forward currency contracts. The Fund may make deposits of margin in
connection with futures and forward contracts and options thereon;
(7) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(8) Mortgage, pledge, or in any other manner transfer as security for
any indebtedness any of its assets, except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of the Fund's assets;
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(9) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs, however, the Fund may invest in
securities of companies that engage in these activities; or
(10) With respect to 75% of its total assets, invest more than 5% of its
assets in the securities of any one issuer or purchase more than 10% of the
outstanding voting securities of any one issuer.
NONFUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on CFTC-regulated exchange, in each
case other than for bona fide hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into; or
(4) Borrow money, except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Fund's total assets
and except that the Fund may purchase securities when outstanding borrowings
represent no more than 5% of the Fund's assets.
LATIN AMERICA FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. government or
any of its agencies or instrumentalities;
(2) Buy and 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 Funds' Prospectus and
Statement of Additional Information;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act;
(4) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and may make loans of securities;
(5) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts;
(6) Borrow money except from banks for temporary or emergency purposes
not in excess of 33 1/3% of the value of the Fund's total assets (at the
lower of cost or fair market value). The Fund will not purchase securities
while borrowings (including reverse repurchase agreements) in excess of 5%
of total assets are outstanding. This restriction shall not prevent the Fund
from entering into reverse repurchase agreements provided that reverse
repurchase agreements, and any other transactions constituting borrowing by
the Fund, may not exceed one-third of the Fund's total assets. In the event
that the asset coverage for the Fund's borrowings falls below 300%, the Fund
will reduce, within three days (excluding Sundays and holidays), the amount
of its borrowings in order to provide for 300% asset coverage;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities; and
Statement of Additional Information Page 30
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GT GLOBAL VARIABLE INVESTMENT FUNDS
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, the Fund may invest in the
securities of companies that engage in these activities.
NONFUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market; or
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for bona fide hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into.
GROWTH & INCOME FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
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 Funds' Prospectus and Statement of Additional
information and subject to investment 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 over-the-counter options or hold assets set aside to cover
over-the-counter options written by the Fund, if, immediately after and as a
result, the value of such securities would exceed, in the aggregate, 15% of
the Fund's net assets;
(5) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act;
(6) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of 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 investment 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 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
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 Trustees of the Company, the Fund or the Fund's investment
adviser, or distributor, each owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of the securities of
such issuer.
NONFUNDAMENTAL INVESTMENT LIMITATIONS.
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 a Fund's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Fund has
entered into.
STRATEGIC INCOME FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
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 Funds' Prospectus and Statement of Additional
Information and subject to (13) below;
(4) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the Securities Act of 1933;
(5) Make loans, except that the Fund may invest in loans and
participations, purchase debt securities and enter into repurchaseagreements
and make loans of securities;
(6) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(7) Purchase securities on margin provided that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities, except that the Fund may make margin deposits in
connection with futures contracts subject to (13) below;
(8) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). The 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
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
Fund's total assets. In the event that the asset coverage for the Fund's
borrowings fall below 300%, the Fund, as the case may be, will reduce,
within three days (excluding Sundays and holidays), the amount of its
borrowings in order to provide for 300% asset coverage. Transactions
involving options, futures contracts, options on futures contracts and
forward currency contracts, and collateral arrangements relating thereto
will not be deemed to be borrowings;
(9) Mortgage or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection with
any permissible borrowing;
(10) Invest in interests in oil, gas or other mineral exploration or
development programs;
(11) Invest more than 5% of its total assets in securities of companies
having, together with predecessors, a record of less than three years of
continuous operation;
(12) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Company, the Fund or the Fund's investment
adviser, or distributor, each owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of the securities of
such issuer; or
(13) Enter into a futures contract if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract), would be committed to margin on such futures contracts.
NONFUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Invest more than 15% of its net assets in illiquid securities; or
(2) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer.
GLOBAL GOVERNMENT INCOME FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
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 Funds' Prospectus and Statement of Additional
Information and subject to (14) below;
(4) Acquire securities subject to restrictions on disposition of
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 over-the-counter options or hold assets set aside to cover
over-the-counter options written by the Fund, if, immediately after and as a
result, the value of such securities would exceed, in the aggregate, 15% of
the Fund's net assets;
(5) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act;
(6) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of securities;
(7) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(8) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities, except that the Fund may make margin deposits in
connection with futures contracts subject to (14) below;
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(9) Borrow money, except from banks or for temporary or emergency
purposes not in excess of 30% of the value of the Fund's total assets. The
Fund will not purchase securities while such borrowings are outstanding.
This restriction shall not prevent the Fund from entering into reverse
repurchase agreements and engaging in "roll" transactions, provided that
reverse repurchase agreements, "roll" transactions and any other
transactions constituting borrowing by the Fund may not exceed one-third of
the Fund's total assets. In the event that the asset coverage for the Fund's
borrowings falls below 300%, the Fund will reduce, within three days
(excluding Sundays and holidays), the amount of its borrowings in order to
provide for 300% asset coverage;
(10) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing;
(11) Invest in interests in oil, gas, or other mineral exploration or
development programs;
(12) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation;
(13) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Company, the Fund or the Fund's investment
adviser, or distributor, each owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of the securities of
such issuer; or
(14) Enter into a futures contract if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract), would be committed to margin on such futures contracts.
NONFUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund will not invest in securities of an issuer if the investment would
cause the Fund to own more than 10% of any class of securities of any one
issuer.
U.S. GOVERNMENT INCOME FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. government or
any of its agencies or instrumentalities;
(2) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts, and may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Funds' Prospectus and Statement of Additional
Information and subject to investment policy (6) below;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the 1933 Act;
(4) Make loans, except that the Fund may invest in loans and
participations, purchase debt securities and enter into repurchase
agreements and make loans of securities;
(5) 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;
(6) Purchase securities on margin provided that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities, except that the Fund may make margin deposits in
connection with futures contracts subject to investment policy (6) below;
(7) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). The 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 fall below 300%, the Fund, as the
case may be, will reduce, within three days (excluding Sundays and
holidays), the amount of its borrowings in order to
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
provide for 300% asset coverage. Transactions involving options, futures
contracts, options on futures contracts and forward currency contracts, and
collateral arrangements relating thereto will not be deemed to be
borrowings;
(8) Mortgage, pledge or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing; or
(9) Invest in interests in oil, gas or other mineral exploration or
development programs.
NONFUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Invest in companies for the purpose of exercising control or
management;
(2) Invest more than 15% of its net assets in illiquid securities;
(3) 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; or
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for bona fide hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into.
MONEY MARKET FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Purchase common stocks, preferred stocks, warrants or other equity
securities;
(2) Issue senior securities;
(3) Pledge, mortgage or hypothecate its assets except to secure
borrowings as disclosed in the Funds' Prospectus;
(4) Sell securities short, purchase securities on margin, or engage in
option transactions;
(5) Underwrite the sale of securities of other issuers;
(6) Purchase or sell real estate interests, commodities or commodity
contracts or oil and gas investments;
(7) Make loans, except: (i) the purchase of debt securities in
accordance with the Fund's objectives and policies shall not be considered
making loans, and (ii) pursuant to contracts providing for the compensation
of service provided by compensating balances;
(8) Purchase the securities issued by other investment companies, except
as they may be acquired as part of a merger, consolidation or acquisition of
assets; and
(9) Invest more than 25% of the value of the Fund's assets in securities
of issuers in any one industry, except that the Fund is permitted to invest
without such limitation in U.S. government-backed obligations.
NONFUNDAMENTAL INVESTMENT LIMITATIONS
The Fund may not invest more than 10% of its net assets in illiquid securities.
ALL FUNDS
For purposes of each Fund's concentration policy (except with respect to Growth
& Income Fund), 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.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage resulting from a change in values or assets
will not constitute a violation of that restriction.
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
All of the Funds have the following investment policies, which may be changed by
the Company's Board of Trustees without shareholder or investor approval:
No Fund may:
(1) Hold assets of any issuers, at the end of any calendar quarter (or
within 30 days thereafter), to the extent such holdings would cause the Fund
to fail to comply with the diversification requirements for segregated asset
accounts used to fund variable annuity contracts imposed by Section 817(h)
of the Code and the Treasury regulations issued thereunder; or
(2) Except under unusual circumstances, purchase securities issued by
investment companies unless they are issued by companies that follow a
policy of investment primarily in the capital markets of a single foreign
entity.
Policies that are designated as operating policies may be changed only upon
approval by the Board of Trustees and following appropriate notice to
shareholders.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by each Company's Board of Trustees, the Manager
is responsible for the execution of the Funds' securities transactions and the
selection of broker/dealers who execute such transactions on behalf of the
Funds. In executing transactions, the Manager seeks the best net results for
each Fund, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. While the Manager
generally seeks reasonably competitive commission rates and spreads, payment of
the lowest commission or spread is not necessarily consistent with the best net
results. While the Funds may engage in soft dollar arrangements for research
services, as described below, the Funds have no obligation to deal with any
broker or dealer or group of brokers or dealers in the execution of securities
transactions.
Consistent with the interests of the Funds, the Manager may select brokers on
the basis of the research and brokerage services they provide to the Manager for
its use in managing the Funds 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 investment management and administration contracts. A commission
paid to such brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction, provided that the Manager
determines in good faith that such commission is reasonable in terms either of
that particular transaction or the overall responsibility of the Manager to the
Funds and its other clients and that the total commissions paid by each Fund
will be reasonable in relation to the benefits received by the Funds over the
long term. Research services may also be received from dealers who execute Fund
transactions in OTC markets.
The Manager may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by the Funds toward payment of the Funds' expenses, such as
custodian fees.
Investment decisions for each 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 one or more Funds. In such cases
simultaneous transactions may occur. Purchases or sales are then allocated as to
price or amount in a manner deemed fair and equitable to all accounts involved.
While in some cases this practice could have a detrimental effect upon the price
or value of the security as far as a Fund is concerned, in other cases the
Manager believes that coordination and the ability to participate in volume
transactions will be beneficial to the Funds.
Under a policy adopted by each Company's Board of Trustees, and subject to the
policy of obtaining the best net results, the Manager may consider a
broker/dealer's sale of the shares of the Funds, and the other GT Global Mutual
Funds in
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
selecting brokers and dealers for the execution of securities transactions. This
policy does not imply a commitment to execute securities transactions through
all broker/dealers that sell shares of such funds.
Each Fund contemplates purchasing most foreign equity securities in OTC markets
or stock exchanges located in the countries in which the respective principal
offices of the issuers of the various securities are located if that is the best
available market. The fixed commissions paid in connection with most such
foreign stock transactions generally are higher than negotiated commissions on
U.S. transactions. There generally is less government supervision and regulation
of foreign stock exchanges and brokers than in the United States. Foreign
security settlements may in some instances be subject to delays and related
administrative uncertainties.
Foreign equity securities may be held by a 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
Funds may invest are generally traded in the OTC markets.
The Funds contemplate that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through affiliates of
Liechtenstein Global Trust. Each Company's Board of Trustees 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 year ended December 31, 1996, the Growth & Income Fund paid LGT
Bank in Liechtenstein (Deutschland) Gmbh, an "affiliated" broker as defined in
the 1940 Act, aggregate brokerage commissions of $611.63 for transactions
involving purchases and sales of portfolio securities, which represented .04% of
the total brokerage commissions paid by the Growth & Income Fund and 0% of the
aggregate dollar amount of transactions involving payment of commissions by the
Growth & Income Fund. For the fiscal year ended December 31, 1995, the Europe
Fund paid LGT Bank in Liechtenstein (Zurich) brokerage commissions of $565 for
transactions involving purchases and sales of portfolio securities, which
represented 2.22% of the total brokerage commissions paid by the Europe Fund and
0% of the aggregate dollar amount of transactions involving payment of
commissions by the Europe Fund.
The aggregate brokerage commissions paid by the Funds for the fiscal periods
ended December 31, 1995, 1996 and 1997, are as follows:
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
GT GLOBAL
<S> <C>
Variable America Fund.................................................................................................. $ 48,017
Variable Europe Fund................................................................................................... 81,066
Variable New Pacific Fund.............................................................................................. 148,304
Variable International Fund............................................................................................ 32,846
Money Market Fund...................................................................................................... 0
Variable Growth & Income Fund.......................................................................................... 24,481
Variable Strategic Income Fund......................................................................................... 0
Variable Global Government Income Fund................................................................................. 0
Variable U.S. Government Income Fund................................................................................... 0
Variable Latin America Fund............................................................................................ 163,060
Variable Telecommunications Fund....................................................................................... 75,529
Variable Emerging Markets Fund......................................................................................... 100,931
</TABLE>
JANUARY 31, 1995 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 1995
<TABLE>
<CAPTION>
GT GLOBAL
<S> <C>
Variable Infrastructure Fund........................................................................................... $ 4,412
Variable Natural Resources Fund........................................................................................ 8,399
</TABLE>
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
GT GLOBAL
<S> <C>
Variable America Fund.................................................................................................. $ 149,008
Variable Europe Fund................................................................................................... 97,808
Variable New Pacific Fund.............................................................................................. 196,708
Variable International Fund............................................................................................ 29,787
Money Market Fund...................................................................................................... 0
Variable Growth & Income Fund.......................................................................................... 15,766
Variable Strategic Income Fund......................................................................................... 3,923
Variable Global Government Income Fund................................................................................. 496
Variable U.S. Government Income Fund................................................................................... 237
Variable Latin America Fund............................................................................................ 134,264
Variable Telecommunications Fund....................................................................................... 69,333
Variable Emerging Markets Fund......................................................................................... 174,892
Variable Infrastructure Fund........................................................................................... 11,718
Variable Natural Resources Fund........................................................................................ 68,778
</TABLE>
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
GT GLOBAL
<S> <C>
Variable America Fund..................................................................................................
Variable Europe Fund...................................................................................................
Variable New Pacific Fund..............................................................................................
Variable International Fund............................................................................................
Money Market Fund......................................................................................................
Variable Growth & Income Fund..........................................................................................
Variable Strategic Income Fund.........................................................................................
Variable Global Government Income Fund.................................................................................
Variable U.S. Government Income Fund...................................................................................
Variable Latin America Fund............................................................................................
Variable Telecommunications Fund.......................................................................................
Variable Emerging Markets Fund.........................................................................................
Variable Infrastructure Fund...........................................................................................
Variable Natural Resources Fund........................................................................................
</TABLE>
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
TRADING AND TURNOVER
Although each Fund does not intend generally to trade for short-term profits,
the securities held by that Fund will be sold whenever management believes it is
appropriate to do so, without regard to the length of time a particular security
may have been held. Portfolio turnover rate is calculated by dividing the lesser
of sales or purchases of portfolio securities by each Fund's average month-end
portfolio value, excluding short-term investments. The portfolio turnover rate
will note a limiting factor when management deems portfolio changes appropriate.
Higher portfolio turnover involves correspondingly greater brokerage commissions
and other transaction costs that the Fund will bear directly, and may result in
the realization of net capital gains that are taxable when distributed to each
Fund's shareholders. The portfolio turnover rates for the Funds for the fiscal
year ended December 31, 1996 and the portfolio turnover rates for the Funds
(except for the Infrastructure Fund and Natural Resources Fund) for the fiscal
year ended December 31, 1995, and for the Infrastructure Fund and Natural
Resources Fund for the period January 31, 1995 to December 31, 1995, were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------------
GT GLOBAL VARIABLE 1997 1996
- -------------------------------------------------- ------------ ------------
<S> <C> <C>
America Fund...................................... 248%
Europe Fund....................................... 56%
New Pacific Fund.................................. 70%
International Fund................................ 92%
Money Market Fund................................. N/A
Growth & Income Fund.............................. 57%
Strategic Income Fund............................. 210%
Global Government Income Fund..................... 235%
U.S. Government Income Fund....................... 49%
Latin America Fund................................ 102%
Telecommunications Fund........................... 77%
Emerging Markets Fund............................. 216%
Infrastructure Fund............................... 76%
Natural Resources Fund............................ 199%
</TABLE>
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
TRUSTEES AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Trustees and Executive Officers of each Company are listed below:
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH EACH PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND THE FUNDS 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;
Trustee, 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
Trustee partnership); Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking
220 Sansome Street firm); Director, Anderson Capital Management, Inc. since 1988; Director, Premium Wear,
Suite 400 Inc. (formerly Munsingwear, Inc.) (a casual apparel company) and Director, "R" Homes, Inc.
San Francisco, CA 94104 and 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
Trustee Chairman of C.D. Stimson Company (a private investment company). Mr. Bayley also is 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
Trustee 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 also is a director or trustee of each of the other investment companies registered under
the 1940 Act that is managed or administered by the Manager.
Ruth H. Quigley, 62 Miss Quigley is a private investor. From 1984 to 1986, she was President of Quigley
Trustee Friedlander & Co., Inc. (a financial advisory services firm). Miss Quigley also is 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 the Manager; Chairman of the Board of Chancellor Capital
Trustee 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 also is a director or trustee of each of the other investment companies
registered under the 1940 Act that is managed or administered by the Manager.
</TABLE>
- --------------
* Mr. Guilfoyle and Mr. Wade are "interested persons" of each Company as
defined by the 1940 Act due to their affiliation with the LGT companies.
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH EACH PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND THE FUNDS 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 the Manager, 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., the
Manager, 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 Trustees of each Company 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 Trustees, reviewing audits of the
Company and its Funds and recommending firms to serve as independent auditors of
the Company. Each of the Trustees and Officers of each Company is also a
Director and Officer of G.T. Investment Funds, Inc., G.T. Investment Portfolios,
Inc., and G.T. Global Floating Rate Fund, Inc. and a Trustee and Officer of G.T.
Global Growth Series, G.T. Global Eastern Europe Fund, Global High Income
Portfolio, Global Investment Portfolio, Growth Portfolio and Floating Rate
Portfolio, which also are registered investment companies managed or
administered by the Manager. Each Trustee and Officer serves in total as a
Director and or Trustee and Officer, respectively, of 12 registered investment
companies and 42 series managed or administered by the Manager. Each Trustee who
is not a director, officer or employee of the Manager or any affiliated company
is paid aggregate fees of $5,000 per annum, plus $300 per Fund for each meeting
of the Board attended, and reimbursed travel and other expenses incurred in
connection with attending Board meetings. Other Trustees and officers receive no
compensation or expense reimbursements from the Company. For the fiscal year
ended December 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 from G.T. Global Variable Investment Series and
G.T. Global Variable Investment Trust aggregate Trustees' fees and expenses of
$ and $ , $ and $ , $ and $ and $ and
$ , respectively. For the fiscal year ended December 31, 1997, Mr.
Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley received total compensation
of $ , $ , $ and $ , 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 Trustees contained no
accrued or payable pension, or retirement benefits. As of the date of this
Statement of Additional Information, the officers and Trustees and their
families as a group do not own beneficially or of record any of the outstanding
shares of any Fund.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
The Manager serves as each Fund's investment manager and administrator under an
Investment Management and Administration Contract (individually, a "Management
Contract," collectively, the "Management Contracts") between that Fund and the
Manager. As investment manager, the Manager makes all investment decisions for
each Fund and administers each Fund's affairs. The Manager also serves as the
Company's administrator under an Administration Contract ("Administration
Contract") between each Company and the Manager. As administrator, the Manager,
among other things, 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 provides suitable office space, and
necessary small office equipment and utilities.
Each Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by: (i) that
Fund's Board of Trustees, or by the vote of a majority of that Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Trustees who are not parties to that Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the purpose of voting on such approval. Either the Fund or
the Manager may terminate a Management Contract without penalty upon sixty (60)
days' written notice to the other party. Each Management Contract terminates
automatically in the event of its assignment (as defined in the 1940 Act).
The amounts of investment management and administration fees paid by each Fund
for the fiscal periods ended December 31, 1995, 1996 and 1997 were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------------------
INVESTMENT
MANAGEMENT REIMBURSEMENT
GT GLOBAL FEES AMOUNT
- ---------------------------------------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Variable America Fund............................................................................... $ 236,272 $ 18,927
Variable Europe Fund................................................................................ 152,847 71,515
Variable New Pacific Fund........................................................................... 204,362 73,848
Variable International Fund......................................................................... 32,608 32,608
Money Market Fund................................................................................... 79,561 48,354
Variable Strategic Income Fund...................................................................... 173,720 56,631
Variable Global Government Income Fund.............................................................. 81,039 71,061
Variable U.S. Government Income Fund................................................................ 33,749 33,749
Variable Latin America Fund......................................................................... 205,457 89,040
Variable Emerging Markets Fund...................................................................... 76,146 73,847
Variable Telecommunications Fund.................................................................... 434,684 6,725
Variable Growth & Income Fund....................................................................... 277,913 53,927
Variable Infrastructure Fund
(from January 31, 1995, commencement of operations)................................................ 6,836 6,836
Variable Natural Resources Fund
(from January 31, 1995, commencement of operations)................................................ 5,918 5,918
</TABLE>
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------------------
INVESTMENT
MANAGEMENT REIMBURSEMENT
GT GLOBAL FEES AMOUNT
- ---------------------------------------------------------------------------------------------------- ------------ ---------------
Variable America Fund............................................................................... $ 290,233 $ 3,077
<S> <C> <C>
Variable Europe Fund................................................................................ 200,116 43,852
Variable New Pacific Fund........................................................................... 291,308 43,012
Variable International Fund......................................................................... 45,476 45,476
Money Market Fund................................................................................... 76,778 15,508
Variable Strategic Income Fund...................................................................... 201,749 36,678
Variable Global Government Income Fund.............................................................. 81,007 51,249
Variable U.S. Government Income Fund................................................................ 39,093 39,093
Variable Latin America Fund......................................................................... 224,901 38,459
Variable Emerging Markets Fund...................................................................... 149,042 63,577
Variable Growth & Income Fund....................................................................... 317,655 15,992
Variable Telecommunications Fund.................................................................... 599,839 --
Variable Infrastructure Fund........................................................................ 35,043 35,043
Variable Natural Resources Fund..................................................................... 75,133 47,923
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-----------------------------
INVESTMENT
MANAGEMENT REIMBURSEMENT
GT GLOBAL FEES AMOUNT
- ---------------------------------------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Variable America Fund...............................................................................
Variable Europe Fund................................................................................
Variable New Pacific Fund...........................................................................
Variable International Fund.........................................................................
Money Market Fund...................................................................................
Variable Strategic Income Fund......................................................................
Variable Global Government Income Fund..............................................................
Variable U.S. Government Income Fund................................................................
Variable Latin America Fund.........................................................................
Variable Emerging Markets Fund......................................................................
Variable Growth & Income Fund.......................................................................
Variable Telecommunications Fund....................................................................
Variable Infrastructure Fund........................................................................
Variable Natural Resources Fund.....................................................................
</TABLE>
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
In addition to payment of the investment management and administration fees, the
Funds paid other operating expenses and received reimbursement pursuant to
undertakings in effect. The amount of such expenses and reimbursements for the
Funds for the fiscal periods ended December 31, 1997, 1996 and 1995 were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
----------------------------
OTHER
EXPENSES REIMBURSEMENT
GT GLOBAL PAID AMOUNT
- ------------------------------------------------------------------------------------------------------ ----------- ---------------
<S> <C> <C>
Variable America Fund.................................................................................
Variable Europe Fund..................................................................................
Variable New Pacific Fund.............................................................................
Variable International Fund...........................................................................
Money Market Fund.....................................................................................
Variable Strategic Income Fund........................................................................
Variable Global Government Income Fund................................................................
Variable U.S. Government Income Fund..................................................................
Variable Latin America Fund...........................................................................
Variable Emerging Markets Fund........................................................................
Variable Growth & Income Fund.........................................................................
Variable Telecommunications Fund......................................................................
Variable Infrastructure Fund..........................................................................
Variable Natural Resources Fund.......................................................................
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
----------------------------
OTHER
EXPENSES REIMBURSEMENT
GT GLOBAL PAID AMOUNT
- ------------------------------------------------------------------------------------------------------ ----------- ---------------
<S> <C> <C>
Variable America Fund................................................................................. $ 99,786 $ 0
Variable Europe Fund.................................................................................. 93,881 0
Variable New Pacific Fund............................................................................. 115,841 0
Variable International Fund........................................................................... 67,753 10,908
Money Market Fund..................................................................................... 53,896 0
Variable Strategic Income Fund........................................................................ 103,927 0
Variable Global Government Income Fund................................................................ 78,263 0
Variable U.S. Government Income Fund.................................................................. 52,137 11
Variable Latin America Fund........................................................................... 94,685 0
Variable Emerging Markets Fund........................................................................ 100,828 0
Variable Telecommunications Fund...................................................................... 100,108 0
Variable Growth & Income Fund......................................................................... 95,407 0
Variable Infrastructure Fund.......................................................................... 53,612 9,807
Variable Natural Resources Fund....................................................................... 66,706 0
</TABLE>
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
----------------------------
OTHER
EXPENSES REIMBURSEMENT
GT GLOBAL PAID AMOUNT
- ------------------------------------------------------------------------------------------------------ ----------- ---------------
<S> <C> <C>
Variable America Fund................................................................................. $ 97,684 $ 0
Variable Europe Fund.................................................................................. 109,726 0
Variable New Pacific Fund............................................................................. 124,938 0
Variable International Fund........................................................................... 82,424 41,664
Money Market Fund..................................................................................... 88,135 0
Variable Strategic Income Fund........................................................................ 114,537 0
Variable Global Government Income Fund................................................................ 98,074 0
Variable U.S. Government Income Fund.................................................................. 81,338 36,337
Variable Latin America Fund........................................................................... 140,403 0
Variable Emerging Markets Fund........................................................................ 92,884 0
Variable Telecommunications Fund...................................................................... 115,396 0
Variable Growth & Income Fund......................................................................... 123,407 0
Variable Infrastructure Fund
(from January 31, 1995, commencement of operations).................................................. 51,789 43,241
Variable Natural Resources Fund
(from January 31, 1995, commencement of operations).................................................. 47,798 40,401
</TABLE>
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
GT Services ("Transfer Agent") performs shareholder servicing, reporting and
general transfer agent functions for the Funds. For these services, the Transfer
Agent receives a fee of $125 per month from each Fund. The Transfer Agent also
is reimbursed by the Funds for its out-of-pocket expenses for such items as
postage, forms, telephone charges, stationery and office supplies.
The Manager also serves as each Fund's pricing and accounting agent. For the
fiscal years ended December 31, 1997, December 31, 1996 and December 31, 1995,
the pricing and accounting services fees for the Funds were:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
GT GLOBAL 1997 1996 1995
- -------------------------------------------------- ------ ------ ------
<S> <C> <C> <C>
Variable Strategic Income Fund.................... $6,725 $2,523
Variable Global Government Income Fund............ 2,707 1,197
Variable U.S. Government Income Fund.............. 1,305 567
Variable Latin America Fund....................... 5,629 2,080
Variable Growth & Income Fund..................... 7,952 3,066
Variable Telecommunications Fund.................. 14,996 5,248
Variable Emerging Markets Fund.................... 3,728 884
Variable Infrastructure Fund...................... 877 124
Variable Natural Resources Fund................... 1,878 109
Variable America Fund............................. 9,687 4,066
Variable New Pacific Fund......................... 7,289 2,215
Variable Europe Fund.............................. 4,997 1,673
Money Market Fund................................. 3,883 1,633
Variable International Fund....................... 1,137 386
</TABLE>
EXPENSES OF THE FUNDS
As described in the Funds' Prospectus, each Fund pays all of its respective
expenses not assumed by other parties. The allocation of general Company
expenses and expenses shared by the Funds with one another, are allocated on a
basis deemed fair and equitable, which may be based on the relative net assets
of the Funds or the nature of the services performed and relative applicability
to each Fund. Expenditures, including costs incurred in connection with the
purchase or sale of securities, which are capitalized in accordance with
generally accepted accounting principles applicable to investment companies, are
accounted for as capital items and not as expenses. The ratio of each Fund's
expenses to its relative net assets can be expected to be higher than the
expense ratios of funds investing solely in domestic securities, since the cost
of maintaining the custody of foreign securities and the rate of investment
management fees paid by each Fund generally are higher than the comparable
expenses of such other funds.
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
VALUATION OF SHARES
- --------------------------------------------------------------------------------
As described in the Funds' Prospectus, each Fund's net asset value per share is
determined each day on which the New York Stock Exchange ("NYSE") is open for
business ("Business Day") as of the close of regular trading on the NYSE
(currently 4:00 p.m. Eastern Time, unless weather, equipment failure or other
factors contribute to an earlier closing time). Currently, the NYSE is closed on
weekends and on certain days relating to the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day, Thanksgiving
Day and Christmas Day.
The portfolio securities and other assets of the Funds, other than those of the
Money Market Fund, are valued as follows:
Equity securities including ADRs, ADSs and EDRs, which are traded on stock
exchanges, are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. In cases
where securities are traded on more than one exchange, the securities are valued
on the exchange determined by the Manager to be the primary market. Securities
traded in the OTC market are valued at the last available sale price prior to
the time of valuation.
Long-term debt obligations are valued at the mean of representative quoted bid
and asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term debt investments are amortized
to maturity based on their cost, adjusted for foreign exchange translation.
Options on indices, securities and currencies purchased by the Funds are valued
at their last bid price in the case of listed options or in the case of OTC
options, at the average of the last bid prices obtained from dealers, unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. When market quotations for futures and options on futures
held by a Fund 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 relevant Company's Board of Trustees. 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 a Fund in connection with such
disposition). In addition, specific factors 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 a Fund's total assets. A Fund's liabilities,
including accruals for expenses, are deducted from its total assets. Once the
total value of a Fund's net assets is so determined, that value is then divided
by the total number of shares outstanding (excluding treasury shares), and the
result, rounded to the nearer cent, is the net asset value per share.
Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or, 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 relevant Company's Board of Trustees, in
good faith, will establish a conversion rate for such currency.
Trading in foreign securities may not take place on all days on which the NYSE
is open. Further, trading takes place in various foreign markets on other days
on which the NYSE is not open. Trading in securities on European and Far Eastern
securities exchanges and OTC markets normally is completed well before the close
of regular trading on the NYSE. Consequently, the calculation of the Funds'
respective net asset values may not take place contemporaneously with the
determination of the prices of securities held by the respective Funds. Events
affecting the values of such 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 respective Funds' net asset values unless the Manager, under
the supervision of the relevant Company's Board of Trustees, determines that the
particular event would materially affect net asset value. As a result, a Fund's
net asset value may be significantly affected by such trading on days when a
shareholder cannot purchase or redeem shares of the Fund.
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
A Fund may declare a suspension of the determination of net asset value during
the periods when it may suspend redemption privileges.
The Board of Trustees of G.T. Global Variable Investment Series has determined
in good faith that the net asset value of each share of the Money Market Fund
will remain constant at $1.00 and, although no assurance can be given that it
will be able to do so on a continuing basis, the Money Market Fund will, as
described below, employ specific investment policies and procedures to
accomplish this result. The Money Market Fund values its portfolio securities
using the amortized cost method. The amortized cost method involves valuing a
security at its cost and thereafter accruing any discount or premium at a
constant rate to maturity. Although this method provides certainty in valuation,
it may result in periods during which the value of the Money Market Fund's
securities, as determined by amortized cost, is higher or lower than the price
the Money Market Fund would receive if it sold the securities. During periods of
declining interest rates, the daily yield on the Money Market Fund computed as
described above may tend to be higher than a like computation made by a similar
fund with identical investments utilizing a method of valuation based upon
market prices and estimates of market prices for all of its securities. Thus, if
the Money Market Fund's use of amortized cost resulted in a lower aggregate
value on a particular day, a prospective investor in the Money Market Fund would
be able to obtain a somewhat higher yield than would result from investment in a
similar fund utilizing solely market values, and existing Money Market Fund
shareholders would receive less investment income. The converse would apply in a
period of rising interest rates.
In connection with the Money Market Fund's policy of valuing its securities
using the amortized cost method, the Fund adheres to certain conditions,
including maintaining a dollar-weighted average maturity of 90 days or less and
purchasing only securities having remaining maturities of 13 months or less. The
Board of Trustees of G.T. Global Variable Investment Series also has established
procedures designed to stabilize, to the extent reasonably possible, the Money
Market Fund's net asset value per share at $1.00. Such procedures include review
of securities holdings by the Board of Trustees, at such intervals as it may
deem appropriate, to determine whether the Money Market Fund's net asset value
calculated by using available market quotations deviates from the net asset
value calculated by using the amortized cost method and, if so, whether such
deviation may result in material dilution or may be otherwise unfair to existing
investors. In the event the Board of Trustees of G.T. Global Variable Investment
Series determines that such a deviation exists, the Board has agreed to take
such corrective action as it deems necessary and appropriate, which action might
include selling securities prior to maturity to realize capital gains or losses
or to shorten average maturity, withholding income, or establishing a net asset
value by using available market quotations or market equivalents.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
Each Company is a funding vehicle for VA Contracts offered by the separate
accounts of the Participating Insurance Companies. Individual VA Contract
holders are not the shareholders of a Fund. Rather, each Participating Insurance
Company and its separate accounts are the shareholders (the "shareholders"). The
offering is without a sales charge and is made at each Fund's net asset value
per share, which is determined in the manner set forth above under "Valuation of
Shares."
GT Global, Inc. pays any distribution expenses and costs (that is, those arising
from any activity which is primarily intended to result in the sale of shares
issued by the Companies), including expenses and costs attributable to the
Companies, which are related to the printing and distributing of prospectuses to
prospective owners of the VA Contracts.
Each Company redeems all full and fractional shares of its Funds at the net
asset value per share applicable to each of its Funds. See "Valuation of Shares"
above.
Payment upon redemption is made in cash and ordinarily will occur within seven
days of receipt of a proper notice of redemption. The right to redeem shares or
to receive payment with respect to any redemption of shares of any Fund may only
be suspended: (1) for any period during which trading on the NYSE is restricted
or such Exchange is closed, other than customary weekend and holiday closing;
(2) for any period during which an emergency exists as a result of which
disposal of securities or determination of the net asset value of that Fund is
not reasonably practicable; or (3) for such other periods as the SEC may by
order permit for the protection of shareholders of that Fund.
Statement of Additional Information Page 47
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
TAXES
- --------------------------------------------------------------------------------
GENERAL
Shares of the Funds are offered only to Separate Accounts that fund certain VA
Contracts. See the applicable VA Contract prospectus for a discussion of the
special taxation of insurance companies with respect to such accounts and of the
VA Contract holders.
Each Fund is treated as a separate corporation for federal income tax purposes.
To continue to qualify for treatment as a RIC under the Code, each Fund must
distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain, and net gains from certain foreign currency
transactions)("Distribution Requirement") and must meet several additional
requirements. With respect to each Fund, these requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, Futures, or Forward
Contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); (2) 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.
As noted in the Funds' Prospectus, each Fund intends to continue to comply with
the diversification requirements imposed by section 817(h) of the Code and the
regulations thereunder. These requirements, which are in addition to the
diversification requirements mentioned above, place certain limitations on the
proportion of each Fund's assets that may be represented by any single
investment (which includes all securities of the same issuer). For these
purposes, each U.S. government agency or instrumentality is treated as a
separate issuer, while a particular foreign government and its agencies,
instrumentalities, and political subdivisions all are considered the same
issuer.
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November, or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January.
Dividends and interest received by a Fund, and gains realized thereby, may be
subject to income, withholding, or other taxes imposed by foreign countries 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 these
foreign taxes, however, and many foreign countries do not impose taxes on
capital gains with respect to investments by foreign investors.
Each Fund (other than the Money Market Fund, the America Fund, and the U.S.
Government Income 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 individually own, directly, indirectly or constructively, at least 10% of
that voting power) as to which a Fund is a U.S. shareholder -- that, in general,
meets either of the following tests: (1) at least 75% of its gross income is
passive or (2) an average of at least 50% of its assets produce, or are held for
the production of, passive income. Under certain circumstances, a Fund will be
subject to federal income tax on a portion of any "excess distribution" received
on the stock of a PFIC or of any gain from disposition of the stock
(collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Fund's investment company
taxable income and, accordingly, will not be taxable to it to the extent it
distributes that income to its shareholders.
If a 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
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 requirements described
above -- 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.
Each 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 a
Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, a Fund also will be allowed to deduct (as 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. A 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.
OPTIONS, FUTURES, AND FOREIGN CURRENCY TRANSACTIONS
A 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 a 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 a 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 Forward Contracts that are part of a "mixed straddle") ("Section
1256 Contracts") and that are held by a 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 realized gain or loss 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
non-corporate taxpayers' net capital gain enacted by the Taxpayer Relief Act of
1997 -- 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 on capital
assets held for more than one year but not more than 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. Each Fund attempts to monitor Section 988 transactions to
minimize any adverse tax impact.
If a 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, that 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 a 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 income tax
considerations affecting each Fund. No attempt is made to present a complete
explanation of the federal tax treatment of the Funds' activities, and this
discussion is not intended as a substitute for careful tax planning.
Accordingly, potential investors are urged to consult their own tax advisers for
more detailed information and for information regarding any state, local, or
foreign taxes applicable to the Funds and to dividends and other distributions
therefrom.
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, MA 02110, acts as custodian of the Funds' assets. State Street is
authorized to establish and has established individual accounts in foreign
currencies and to cause securities of the Funds to be held in such accounts
outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Companies' and the Funds' 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's Financial Statements, assists in the
preparation of the Funds' federal and state income tax returns and consults with
the Companies and the Funds as to matters of accounting, regulatory filings, and
federal and state income taxation.
The audited financial statements of each Company and each Fund included in this
Statement of Additional Information have been examined by Coopers & Lybrand
L.L.P., as stated in its 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 each Company the right to use the "GT" name and "GT
Global" and has reserved the right to withdraw its consent to the use of such
names by either Company and/or any of the Funds at any time, or to grant the use
of such names to any other company.
SHAREHOLDER LIABILITY
Under certain circumstances, a shareholder of a Fund may be held personally
liable for the obligations of the Fund. Each Company's Declaration of Trust
provides that shareholders shall not be subject to any personal liability for
the acts or obligations of a Fund or the Company and that every written
agreement, obligation or other undertaking made or issued by a Fund or the
Company shall contain a provision to the effect that shareholders are not
personally liable thereunder. Each Declaration of Trust provides for
indemnification out of the Company's assets under certain circumstances, and
further provides that the Company shall, upon request, assume the defense of any
act or obligation of a Fund or the Company and that the Fund in which the
shareholder holds shares will indemnify the shareholder for all legal and other
expenses incurred therewith. Thus, the risk of any shareholder incurring
financial loss beyond his or her investment, on account of this theoretical
shareholder liability, is limited to circumstances in which the Fund or the
Company itself would be unable to meet its obligations.
Statement of Additional Information Page 50
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
Each Fund's "Standardized Returns", as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), is calculated as
follows: Standardized Return 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) reinvestment of dividends and other distributions at net asset
value on the reinvestment date determined by the Companies' Board of Trustees;
and (2) a complete redemption at the end of any period illustrated. The
Standardized Return quotation does not reflect the charges deducted from the
Participating Insurance Companies' separate accounts. See the VA Contract
prospectus. If these charges were deducted to reflect the effective Standardized
Return to the VA Contract owner, that Standardized Return would be lower than
the Standardized Returns quoted.
Each Fund's Standardized Returns, stated as average annualized total returns for
the periods shown, were:
<TABLE>
<CAPTION>
AVERAGE
ANNUALIZED
STANDARDIZED
GT GLOBAL RETURN
- -------------------------------------------------------------------------------- ---------
<S> <C>
Variable America Fund
- -- Year ended December 31, 1997................................................. %
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable Europe Fund
- -- Year ended December 31, 1997................................................. %
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable New Pacific Fund
- -- Year ended December 31, 1997................................................. %
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable Growth & Income Fund
- -- Year ended December 31, 1997................................................. %
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable Strategic Income Fund
- -- Year ended December 31, 1997................................................. %
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable Global Government Income Fund
- -- Year ended December 31, 1997................................................. %
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable U.S. Government Income Fund
- -- Year ended December 31, 1997................................................. %
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable Latin America Fund
- -- Year ended December 31, 1997................................................. %
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Money Market Fund
- -- Year ended December 31, 1997................................................. %
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable Telecommunications Fund
- -- Year ended December 31, 1997................................................. %
- -- From inception on October 18, 1993 to December 31, 1997...................... %
</TABLE>
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<S> <C>
Variable Emerging Markets Fund
- -- Year ended December 31, 1997................................................. %
- -- From inception on July 5, 1994 to December 31, 1997.......................... %
Variable International Fund
- -- Year ended December 31, 1997................................................. %
- -- From inception on July 5, 1994 to December 31, 1997.......................... %
Variable Infrastructure Fund
- -- Year ended December 31, 1997................................................. %
- -- From inception on January 31, 1995 to December 31, 1997...................... %
Variable Natural Resources Fund
- -- Year ended December 31, 1997................................................. %
- -- From inception on January 31, 1995 to December 31, 1997...................... %
</TABLE>
In addition to Standardized Returns, each Fund also may include in
advertisements, sales literature and shareholder reports other total return
performance data ("Non-Standardized Return"). Non-Standardized Return is
calculated for a specified period of time by assuming the investment of $1,000
in Fund shares and further assuming the reinvestment of all dividends and other
distributions made to Fund shareholders in additional Fund shares at their net
asset value. Percentage rates of return are then calculated by comparing this
assumed initial investment to the value of the hypothetical account at the end
of the period for which the Non-Standardized Return is quoted. The
Non-Standardized Return quotation does not reflect the charges deducted from the
Participating Insurance Companies' separate accounts. See the VA Contract
prospectus. If these charges were deducted, the Non-Standardized Return
quotation would be lower than those stated. Non-Standardized Returns may be
quoted for the same or different time periods for which Standardized Returns are
quoted.
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.
Each Fund's aggregate Non-Standardized Returns, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
AGGREGATE
NON-STANDARDIZED
GT GLOBAL RETURN
- -------------------------------------------------------------------------------- ---------
<S> <C>
Variable America Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable Europe Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable New Pacific Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable Growth & Income Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable Strategic Income Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable Global Government Income Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable U.S. Government Income Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable Latin America Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Money Market Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... %
Variable Telecommunications Fund
- -- From inception on October 18, 1993 to December 31, 1997...................... %
</TABLE>
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<S> <C>
Variable Emerging Markets Fund
- -- From inception on July 5, 1994 to December 31, 1997.......................... %
Variable International Fund
- -- From inception on July 5, 1994 to December 31, 1997.......................... %
Variable Infrastructure Fund
- -- From inception on January 31, 1995 to December 31, 1997...................... %
Variable Natural Resources Fund
- -- From inception on January 31, 1995 to December 31, 1997...................... %
</TABLE>
The Money Market Fund may, from time to time, provide yield information or
comparisons of its yield to various averages including data from Lipper
Analytical Services, Inc., Bank Rate Monitor-TM-, IBC/Donaghue's Money Fund
Report, MONEY Magazine, and other industry publications (to the extent they
apply to investment companies whose shares are offered to insurance company
separate accounts, in advertisements or in reports furnished to current or
prospective shareholders).
The Money Market Fund calculates its yield for its shares daily, based upon the
seven days ending on the day of the calculation, called the "base period." The
yield is computed by determining the net change in the value of a hypothetical
account with a balance of one share at the beginning of the base period, with
the net change, excluding capital changes, but including the value of any
additional shares purchased with dividends earned from the original one share
and all dividends declared on the original and any purchased shares; dividing
the net change in the account's value by the value of the account at the
beginning of the base period to determine the base period return; and
multiplying the base period return by (365/7). The Money Market Fund's effective
yield is computed by compounding the unannualized base period return by adding 1
to the base period return; raising the sum to the 365/7th power; and subtracting
1 from the result.
For the seven-day period ended December 31, 1997, the Fund's yield was % and
effective yield was %. See "Management" in the Prospectus. The seven-day and
effective yields are calculated as follows:
<TABLE>
<S> <C>
Assumptions:
Value of hypothetical pre-existing account with exactly one share at the beginning
of the period:.................................................................... $ 1.000000000
Value of same account* (excluding capital changes) at the end of the seven-day
period ending December 31, 1997:.................................................. $
</TABLE>
- ------------------
* Value includes additional shares acquired with dividends paid on the
original shares.
<TABLE>
<S> <C>
Calculation:
Ending account value:.............................................................. $
Less beginning account value:...................................................... $ 1.000000000
Net change in account value:....................................................... $
Seven-day yield = $ X 365/7 = 4.67%
Effective yield** = [1 + ] 365/7 - 1 = %
</TABLE>
- ------------------
** The effective yield assumes a year's compounding of the seven-day yield.
The Money Market Fund's investment results may also be calculated for longer
periods in accordance with the following method: by subtracting (a) the net
asset value of one share at the beginning of the period, from (b) the net asset
value of all shares an investor would own at the end of the period for the share
held at the beginning of the period (assuming reinvestment of all dividends and
distributions) and dividing by (c) the net asset value per share at the
beginning of the period. The resulting percentage indicates the positive or
negative rate of return that an investor would have earned from the reinvested
dividends and distributions and any changes in share price during the period.
These performance quotations do not reflect the charges deducted from the
Participating Insurance Companies' separate accounts. See the VA Contract
prospectus. If these charges were deducted, such quotations would be lower than
those calculated for the Money Market Fund.
The performance figures for a Fund will only be advertised if comparable
performance figures for the corresponding division of the separate account are
included in the advertisement. Each Fund's investment results will vary from
time to time depending upon market conditions, the composition of the Fund's
portfolio and operating expenses of the Fund, so that any performance figure
should not be considered representative of what an investment in the Fund may
earn in any future period. These factors and possible differences in calculation
methods should be considered when comparing the
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
Fund's investment results with those published for other investment companies
and other investment vehicles whose shares are offered to insurance company
separate accounts. Investment results also should be considered relative to the
risks associated with the investment objective and policies.
IMPORTANT POINTS TO NOTE ABOUT THE FOLLOWING WORLD FINANCIAL AND ECONOMIC DATA
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by either
Company or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the Securities Act of 1933, on account of the
inclusion of such information herein.
GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of any of these Funds, nor is it a
prediction of such performance. The performance of the Funds will differ from
the historical performance of the relevant indices. The performance of indices
does not take expenses into account, while each Fund incurs expenses in its
operations, which will reduce performance. Each Fund is actively managed, i.e.,
the Manager, as each Fund's investment manager, actively purchases and sells
securities in seeking each Fund's investment objective. Moreover, each Fund may
invest a portion of its assets in corporate bonds, while the above data relates
only to government bonds. Each of these factors will cause the performance of
each Fund to differ from the indices shown above.
Each Fund and GT Global may from time to time, in advertisements, sales
literature and reports furnished to present or prospective shareholders, compare
the Funds with the following, among others, to the extent they apply to
investment companies whose shares are offered to insurance company separate
accounts:
(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, mutual fund rankings and comparisons and variable account
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.,
Financial Planning Resources Inc., publisher of a compilation of data
regarding variable accounts ("VARDS") and/or other companies that rank
and/or compare mutual funds or variable annuity account divisions by overall
performance, investment objectives, assets, expense levels, periods of
existence and/or other factors. In this regard, each Fund may be compared to
its "peer group" as defined by Lipper, CDA/Wiesenberger, Morningstar, VARDS
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.
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(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 2,500 different issuers, located in 47 countries, and
grouped in 38 separate industries.
(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 but not limited to
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,
S&P and Fitch.
(18) Wilshire Associates, which is an on-line database for international
financial and economic data including performance measures 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 bond and stock 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.
To the extent that they apply to investment companies whose shares are offered
to insurance company separate accounts, 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, GT Global may use
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 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 Funds 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,
Statement of Additional Information Page 55
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of the Funds, nor is it a
prediction of such performance. The performance of the Fund will differ from the
historical performance of relevant indices. The performance of indices does not
take expenses into account, while the Fund incurs expenses in its operations,
which will reduce performance. Each of these factors will cause the performance
of the Fund to differ from relevant indices.
From time to time, each Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number shareholders in all GT Global
Mutual Funds or the dollar amount Fund assets under management in advertising
materials.
GT Global believes the GT Global Variable Investment Funds can be 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 GT
Global Variable Investment Funds do not represent a complete investment program
and the investors should consider the Funds as appropriate for a portion of
their overall investment portfolio with regard to their long-term investment
goals. 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 Variable Investment Fund may own the securities of these
companies.
Advertising and sales literature for the Contract may discuss the financial
ratings of any of the Participating Insurance Companies as compiled by
independent agencies. These independent agencies rate insurance companies'
overall financial strength, ability to meet contractual obligations, ability to
discharge senior policyholder obligations and claims, overall claims-paying
ability and other financial measures related to long-term solvency and
liquidity. The independent agencies which may be quoted include, but are not
limited to:
/ / A.M. Best Company
/ / Moody's Investors Service
/ / Standard & Poor's Insurance Rating Services
/ / Duff & Phelps, Incorporated
Ratings descriptions are relevant only to the insurance company and do not apply
to variable annuities or the underlying accounts which are subject to market
risk and whose value will fluctuate with market conditions.
In addition, advertising and sales literature for the Contracts may discuss the
assets of any of the Participating Insurance Companies, including a breakdown of
annuity assets under management, as well as the number of years the company has
been involved in the annuity marketplace.
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 Variable Investment Funds may use the performance of these capital
markets in order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical investment
in any of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the Funds.
Ibbotson calculates total returns in the same method as the Funds.
Each Fund may quote various measures of volatility and benchmark correlation,
such as beta, standard deviation and R(2), in advertising. In addition, each
Fund may compare these measures to those of other funds. Measures of volatility
seek to compare the Funds' historical share price fluctuations or total return
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
Each Fund may advertise examples of the effect 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
Statement of Additional Information Page 56
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may 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.
GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk, liquidity risk and inflation
risk. Risk represents the possibility that you may lose some or all of your
investment over a period of time. A basic tenet of investing is the greater the
potential reward, the greater the risk.
From time to time, the GT Global Variable Investment Funds 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 World
Indices and IFC.
3) The number of listed companies: IFC, GT Guide to World Equity Markets,
Salomon Brothers, Inc. and S.G. Warburg.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, IFC and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
IFC.
8) Gross Domestic Product ("GDP"): Datastream and The World Bank.
9) GDP growth rate: IFC, The World Bank and Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: OECD and United Nations.
13) Total exports and imports by year: IFC, The World Bank and Datastream.
14) Top three companies by country, industry, or market: IFC, GT Guide to World
Equity Markets, Salomon Brothers, Inc. and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
the Manager.
19) Political and economic structure of countries: Economist Intelligence Unit.
Statement of Additional Information Page 57
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 quote in advertising materials economic and
financial data, including statistics and commentary from published works
including, but not limited to, Megatrends 2000, Global Paradox, and Megatrends
Asia.
From time to time, GT Global may include in its advertisement and sales
material, information about privatization which is an economic process involving
the sale of state-owned companies to the private sector.
In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 the Manager provided assistance to the government of Hong Kong in
linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Asset Management Ltd. as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager by the government
of Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of the Manager provide any assurance
that the GT Global Variable Investment 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 Variable Investment 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 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.
In addition, the GT Global Variable Strategic Income Fund, from time to time,
may quote yields and total returns of representative debt instruments from
emerging market countries in its advertising and sales literature.
The Manager believes that before emerging market countries with high debt levels
can attract substantial amounts of foreign capital, they must put their
financial houses in order. Some emerging markets governments have implemented
debt restructuring programs. From time to time, each Fund may include in its
advertising and sales material information on emerging market countries' debt
restructuring activities.
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 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.
Statement of Additional Information Page 58
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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.
ECONOMIC DEVELOPMENT IN EMERGING MARKETS
The Manager has identified six phases to track the progress of developing
economies.
In addition, the Manager focuses on the transitions between each phase:
BETWEEN PHASES 1 & 2, STABILIZATION: Developing nations recognize the need
for economic reform and launch initiatives to stabilize their economies. Typical
measures might include initiating monetary reforms to contain inflation,
controlling government spending, and addressing external trade imbalances.
BETWEEN PHASES 2 & 3, RENOVATION: Economic development gathers momentum as
the governments of developing nations take further steps to increase
productivity and external competitiveness. Typical reforms include easing market
regulations, privatizing state-owned industries, lowering trade barriers and
reforming the national tax structure.
BETWEEN PHASES 3 & 4, NEW CONSTRUCTION: As economic reforms take hold,
infrastructure improvements are needed to facilitate and support long-term
growth. The construction and upgrading of highways and airports, communications
and utility systems generally require financing in the form of public debt.
Similarly, as the private sector develops, bolstered by new privatizations,
corporate debt securities typically are issued to finance business expansion.
EMERGING MARKET TRADING VOLUME
The annual trading volume of debt securities from developing economies according
to Salomon Brothers, Inc. has grown from $90 billion in 1990 to $150 billion in
1991 to $400 billion in 1992 and was estimated to be $1,200 billion at the end
of 1993 and $1.5 trillion at the end of 1994, respectively.
- --------------------------------------------------------------------------------
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.
Statement of Additional Information Page 59
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 judgement to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to 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.
Statement of Additional Information Page 60
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 grace 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 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.
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."
Statement of Additional Information Page 61
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
APPENDIX
- --------------------------------------------------------------------------------
VARIABLE TELECOMMUNICATIONS FUND
From time to time the Fund and GT Global will quote information including, but
not limited to, data regarding:
/ / Increased usage of new technologies such as, but not limited to,
cellular and wireless communications in emerging and established
countries around the world
/ / Supply and demand of telephone equipment and services
/ / Regulatory environment of telecommunications industries
/ / Revenue, price and usage of telecommunications products and services
/ / Privatization of telecommunications companies
The information quoted has not been independently verified by the Fund or GT
Global and will be based on data provided that is believed to be reliable and
accurate from, but not limited to, the following sources:
/ / Salomon Brothers World Equity Telecommunications Index, which includes
stock market data about the telecommunications industry in established
and developing markets
/ / OECD and other publications from its subsidiaries such as the
International Telecommunications Union
/ / Morgan Stanley Capital International stock market industry indices such
as Telecommunications, Broadcasting & Publishing and Data Processing &
Reproduction
/ / International Technology Consultants, a Washington D.C. based firm which
publishes reports such as EASTERN EUROPEAN & SOVIET TELECOM REPORT and
LATIN AMERICAN TELECOM REPORT
DEREGULATION IN THE UNITED STATES
The United States has been the bellwether for deregulation of the telephone
industry. The divestiture of the Bell System from American Telephone and
Telegraph has produced new competing companies in the United States. Such U.S.
market-driven competition has, for example, led to lower costs for consumers
which in turn led to greater consumer usage and to higher industrywide revenues.
The Manager expects this scenario to continue to benefit such companies in the
U.S. and to similarly to be realized by the established telecommunications
companies in established economies, although no assurances can be made in this
regard.
VARIABLE INFRASTRUCTURE FUND
From time to time the Fund and GT Global may quote information including, but
not limited to:
/ / Supply and demand of telephone equipment and services, electricity,
water, transportation, construction materials and other infrastructure
related products and services
/ / Regulatory environment of infrastructure industries
/ / Quantity and costs of current and projected infrastructure projects
/ / Privatization of industries and companies
/ / New technologies, products and services used in infrastructure
industries
VARIABLE NATURAL RESOURCES FUND
From time to time the Fund and GT Global may quote information including, but
not limited to:
/ / Supply, demand and prices of natural resources
/ / Regulatory environment of natural resources
/ / Supply, demand and prices of products manufactured from natural
resources
/ / New technologies, products and services used in the natural resources
industries
Statement of Additional Information Page 62
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Funds as of December 31, 1997 and for
the fiscal year then ended appear on the following pages.
Statement of Additional Information Page 63
<PAGE>
G.T. GLOBAL VARIABLE INVESTMENT SERIES
PART C: OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS -- To be filed.
(b) EXHIBITS REQUIRED BY PART C, ITEM 24 OF FORM N-1A.
(1) The Registrant's Declaration of Trust(4).
(1)(a) Certificate of Amendment to the Registrant's Declaration of
Trust, dated December 4, 1992(4).
(1)(b) Certificate of Amendment to Registrant's Declaration of
Trust, dated September 14, 1992(1).
(1)(c) Certificate of Amendment to Registrant's Declaration of
Trust, dated July 7, 1993(1).
(1)(d) Certificate of Amendment to the Registrant's Declaration of
Trust, dated May 17, 1994(1).
(2) The Registrant's By-Laws(4).
(3) Not Applicable.
(4) Instruments Defining the Rights of Holders of Securities --
Filed herewith.
(5)(a) The Investment Management and Administration Contract
between the Registrant and G.T. Capital Management, Inc.(4).
(5)(b) Investment Management Contract Fee letter relating to:
(i) GT Global Variable International Fund(4).
(6) Not Applicable.
(7) Not Applicable.
(8)(a) Custodian Agreement between the Registrant and State Street
Bank and Trust Company(4).
(8)(b) Custodian Agreement Side letter relating to:
(i) GT Global Variable International Fund(4).
(9) Transfer Agency Contract between the Registrant and GT
Global Investor Services, Inc.(2).
(10) Opinion and consent of counsel(4).
(11) Consent of Coopers & Lybrand L.L.P., Independent
Accountants(5).
(12) Not Applicable.
(13) Not Applicable.
(14)(a) Model Retirement Plan -- GT Global Individual Retirement
Account Disclosure Statement and Application -- Filed
herewith.
(14)(b) Model Retirement Plan -- GT Global SIMPLE Individual
Retirement Account Disclosure Statement and Application --
Filed herewith.
(14)(c) Model Retirement Plan -- GT Global Simplified Employee
Pension Individual Retirement Account Disclosure Statement
and Application -- Filed herewith.
(14)(d) Model Reitrement Plan -- Roth IRA -- Filed herewith.
(14)(e) 403(b)(7) Custodial Agreement -- Filed herewith.
(15) Not Applicable.
(16) Schedules of Computation of Performance Quotations relating
to the shares of:
(i) GT Global Variable America Fund(3).
(ii) GT Global Variable Europe Fund(3).
C-1
<PAGE>
(iii) GT Global Variable New Pacific Fund(3).
(iv) GT Global Money Market Fund(3).
(v) GT Global Variable International Fund(3).
(17) Financial Data Schedules -- To be filed.
Other Exhibits:
(a) Power of Attorney for Helge K. Lee and Michael A. Silver for
G.T. Global Variable Investment Series -- Filed herewith.
- ------------------------
(1) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 5 to the Registration Statement on Form N-1A,
filed on November 18, 1994.
(2) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 10 to the Registration Statement on Form N-1A,
filed on September 28, 1995.
(3) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 11 to the Registration Statement on Form N-1A,
filed on April 22, 1996.
(4) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 12 to the Registration Statement on Form N-1A,
filed on February 28, 1997.
(5) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 13 to the Registration Statement on Form N-1A,
filed on April 29, 1997.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of December 31, 1997:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
- -------------------------------------------------------------------------- -----------------
<S> <C>
Shares of Beneficial Interest, no par value, of:
GT Global Variable America Fund......................................... 4,006
GT Global Variable Europe Fund.......................................... 3,755
GT Global Variable New Pacific Fund..................................... 4,594
GT Global Variable International Fund................................... 1,061
GT Global Money Market Fund............................................. 2,564
</TABLE>
ITEM 27. INDEMNIFICATION
Article X of the Registrant's Declaration of Trust provides for
indemnification of certain persons acting on behalf of the Registrant.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended ("1933 Act"), may be permitted to Trustees, officers and
controlling persons by the Registrant's Declaration of Trust, By-Laws, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission ("Commission") such indemnification is against public
policy as expressed in the 1933 Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a Trustee, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such Trustee, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issues.
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<PAGE>
Registrant and the Trustees and officers of the Registrant have obtained
coverage under a Professional Indemnity insurance policy. The terms and
conditions of policy coverage conform generally to the standard coverage
available throughout the investment company industry. Similar coverage by
separate policies is afforded the investment manager and its directors, officers
and employees.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See the material under the heading "Management" included in Part A
(Prospectus) of this Registration Statement and the material appearing under the
headings "Trustees and Officers" and "Management" included in Part B (Statement
of Additional Information) of this Registration Statement.
ITEM 29. PRINCIPAL UNDERWRITER
(a) GT Global, Inc. is also the principal underwriter for the following
other investment companies: G.T. Investment Funds, Inc. (which includes thirteen
funds currently in operation: GT Global Strategic Income Fund, GT Global
Government Income Fund, GT Global High Income Fund, GT Global Growth & Income
Fund, GT Global Latin America Growth Fund, GT Global Telecommunications Fund, GT
Global Health Care Fund, GT Global Financial Services Fund, GT Global
Infrastructure Fund, GT Global Consumer Products and Services Fund, GT Global
Natural Resources Fund, GT Global Developing Markets Fund and GT Global Emerging
Markets Fund); G.T. Global Growth Series (which includes the following funds: GT
Global America Value Fund, GT Global America Small Cap Growth Fund, GT Global
America Mid Cap Growth Fund, GT Global Europe Growth Fund, GT Global
International Growth Fund, GT Global Japan Growth Fund, GT Global New Pacific
Growth Fund and GT Global Worldwide Growth Fund); G.T. Investment Portfolios,
Inc. (which includes one fund: GT Global Dollar Fund); GT Global Series Trust
(which includes one fund: GT Global New Dimension Fund); G.T. Global Variable
Investment Trust (which includes nine funds in operation: GT Global Variable
Latin America Fund, GT Global Variable Infrastructure Fund, GT Global Variable
Natural Resources Fund, GT Global Variable Telecommunications Fund, GT Global
Variable Growth & Income Fund, GT Global Variable Strategic Income Fund, GT
Global Variable Emerging Markets Fund, GT Global Variable Global Government
Income Fund and GT Global Variable U.S. Government Income Fund); and GT Global
Floating Rate Fund, Inc.
(b) Directors and Officers of GT Global, Inc.
Unless otherwise indicated, the business address of each person listed is 50
California Street, San Francisco, CA 94111.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
William J. Guilfoyle President and Chairman of the Chairman of the Board of Trustees
Board and President
Raymond R. Cunningham Senior Vice President -- Director None
of Sales and Director
Richard W. Healey Senior Vice President -- Director None
of Marketing and Director
Helge K. Lee Secretary and Chief Legal and Vice President and Secretary
Compliance Officer
David P. Hess Assistant Secretary and Director Assistant Secretary
of Mutual Fund Compliance
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Michael A. Silver Assistant Secretary and Assistant Assistant Secretary
General Counsel
Philip D. Edelstein Senior Vice President -- Regional None
9 Huntly Circle Sales Manager
Palm Beach Garden, FL 33418
Stephen A. Maginn Senior Vice President -- Regional None
519 S. Juanita Sales Manager
Redondo Beach, CA 90277
Peter J. Wolfert Senior Vice President -- None
Information Technology
Christine M. Pallatto Senior Vice President -- Director None
of Human Resources
Earle A. Malm II Chief Operating Officer None
Margo A. Tammen Vice President -- Finance & None
Administration
Gary M. Castro Assistant Treasurer & Controller None
Dennis W. Reichert Assistant Treasurer & Budget Assistant Treasurer
Director
Kenneth W. Chancey Senior Vice President -- Fund Vice President, Principal
Accounting Accounting Officer and (Acting)
CFO
Hallie L. Baron Vice President -- Public Relations None
& Shareholder Communications
Claus te Wildt Vice President -- Director of None
Strategy and Business Planning
Pamela Ruddock Vice President -- Fund None
Administration
Paul Wozniak Vice President -- Fund Accounting None
Christine C. Mangan Vice President -- Dealer Marketing None
Donna B. Abrahamson Vice President -- Account None
Management
Jon Burke Vice President None
31 Darlene Drive
Southboro, MA 01772
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Phil Christopher Vice President None
3621 59th Avenue, SW
Seattle, WA 98116
Anthony DiBacco Vice President None
30585 Via Lindosa
Laguna Niguel, CA 92677
Stephen Duffy Vice President None
1120 Gables Drive
Atlanta, GA 30319
Glen R. Farinacci Vice President None
80 University Place
Staten Island, NY 10301
Ned E. Hammond Vice President None
5901 McFarland Ct.
Plano, TX 75093-4317
Richard Kashnowski Vice President None
1368 South Ridge Drive
Mandeville, LA 70448
Allen M. Kuhn Vice President None
19655 Red Maple Lane
Jupiter, FL 33458
Steven C. Manns Vice President None
1941 West Wolfram
Chicago, IL 60657
Wayne F. Meyer Vice President None
2617 Sun Meadow Drive
Chesterfield, MO 63005
Dean Phillips Vice President None
3406 Bishop Park Drive, #428
Winter Park, FL 32792
Philip Schertz Vice President None
25 Ivy Place
Wayne, NJ 07470
Peter Sykes Vice President None
1655 E. Sherman Ave.
Salt Lake City, UT 84105
Lance Vetter Vice President None
10915 La Salinas Circle
Boca Raton, FL 33428
Tommy D. Wells Vice President None
25 Crane Drive
San Anselmo, CA 94960
Todd H. Westby Vice President None
3405 Goshen Road
Newtown Square, PA 19073
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Eric T. Zeigler Vice President None
437 - 30th Street
Manhattan Beach, CA 90266
</TABLE>
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other records required by Rules 31a-1 and 31a-2 under
the Investment Company Act of 1940, as amended, are maintained and held in the
offices of the Registrant, and its investment manager, Chancellor LGT Asset
Management, Inc., 50 California Street, 27th Floor, San Francisco, CA 94111, and
its custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston,
MA 02110.
Records covering shareholder accounts are maintained and kept by the
Registrant's Transfer Agent, GT Global Investor Services, Inc., 2121 N.
California Boulevard, Suite 450, Walnut Creek, California 94596, and records
covering portfolio transactions are maintained and kept by the Registrant's
custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
None.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant has duly caused
this Post-Effective Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of San
Francisco, and the State of California, on the 29th day of January, 1998.
G.T. GLOBAL VARIABLE INVESTMENT SERIES
By: William J. Guilfoyle*
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement of G.T. Global Variable
Investment Series has been signed below by the following persons in the
capacities indicated on the 29th day of January, 1998.
President, Trustee and
William J. Guilfoyle* Chairman of the Board
(Principal Executive Officer)
/s/ KENNETH W. CHANCEY
- ---------------------------------------- Vice President and Principal
Kenneth W. Chancey Accounting Officer
C. Derek Anderson* Trustee
Arthur C. Patterson* Trustee
Frank S. Bayley* Trustee
Ruth H. Quigley* Trustee
Robert G. Wade Jr.* Trustee
*By: /s/ MICHAEL A. SILVER
-----------------------------------
Michael A. Silver
Attorney-in-Fact, pursuant to
Power of Attorney filed herewith
C-7
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Helge K. Lee and Michael A. Silver, and each of them, with full power to act
without the other, his or her true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities (until revoked in writing) to
sign the Registration Statement and any and all Amendments to the Registration
Statement (including Post-Effective Amendments), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
GT GLOBAL VARIABLE INVESTMENT SERIES
/s/ WILLIAM J. GUILFOYLE
- ------------------------------ Trustee, Chairman of the October 14, 1997
William J. Guilfoyle Board and President
/s/ C. DEREK ANDERSON
- ------------------------------ Trustee October 14, 1997
C. Derek Anderson
/s/ FRANK S. BAYLEY
- ------------------------------ Trustee October 14, 1997
Frank S. Bayley
/s/ ARTHUR C. PATTERSON
- ------------------------------ Trustee October 14, 1997
Arthur C. Patterson
/s/ RUTH H. QUIGLEY
- ------------------------------ Trustee October 14, 1997
Ruth H. Quigley
/s/ ROBERT G. WADE JR.
- ------------------------------ Trustee October 14, 1997
Robert G. Wade Jr.
C-8
<PAGE>
G.T. GLOBAL VARIABLE INVESTMENT SERIES
EXHIBIT 4
Sections 2.01, 2.02, 2.03, 2.04, 2.05 and 2.06 of the Registrant's By-Laws
provide as follows:
Section 2.01. SHAREHOLDER MEETINGS: Meetings of the shareholders may be
called at any time by the Trustees or, if the Trustees shall fail to call any
meeting for a period of 30 days after written request of Shareholders owning
at least one-tenth of the outstanding shares entitled to vote, then such
Shareholders may call such meeting. Each call of a meeting shall state the
place, date, hour and purposes of the meeting.
Section 2.02. PLACE OF MEETINGS: All meetings of the Shareholders shall be
held at the principal office of the Trust, except that the Trustees may
designate a different place of meeting within the United States.
Section 2.03. NOTICE OF MEETING: The secretary or an assistant secretary
or such other officer as may be designated by the Trustees shall cause notice
of the place, date and hour, and purpose or purposes for which the meeting is
called, to be mailed, not less than fifteen days before the date of the
meeting, to each Shareholder entitled to vote at such meeting, at his address
as it appears on the records of the Trust at the time of such mailing. Notice
of any Shareholders' meeting need not be given to any Shareholder if a
written waiver of notice, executed before or after such meeting, is filed
with the records of such meeting, or to any Shareholder who shall attend such
meeting in person or by proxy. Notice of adjournment of a Shareholders'
meeting to another time or place need not be given, if such time and place
are announced at the meeting.
Section 2.04. BALLOTS: The vote upon any question shall be by ballot
whenever requested by any person entitled to vote, but, unless such a request
is made, voting may be conducted in any way approved by the meeting.
Section 2.05. VOTING; PROXIES: Shareholders entitled to vote may vote
either in person or by proxy, provided that an instrument authorizing such
proxy to act is executed by the Shareholder in writing and dated not more
than eleven months before the meeting, unless the instrument specifically
provides for a longer period. Proxies shall be delivered to the secretary of
the Trust or other person responsible for recording the proceedings before
being voted. A proxy with respect to shares held in the name of two or more
persons shall be valid if executed by one of them unless at or prior to
exercise of such proxy the Trust receives a specific written notice to the
contrary from any one of them. Unless otherwise specifically limited by their
terms, proxies shall entitle the holder thereof to vote at any adjournment of
a meeting. A proxy purporting to be exercised by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its
exercise and the burden of proving invalidity shall rest on the challenger.
At all meetings of the Shareholders, unless the voting is conducted by
inspectors, all questions relating to the qualifications of voters, the
validity of proxies, and the acceptance or rejection of votes shall be
decided by the chairman of the meeting.
Section 2.06. ACTION WITHOUT A MEETING: Any action to be taken by
Shareholders may be taken without a meeting if all Shareholders entitled to
vote on the matter consent to the action in writing and the written consents
are filed with the records of meetings of Shareholders of the Trust. Such
consent shall be treated for all purposes as a vote at a meeting.
<PAGE>
--------------------
QUESTIONS AND ANSWERS
- ----------------------------------------------------------
Q. AM I ELIGIBLE FOR AN IRA?
A. Any individual who receives earned income from employment (including
self-employment) and who has not reached age 70 1/2 can contribute to an IRA. In
addition, the spouse of any such individual may contribute to a spousal IRA,
provided that the spouse has not reached age 70 1/2, even if the spouse has no
earned income.
Q. HOW MUCH CAN I CONTRIBUTE?
A. Each working individual can contribute up to $2,000 (or 100% of
compensation, whichever is less) per year to an IRA. If you are married, your
employed spouse can also contribute up to $2,000 each year to his or her own
IRA. Even a non-employed spouse can open an IRA: for each year, you and your
non-employed spouse can contribute a combined total of $4,000 (or 100% of
compensation, whichever is less) to your individual IRAs, provided no more than
$2,000 is invested in any one account.
Q. WHEN MUST I MAKE MY CONTRIBUTION?
A. You can make a contribution for each tax year any time between January 1 of
that year and April 15 of the following year. (If you make a contribution after
December 31 that you wish to be considered as a contribution for the prior year,
you will need to so designate in writing.) You are not required to make a
contribution every year, but you cannot over-contribute in any year to make up
for a year for which you did not contribute at all or made only a partial
contribution.
Q. ARE MY IRA CONTRIBUTIONS TAX-DEDUCTIBLE?
A. Even before Congress passed the Taxpayer Relief Act of 1997, over
three-quarters of all Americans were able to deduct all or part of their annual
IRA contributions. Whether and exactly how much you may deduct depends on your
adjusted gross income (AGI), marital status and whether you are an "active
participant" in an employer-sponsored retirement plan such as a SEP-IRA,
SARSEP-IRA, SIMPLE IRA, 401(k), 403(b), profit-sharing, money purchase or
defined benefit plan.* If neither you nor your spouse are an active participant
in a retirement plan where you work or, beginning in 1998, if you are not but
your spouse is an active participant and your combined adjusted gross income is
less than $150,000, your entire IRA contribution is tax-deductible. If you (or,
for 1997, either you or your spouse) are covered by an employer-sponsored plan
and you file jointly, use the table below to calculate your maximum deductions
for 1997 and 1998. You may, of course, contribute to your IRA even if the
contributions are not tax-deductible (subject to the contribution limits
described above). No contributions may be made for the year you become 70 1/2,
or thereafter.
- --------------
* THE IRS SPECIFICALLY DEFINES WHO IS AN "ACTIVE PARTICIPANT" IN AN
EMPLOYER-SPONSORED RETIREMENT PLAN. PLEASE SEE THE GT GLOBAL IRA DISCLOSURE
STATEMENT FOR MORE INFORMATION ON DEDUCTIBILITY.
[LOGO]
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1
<PAGE>
----------------
GT GLOBAL IRA
<TABLE>
<CAPTION>
SINGLE TAXPAYER OR HEAD OF HOUSEHOLD
STATUS MARRIED TAXPAYERS FILING JOINTLY MAXIMUM DEDUCTION
<S> <C> <C>
MODIFIED ADJUSTED GROSS INCOME AT OR MODIFIED ADJUSTED GROSS INCOME AT OR ENTIRE CONTRIBUTION IS TAX DEDUCTIBLE
LESS THAN: $25,000 FOR 1997; $30,000 FOR LESS THAN: $40,000 FOR 1997; $50,000 FOR
1998 1998
FOR 1997: MODIFIED ADJUSTED GROSS INCOME FOR 1997: MODIFIED ADJUSTED GROSS INCOME FOR 1997: SUBTRACT MODIFIED ADJUSTED
$25,000 TO $35,000 $40,000 TO $50,000 GROSS INCOME FROM $35,000 ($50,000 FOR
MARRIED TAXPAYERS FILING JOINTLY) AND
MULTIPLY
REMAINDER BY 20%
FOR 1998: MODIFIED ADJUSTED GROSS INCOME FOR 1998: MODIFIED ADJUSTED GROSS INCOME FOR 1998: SUBTRACT MODIFIED ADJUSTED
$30,000 TO $40,000 $50,000 TO $60,000 GROSS INCOME FROM $40,000 ($60,000 FOR
MARRIED TAXPAYERS FILING JOINTLY) AND
MULTIPLY REMAINDER BY 20%
MODIFIED ADJUSTED GROSS INCOME OVER: MODIFIED ADJUSTED GROSS INCOME OVER: IRA CONTRIBUTIONS ARE NOT TAX DEDUCTIBLE
$35,000 FOR 1997; $40,000 FOR 1998 $50,000 FOR 1997; $60,000 FOR 1998
</TABLE>
For 1998, if your spouse is an active participant in an employer-sponsored
retirement plan, but you are not, and you file jointly, use the table below to
calculate your maximum deduction.
<TABLE>
<CAPTION>
MARRIED TAXPAYERS MAXIMUM
FILING JOINTLY DEDUCTION
<S> <C>
MODIFIED ADJUSTED GROSS INCOME AT OR ENTIRE CONTRIBUTION IS TAX DEDUCTIBLE
LESS THAN $150,000
MODIFIED ADJUSTED GROSS INCOME $150,000 SUBTRACT MODIFIED ADJUSTED GROSS INCOME
TO $160,000 FROM $160,000 AND MULTIPLY REMAINDER BY
20%
MODIFIED ADJUSTED GROSS INCOME OVER IRA CONTRIBUTIONS ARE NOT TAX DEDUCTIBLE
$160,000
</TABLE>
NOTE: If your combined AGI is under $150,000, your spouse's maximum deduction
for 1998, if any, will be determined according to the table above.
SOURCE: INTERNAL REVENUE SERVICE, PUBLICATION 590, MODIFIED TO REFLECT THE
TAXPAYER RELIEF ACT OF 1997.
* GENERALLY, MODIFIED ADJUSTED GROSS INCOME IS ADJUSTED GROSS INCOME AS SHOWN ON
YOUR FEDERAL INCOME TAX RETURN, WITHOUT TAKING INTO ACCOUNT ANY IRA DEDUCTION.
PLEASE CONSULT IRS PUBLICATION 590 OR THE INSTRUCTIONS TO YOUR TAX RETURN FOR
FURTHER DETAILS.
Q. WHAT IF MY IRA CONTAINS BOTH DEDUCTIBLE AND NON-DEDUCTIBLE CONTRIBUTIONS?
A. The IRS requires that your deductible and non-deductible contributions be
withdrawn in the same proportion as they exist within your IRA. To avoid tax
penalties at withdrawal, it is therefore important to keep track of your
deductible and non-deductible contributions.
Q. WHEN CAN I WITHDRAW MONEY FROM MY IRA?
A. You can withdraw all or part of your money at any time, but ordinary income
taxes will be due on withdrawals of deductible contributions and earnings in the
year the withdrawals are made. In addition, if you withdraw money prior to
reaching age 59 1/2, you may be subject to a 10% federal penalty on early
withdrawals. After age 59 1/2 you may withdraw money from your IRA without
penalty. Under current law, you must begin withdrawing money by April 1
following the year in which you reach age 70 1/2.
Q. CAN I CONSOLIDATE MY OTHER IRA ASSETS WITH THE ASSETS IN MY GT GLOBAL IRA?
Yes, by using either an IRA Transfer or an IRA Rollover.
Q. WHAT IS THE DIFFERENCE BETWEEN AN IRA TRANSFER AND AN IRA ROLLOVER?
A. An IRA Transfer moves your IRA assets directly from one financial
institution to another. You may, for instance, consolidate your IRA at GT Global
by transferring IRA assets from a bank, trust company, insurance company or
mutual fund; your current custodian will liquidate your IRA assets (if not
currently held in GT Global Mutual Funds) and send the check directly to GT
Global Investor Services, Inc.
An IRA Rollover reinvests IRA assets distributed to you. With a rollover you
can take receipt of your IRA assets for up to 60 days before reinvesting them
(please note that you must reinvest your IRA assets within 60 days to maintain
their tax-deferred status). You may do only one rollover in any 12-month period.
There is no restriction on the number of IRA Transfers you effect in a year.
-------
2
<PAGE>
----------------
GT GLOBAL IRA
Q. I AM ELIGIBLE TO RECEIVE A DISTRIBUTION FROM AN EMPLOYER-SPONSORED PLAN.
CAN I ROLL IT OVER AND KEEP IT TAX-DEFERRED?
A. Most any distribution from an employer-sponsored plan may be rolled over to
an IRA, with certain exceptions (E.G., minimum required distributions, annuity
payments, and installments over a period of ten or more years). Your eligible
rollover distribution will be subject to 20% income tax withholding unless you
have the distribution transferred directly to your IRA.
-- If you have your eligible rollover distribution paid directly to your IRA,
you avoid paying current tax (and, potentially, the 10% federal penalty on early
withdrawals) and keep all of your distribution money growing tax-deferred.
-- If, instead, your eligible rollover distribution is paid to you, the
distribution will be subject to 20% withholding and you will receive only 80% of
the payment, all or a portion of which may be rolled over into an IRA within 60
days of receipt. You will avoid paying current tax and penalties on the amount
rolled over into your IRA. (If you want to avoid being taxed on the amount that
was withheld, you will need to find other money to replace the 20% that was
withheld and contribute it to your IRA within the 60-day period.)
Q. WHAT FORMS OR REPORTS DO I FILE FOR MY IRA CONTRIBUTIONS?
A. If your IRA contributions are completely deductible, you file no special
forms with the IRS. If you make non-deductible contributions, you must file Form
8606 with the IRS (and you should keep copies of all IRS Forms 8606 that you
file).
You do not report any interest income, dividends or capital gains or losses
that occur in your IRA.
Q. WHAT FORMS OR REPORTS DOES GT GLOBAL, INC. FILE FOR MY IRA?
A. GT Global, Inc. will report to the IRS: your annual contributions, if any;
your rollover contributions and the market value of your IRA at December 31 of
each year (Form 5498); and any distributions (Form 1099R).
-------
3
<PAGE>
----------------
GT GLOBAL IRA
NOTES
- ----------------------------------------------------------
-------
4
<PAGE>
----------------
[LOGO]
GT GLOBAL
INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT AND APPLICATION
- --------------------------------------------------------------------------------
- --------------------------------------------
1. GENERAL
- --------------------------------------------
Internal Revenue Service Regulations require that you be given this Disclosure
Statement for the purpose of informing you of the restrictions and limitations
on how you may use an Individual Retirement Account (IRA). Please read this
Disclosure Statement together with the Custodial Agreement and the
prospectus(es) for the GT Global Fund(s) in which you are investing. The
provisions of the Custodial Agreement and prospectus(es) must prevail over this
statement in any instance where the statement is incomplete or appears to be in
conflict.
- --------------------------------------------
2. IRREVOCABILITY OF ACCOUNT
- --------------------------------------------
The Internal Revenue Service requires that you receive this disclosure
statement at least 7 days prior to the establishment of your IRA. Because of
this requirement, your application will not be accepted by the Custodian until
at least 7 days after the date you received this disclosure statement, as
indicated by you in the IRA Custodial Agreement. Prior to such acceptance, you
may receive back the entire amount that you have contributed, without reduction
for fees or other expenses. You may request that your contribution be returned
to you by writing to GT Global Investor Services, Inc. (agent for the
Custodian), P.O. Box 7345, San Francisco, CA 94120-7345 or by calling GT Global
Investor Services, Inc. toll free at (800) 223-2138 within 7 days of the date
you have signed the Custodial Agreement. All telephone requests must be
confirmed in writing. Once your application for a GT Global IRA is accepted by
the Custodian, it cannot be revoked by you.
- --------------------------------------------
3. ELIGIBLE INDIVIDUAL
- --------------------------------------------
Generally, you may open an IRA at any time; however, you will not be able to
make any contribution in the year you become 70 1/2, or in any year thereafter.
- --------------------------------------------
4. YOUR IRA ACCOUNT
- --------------------------------------------
An Individual Retirement Account is a trust or custodial account created or
organized in the United States for your exclusive benefit or for the benefit of
your beneficiaries. The IRA must be created by written instrument that meets the
following requirements:
(1) The trustee or custodian must be a bank, federally insured credit union,
savings and loan association, or (under federal regulations) another person
eligible to act as trustee or custodian;
(2) Except for rollovers, transfers and certain employer-sponsored plans,
under applicable law, the trustee or custodian will not accept contributions of
more than $2,000 in any tax year. You may make rollover and transfer
contributions in amounts greater than $2,000. All contributions must be in cash.
(3) Your interest in the IRA is nonforfeitable; that is, it is fully vested at
all times;
(4) No part of the trust or custodial funds may be invested in life insurance
contracts or certain collectibles nor may the assets be commingled with other
property except in a common trust fund or common investment fund; and
(5) Your interest in the custodial account must begin to be distributed by
April 1 of the year following the year in which you reach age 70(1)/(2). The
distribution may be made in a single sum, or you may receive periodic
distributions, starting by April 1 of the year following the year
-------
DS-1
<PAGE>
----------------
GT GLOBAL IRA
in which you reach age 70(1)/(2), so long as your entire interest in the
custodial account is distributed over one of the following periods:
(a) Your life;
(b) The joint lives of you and your designated beneficiary;
(c) A specific period not extending beyond your life expectancy; or
(d) A specific period not extending beyond the life expectancy of you and
your designated beneficiary.
If the amount distributed is less than the minimum amount required to be
distributed to you under the Internal Revenue Code, an excise tax will be
imposed on you in an amount equal to 50% of the excess of the amount required to
be distributed to you over the amount you actually receive.
(6) If you die after distributions have begun, your beneficiary must receive
the remaining payments at least as rapidly as under the method of distribution
being used on the date of your death. If you die before distributions have begun
or if your surviving spouse dies before distributions have begun, any interest
remaining must, by December 31 of the calendar year which contains the fifth
anniversary of your death or the death of your surviving spouse, be distributed
in a single sum. If your (or your surviving spouse's) designated beneficiary
wishes to receive an immediate annuity which provides for payments over the
beneficiary's life or over a specific period not exceeding the beneficiary's
life expectancy, the beneficiary must elect to receive such payments by December
31 following the calendar year of your death. Such payments also must begin by
that date. If your designated beneficiary is your spouse, annuity payments need
not commence until December 31 of the year you would have attained 70(1)/(2).
This annuity contract will not allow one's life expectancy to be recalculated.
The election will also apply to beneficiaries who make additional contributions
or rollovers in their own names to the IRA. An amount is not distributed if it
is rolled over into an Individual Retirement Account, annuity, or retirement
bond for the benefit of the beneficiary.
(7) If your surviving spouse is your designated beneficiary, your IRA assets
may be rolled over into his or her own IRA. No rollover from your IRA is
available for a beneficiary other than your surviving spouse, and such
non-spouse beneficiary must take the IRA assets in the form of a taxable
distribution.
- --------------------------------------------
5. TAX DEDUCTIONS
- --------------------------------------------
ELIGIBILITY
If neither you, nor your spouse, is an active participant (see A. below), you
may make a contribution of up to the lesser of $2,000 (or $4,000 in the case of
a Spousal IRA) or 100% of compensation and take a deduction for the entire
amount contributed. If you or (in most cases) your spouse are an active
participant but have an adjusted gross income (AGI) below a certain level (see
B. below), you may make a fully deductible contribution as under current law.
If, however, you or (in most cases) your spouse is an active participant and
your combined AGI is above the specified level, the amount of the deductible
contribution you may make to an IRA is phased down and eventually eliminated.
A. ACTIVE PARTICIPANT. You are an "active participant" for a year if you are
covered by a retirement plan. Generally, you are covered by a "retirement plan"
for a year if your employer or union has a retirement plan under which money is
added to your account or you are eligible to earn retirement credits. For
example, if you are covered under a profit-sharing plan, certain government
plans, a salary reduction arrangement (such as a tax sheltered annuity
arrangement or a 401(k) plan), a simplified employee pension plan (SEP), a
SIMPLE IRA or a plan which promises you a retirement benefit which is based upon
the number of years of service you have with the employer (a "defined benefit
plan"), you are likely to be an active participant. Your Form W-2 for the year
should indicate your participation status.
You are an active participant for a year even if you are not yet vested in
your retirement benefit. Also, if you make required contributions or voluntary
employee contributions to a retirement plan, you are an active participant. In
certain plans you may be an active participant even if you were only with the
employer for part of the year. You will be deemed an active participant in your
employer's defined benefit plan even if you do not make required contributions
and even if you elect not to participate or
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DS-2
<PAGE>
----------------
GT GLOBAL IRA
waive participation. In other plans, however, you will not be deemed an active
participant if you elect not to participate.
You are generally not considered an active participant if you are covered in a
government-sponsored plan only because of your services as 1) an Armed Forces
Reservist, for less than 91 days of active service, or 2) a volunteer
firefighter covered for firefighting service. Of course, if you are covered in
any other plan, these exceptions do not apply.
For 1997, if you are married but file a separate return, your spouse's active
participation affects your ability to make deductible contributions if you lived
together for any part of the year. For 1998, your combined AGI will also affect
your ability to make deductible contributions in this situation. If you lived
apart from your spouse for the entire year and you file a separate return, you
are treated as unmarried for purposes of your IRA deductions and thus your
spouse's active participation does not affect your ability to make deductible
contributions.
B. MODIFIED ADJUSTED GROSS INCOME (AGI). If you are an active participant, you
must look at your Adjusted Gross Income for the year (if you and your spouse
file a joint tax return, you use your combined AGI) to determine whether you can
make deductible IRA contribution. Your tax return will show you how to calculate
your AGI which, for purposes of determining the deductible amount of your IRA
contribution, is calculated without taking into account any IRA deduction, any
foreign earned income or foreign housing exclusion or any excludable series EE
savings bond interest. If you are at or below a certain AGI level, called the
Threshold Level, you are treated as if you were not an active participant and
can make a deductible contribution under the same rules as a person who is not
an active participant.
If you are single (or if you are married, filed separately and lived apart
from your spouse during the entire year), your Threshold Level is $25,000 for
1997 and $30,000 for 1998. The Threshold Level if you are married and file a
joint tax return is $40,000 for 1997 and $50,000 for 1998, and if you are
married but file a separate tax return, the Threshold Level is $0. For 1998, if
you are married and not an active participant but your spouse is, your Threshold
Level is $150,000.
If your AGI is $10,000 or more above your Threshold Level and you are an
active participant, you will not be able to deduct any of your contributions to
your IRA. If your AGI is less than $10,000 above your Threshold Level, you will
still be able to make a deductible contribution but it will be limited in
amount. The amount by which your AGI exceeds your Threshold Level (AGI-Threshold
Level) is called your Excess AGI. The Maximum Allowable Deduction is $2,000 (or
$4,000 for a Spousal IRA). You can calculate your Deduction Limit as follows:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-EXCESS AGI MAXIMUM
- ------------------- X ALLOWABLE DEDUCTION = DEDUCTION LIMIT
$10,000
</TABLE>
You must round up the result to the next highest $10 level (the next highest
number which ends in zero). For example, if the result is $1,525, you must round
it up to $1,530. If the final result is below $200 but above zero, your
Deduction Limit is $200. Your Deduction Limit cannot, in any event, exceed 100%
of your compensation.
EXAMPLE 1: Ms. Smith, a single person, is an active participant and has an AGI
of $36,619. She calculates her deductible IRA contribution for 1998 as follows:
HER AGI IS $36,619.
HER THRESHOLD LEVEL IS $30,000.
HER EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($36,619-$30,000) = $6,619.
HER MAXIMUM ALLOWABLE DEDUCTION IS $2,000.
SO, HER IRA DEDUCTION LIMIT FOR 1998 IS:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$6,619
- --------------- X $2,000 = $676 (ROUNDED TO $680)
$10,000
</TABLE>
EXAMPLE 2: Mr. and Mrs. Young file a joint tax return. For 1997, each spouse
earns more than $2,000, and Mrs. Young is an active participant. They have a
combined AGI of $44,255. They may each contribute to an IRA for 1997 and
calculate their deductible contributions to each IRA as follows:
THEIR AGI IS $44,255.
THEIR THRESHOLD LEVEL IS $40,000.
THEIR EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($44,255-$40,000) = $4,255.
THE MAXIMUM ALLOWABLE DEDUCTION FOR EACH SPOUSE
IS $2,000.
SO, EACH SPOUSE MAY COMPUTE HIS OR HER IRA DEDUCTION
LIMIT FOR 1997 AS FOLLOWS:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$4,255
- --------------- X $2,000 = $1,149 (ROUNDED TO
$10,000 $1,150)
</TABLE>
EXAMPLE 3: If, in example 2, Mr. Young did not earn any compensation, or
elected to be
-------
DS-3
<PAGE>
----------------
GT GLOBAL IRA
treated as earning no compensation, for 1997 Mrs. Young could establish a
Spousal IRA (consisting of an account for herself and one for her husband). The
amount of deductible contributions for 1997 which could be made to the two IRAs
is calculated using a Maximum Allowable Deduction of $4,000 rather than $2,000.
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$4,255
- --------------- X $4,000 = $2,298 (ROUNDED TO
$10,000 $2,300)
</TABLE>
The $2,300 must then be divided between the two accounts, but no more than
$2,000 may be contributed to either IRA.
EXAMPLE 4: In 1998, Mr. and Mrs. Young file a joint return. Mrs. Young is an
active participant, and Mr. Young is not. They have a combined AGI of $55,000.
They may each contribute to an IRA for 1998 and calculate their deductible
contributions to each IRA as follows:
THEIR AGI IS $55,000.
SINCE THIS IS LESS THAN $150,000, MR. YOUNG IS NOT AFFECTED
BY MRS. YOUNG'S ACTIVE PARTICIPANT STATUS.
HIS ALLOWABLE DEDUCTION FOR 1998 IS $2,000.
MRS. YOUNG'S THRESHOLD LEVEL IS $50,000.
HER EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($55,000-$50,000) = $5,000.
THE MAXIMUM ALLOWABLE DEDUCTION FOR EACH SPOUSE
IS $2,000.
MRS. YOUNG'S IRA DEDUCTION LIMIT FOR 1998 IS:
<TABLE>
<C> <S>
$10,000-$5,000
- --------------- X $2,000 = $1,000
$10,000
</TABLE>
EXAMPLE 5: For 1997, Mr. Jones, a married person, files a separate tax return
and lived with Mrs. Jones during the year and is an active participant. He has
$1,500 of compensation and wishes to make a deductible contribution to an IRA.
HIS AGI IS $1,500.
HIS THRESHOLD LEVEL IS $0.
HIS EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($1,500-$0) = $1,500.
HIS MAXIMUM ALLOWABLE DEDUCTION IS $2,000.
SO, HIS IRA DEDUCTION LIMIT FOR 1997 IS:
<TABLE>
<C> <S>
$10,000-$1,500
- --------------- X $2,000 = $1,700
$10,000
</TABLE>
Even through his IRA deduction limit under the formula is $1,700, Mr. Jones
may not deduct an amount in excess of his compensation, so, his actual deduction
is limited to $1,500.
As an alternative, you may determine your Deduction Limit by consulting the
Table found in IRS Publication 590.
NOTE: Check to see if the Publication has been updated to reflect the
increased Threshold Levels and other changes for 1998 resulting from the
Taxpayer Relief Act of 1997.
SPOUSAL IRAS
As noted in Example 3 above, under the Act you may contribute to a Spousal IRA
even if your spouse has earned some compensation during the year. Provided your
spouse does not make a contribution to an IRA, you may set up a Spousal IRA
consisting of an account for your spouse as well as an account for yourself. The
maximum deductible amount for the Spousal IRA is the lesser of $4,000 or 100% of
compensation.
NONDEDUCTIBLE CONTRIBUTIONS TO IRAS
Even if you are above the Threshold Level and thus may not make a deductible
contribution of $2,000 ($4,000 for a Spousal IRA), you may still contribute up
to the lesser of 100% of compensation or $2,000 to an IRA ($4,000 for a Spousal
IRA). The amount of your contribution which is not deductible will be a
nondeductible contribution to the IRA. You may also choose to make a
contribution nondeductible even if you could have deducted part or all of the
contribution. Interest or other earnings on your IRA contribution whether from
deductible or nondeductible contributions will not be taxed until taken out of
your IRA and distributed to you.
If you make a nondeductible contribution to an IRA you must report the amount
of the nondeductible contribution to the IRS as a part of your tax return for
the year.
You may make a $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, without having to know how
much will be deductible. When you fill out your tax return you may then figure
out how much is deductible.
You may withdraw an IRA contribution made for a year any time before April 15
of the following year. If you do so, you must also withdraw the earnings
attributable to that portion and report the earnings as income for the year for
which the contribution was made. If some portion of your contribution is not
deductible, you may decide either to withdraw the nondeductible amount, or to
leave it in the IRA and designate that portion as a nondeductible contribution
on your tax return.
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DS-4
<PAGE>
----------------
GT GLOBAL IRA
IRA DISTRIBUTIONS
Because nondeductible IRA contributions are made using income which has
already been taxed (that is, they are not deductible contributions), the portion
of the IRA distributions consisting of nondeductible contributions will not be
taxed again when received by you. If you make any nondeductible IRA
contributions, each distribution from your IRA will consist of a nontaxable
portion (return of nondeductible contributions) and a taxable portion (return of
deductible contributions, if any, and account earnings).
Thus, you may not take a distribution which is entirely tax-free if you have
made any deductible contributions. The following formula is used to determine
the nontaxable portion of your distributions for a taxable year:
<TABLE>
<S> <C> <C> <C> <C>
REMAINING
NONDEDUCTIBLE TOTAL NONTAXABLE
CONTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
- -------------------------- X (FOR THE = (FOR THE
YEAR-END TOTAL IRA YEAR) YEAR)
ACCOUNT BALANCES
</TABLE>
To figure the year-end total IRA account balance you treat all of your IRAs as a
single IRA. This includes all regular IRAs, as well as Simplified Employer
Pension (SEP) IRAs, SIMPLE IRAs and Rollover IRAs. You also add back the
distributions taken during the year.
EXAMPLE: An individual makes the following contributions to his or her IRAs:
<TABLE>
<CAPTION>
YEAR DEDUCTIBLE NONDEDUCTIBLE
- --------- ----------- --------------
<S> <C> <C>
1993 $ 2,000
1994 1,800
1995 1,000 $ 1,000
1996 600 1,400
----------- -------
$ 5,400 $ 2,400
</TABLE>
<TABLE>
<S> <C>
Deductible Contributions: $ 5,400
Nondeductible Contributions: 2,400
Earnings on IRAs: 1,200
---------
Total Account Balance of IRAs
as of 12/31/96:$9,000
(including distributions in 1996)
</TABLE>
In 1997, the individual takes a distribution of $3,000. The total account
balance in the IRAs on 12/31/96, plus 1997 distributions, is $9,000. The
nontaxable portion of the distributions for 1997 is figured as follows:
<TABLE>
<S> <C> <C> <C>
TOTAL NONDEDUCTIBLE CONTRIBUTIONS $2,400
TOTAL ACCOUNT BALANCE IN THE ------ X $3,000 = $800
IRAS PLUS DISTRIBUTIONS $ 9,000
</TABLE>
Thus, $800 of the $3,000 distribution in 1997 will not be included in the
individual's taxable income. The remaining $2,200 will be taxable for 1997.
SIMPLIFIED EMPLOYEE PENSION ACCOUNTS
Your IRA may be used as part of a SEP established by your employer, or by you
if you are self-employed. Generally, your employer, or you if self-employed, may
contribute to your SEP-IRA up to a maximum of 15% of your compensation or
$24,000, whichever is less. If your IRA is used as part of a salary reduction
SEP, you may elect to reduce your compensation, up to a maximum of 15% of your
compensation or $10,000 (adjusted), whichever is less, and have your employer
contribute that amount to your SEP-IRA. If your employer maintains both a salary
reduction SEP and a regular SEP, the contribution limit to both SEPs together is
15% of your compensation or $24,000, whichever is less. It is your and your
employer's responsibility to see that contributions in excess of normal IRA
limits are made under a valid SEP and are, therefore, proper. Generally, under a
SEP, an IRA must be set up for each employee who is (1) at least 21 years old,
(2) has worked for the employer in any of the 3 of the 5 years immediately
preceding the particular tax year and (3) has received from the employer at
least $400 (or other amount resulting from cost-of-living adjustment) in
compensation for the tax year. Certain employees may be excluded from the Plan.
- --------------------------------------------
6. TAX-FREE TRANSFER CONTRIBUTIONS
- --------------------------------------------
Transfers allow you to transfer IRA assets directly from one IRA trustee or
custodian to another on a tax-free basis. If you already have an IRA with
another trustee or custodian, you may direct that trustee or custodian to
transfer your IRA assets to your GT Global IRA without tax consequences, in
accordance with the rules of your existing account. You may not take a deduction
for the amount. To authorize the GT Global IRA Custodian to arrange a direct
transfer from your existing IRA, please complete the attached IRA Transfer
Authorization as well as the IRA Application.
- --------------------------------------------
7. TAX-FREE ROLLOVER CONTRIBUTIONS
- --------------------------------------------
Rollover contributions permit you to contribute amounts you are eligible to,
or actually,
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DS-5
<PAGE>
----------------
GT GLOBAL IRA
receive from one retirement program to another without incurring any income tax
liability. The source of a rollover contribution to an IRA is typically either a
distribution from a qualified retirement plan, a tax-sheltered 403(b) annuity or
custodial account, or another IRA. Most distributions may be rolled over to an
IRA without regard to whether it is a total or a partial distribution, except
for certain distributions such as minimum required distributions, annuity
payments, installments over a period of ten or more years, and certain payments
to non-spouse beneficiaries and alternate payees that are not eligible for
rollover treatment.
IF YOU ARE ELIGIBLE TO RECEIVE A DISTRIBUTION FROM A QUALIFIED PLAN OR A
403(b) PROGRAM, you may wish to have your eligible rollover distribution paid
directly to your GT Global IRA in order to avoid 20% withholding on the
distribution (which will be credited against your federal income taxes). If you
have a direct rollover of your eligible distribution, no income tax will be
withheld and your distribution will not be taxed until you take it out of your
IRA. To facilitate a direct rollover, please complete the attached IRA Direct
Rollover Instructions as well as the IRA Application. If, instead, you have your
eligible rollover distribution paid to you, you will receive only 80% of the
payment (because of the required 20% withholding) all or part of which may be
rolled over into a GT Global IRA within 60 days of your receipt of the
distribution. The amount rolled over will not be taxed until you take it out of
your IRA. NOTE that if you want to avoid being taxed on the amount that was
withheld, you will need to find other money to replace the 20% that was withheld
and contribute it to your IRA within the 60-day period.
This mandatory withholding does not apply to distributions you receive from
another IRA. All or part of an eligible distribution from another IRA may be
rolled over, into a GT Global IRA by the 60th day after you receive the benefits
from your first IRA.
Whether you do a direct rollover or a rollover of amounts that are initially
paid to you, you will not be taxed on (nor can you take a deduction for) the
amount you roll over. You will not be taxed on the amount transferred, and you
cannot take a tax deduction for that amount. You will be taxed on the portion of
the distribution, if any, which is not reinvested within 60 days. The following
summarizes some of the other rules applicable to rollover contributions.
Rollovers between individual retirement programs may occur only once in any
12-month period, BUT THIS LIMIT DOES NOT APPLY TO A TRUSTEE-TO-TRUSTEE TRANSFER
DESCRIBED IN SECTION 6 ABOVE.
If property has been received from a retirement program, it may be sold and
the proceeds of the sale rolled over. For example, if you were to receive a
distribution consisting of stock, you could sell the stock and contribute the
money you received from the sale to your IRA within the 60-day period from your
receipt of the stock. If you did not contribute all of the money you received
from the sale, you would be taxed on the portion not rolled over.
In general, you may roll over all or part of a distribution from your
employer's qualified plan or 403(b) program (except the portion, if any,
representing your own employee contributions to the plan) to your new IRA. You
may do this even though you are not otherwise allowed to make deductible
contributions into an IRA.
Tax-free rollover treatment will also apply, in certain circumstances, where
you receive a distribution in a parent-subsidiary or controlled group
relationship. Any amounts distributed from an employer's qualified plan will not
be eligible for five-year forward averaging if part of the distribution is
rolled-over into an IRA.
If you roll over an amount into an IRA from a qualified plan, you may be
allowed at a later date to roll those proceeds back into another qualified plan.
In order to do so, however, the proceeds may not have been mixed with regular
contributions or funds from other sources.
Since many of the rules with respect to rollover situations are rather
complex, you should check with your own tax adviser as to your ability to effect
a rollover in your particular circumstances.
- --------------------------------------------
8. EXCESS CONTRIBUTIONS
- --------------------------------------------
Generally, an excess contribution is the amount of any contributions to your
IRA (other than a proper rollover or transfer contribution) for a taxable year
that exceeds your IRA contribution limit for that year. If you make an excess
contribution, no income tax deduction will be
-------
DS-6
<PAGE>
----------------
GT GLOBAL IRA
allowed for the excess contribution, and you may be subject to a 6% excise tax
on the amount of the excess contribution.
The 6% excise tax is imposed with respect to the tax year for which the excess
contribution is made and for each later year until the excess amount is
eliminated. The amount of this excise tax for any year cannot exceed 6% of the
value of the account, determined as of the close of that tax year.
If you make a contribution to your IRA for a taxable year which exceeds your
IRA contribution limit, whether deductible or nondeductible, you may be
permitted to designate the contribution as a nondeductible IRA contribution by
the due date for filing your Federal income tax return, not including
extensions. As an alternative, you may withdraw the contribution from your IRA
and the earnings thereon at any time prior to the due date for filing your
Federal income tax return, including extensions, for the taxable year for which
the contribution was made. If this is done, the return of the contribution will
not be includible in your gross income as an IRA distribution, and the
contribution will not be subject to the 6% excise tax on excess contributions
(assuming the contribution is not deducted on your return). However, the
earnings on the contribution will be taxable income in the year for which the
contribution was made, and may possibly be subject to the 10% tax on early
distributions if you are under age 59 1/2 (see Section 10 below).
If you make an excess contribution to your IRA that exceeds your IRA
contribution limit, and you withdraw the excess contribution after the due date
for filing your Federal income tax return (including extensions), the returned
excess contribution will not be includible in your gross income as an IRA
distribution (subject to possible premature distribution penalties) if: (1) your
total IRA contributions for the year were not more than $4,000 and (2) you did
not deduct the excess contribution on your return (or if the deduction you
claimed was disallowed by the Internal Revenue Service). However, you must pay
the 6% excise tax on the excess contribution for each taxable year that it is
still in your IRA at the end of the following year. Under this procedure, you
are not required to withdraw any earnings attributable to the excess
contribution.
You may also eliminate an excess contribution from your IRA in a subsequent
year by not contributing the maximum amount for that year and applying the
excess contribution to the subsequent year's contribution. You may be entitled
to a deduction for the amount of the excess contribution that is applied in the
subsequent year, provided you did not previously deduct the excess contribution
(or if the deduction you claimed was disallowed by the Internal Revenue
Service). However, if you incorrectly deducted an excess contribution in a
closed taxable year (I.E., one for which the period to assess a deficiency has
expired), the amount of the excess contribution cannot be deducted again in the
subsequent year in which it is applied.
- --------------------------------------------
9. DISTRIBUTIONS
- --------------------------------------------
Taxable distributions from your IRA are taxed as ordinary income regardless of
their source. They are not eligible for capital gains treatment or the special
5-year averaging rules that apply (for tax years beginning prior to 2000) to
lump sum distributions from qualified employer plans.
As provided in Form 5305-A, you may elect to have your IRA distributed in: a
single sum payment; an annuity contract; or equal annual installments over a
specified period not to exceed your life expectancy or the joint life and last
survivor expectancy of you and your designated beneficiary. In general, you must
begin receiving distributions from your IRA no later than April 1 following the
calendar year in which you reach age 70 1/2. There is a prescribed minimum
amount for such distributions and an excise tax may be imposed if the amount
distributed to you is less than the required amount. If you die before your IRA
is completely distributed to you, the remaining balance in your IRA will be
distributed to your beneficiary(ies) either in accordance with the method of
distribution in effect at your death (if on or after the required beginning
date) or as otherwise permitted (if your death occurs prior to the required
beginning date).
- --------------------------------------------
10. PREMATURE DISTRIBUTIONS
- --------------------------------------------
A penalty tax of 10% is imposed on taxable distributions made to you or your
beneficiaries before you attain age 59(1)/(2). No penalty tax will be imposed if
the distribution is (i) a return of nondeductible contributions, (ii) made on
account of your death or disability, (iii) made in
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DS-7
<PAGE>
----------------
GT GLOBAL IRA
substantially equal payments over life or life expectancy as permitted in
accordance with the provisions of Section 72(t)(2) of the Code and the
regulations promulgated thereunder, or (iv) contributed as a "rollover" within
60 days. In addition, the penalty tax does not apply if the distribution is made
(i) to pay for medical expenses in excess of 7.5% of your adjusted gross income,
(ii) if you are unemployed, to pay for medical insurance premiums after you have
received unemployment compensation for a specified period or, for distributions
made after 1997, (iii) to pay for certain qualified higher education expenses of
you or certain of your family members or (iv) to pay for certain expenses
associated with the purchase of a first home by you or certain of your family
members. This tax is in addition to any tax that is due because you must include
the portion of the premature distribution attributable to deductible
contributions and all earnings in your gross income.
- --------------------------------------------
11. TAXABILITY OF ACCOUNT
- --------------------------------------------
Your IRA is exempt from tax unless you or your beneficiaries engage in a
prohibited transaction under Section 4975 of the Internal Revenue Code. Examples
of prohibited transactions include your borrowing from the IRA or your selling
property to or buying property from the IRA.
If you engage in a prohibited transaction, your IRA will lose its tax exempt
status as of the first day of the tax year in which the prohibited transaction
occurs. Once your IRA loses its exempt status, you must include the fair market
value of its assets in your income for that tax year. You will also be subject
to the 10% penalty tax on premature distributions.
If you use your IRA or any portion thereof as security for a loan, the portion
so used will be treated as distributed to you and will be currently taxable and
subject to the 10% tax on premature distributions.
- --------------------------------------------
12. FINANCIAL DISCLOSURES
- --------------------------------------------
Contributions to your IRA will be invested in shares of a GT Global Fund. You
may receive earnings on your shares in the form of income dividends or net
realized capital gain distributions. Such earnings will be reinvested in
additional shares of a GT Global Fund. The growth in value of the IRA is neither
guaranteed nor projected. The gross income received by a GT Global Fund is
reduced by the fees paid to the manager of the Fund, Chancellor LGT Asset
Management, Inc., and by expenses incurred by the Fund, such as accounting fees,
taxes, interest, trustee fees and brokerage charges. Each Fund's prospectus
contains more complete information including charges, expenses, the risks of
global investing and other matters of interest to a prospective investor.
- --------------------------------------------
13. MISCELLANEOUS
- --------------------------------------------
You are required to file form 5329 (Return for Individual Retirement Savings
Arrangements) for a taxable year in which you are subject to penalty taxes in
connection with your IRA.
The enclosed agreement has been approved as to form for use in establishing
custodial accounts by the Internal Revenue Service. The Internal Revenue Service
approval is a determination as to form only and does not represent a
determination of the merits of the account.
The proceeds from the custodial account may be used by you as a rollover
contribution to another account or annuity or retirement bond.
- --------------------------------------------
14. ADDITIONAL INFORMATION
- --------------------------------------------
Additional information on Individual Retirement Accounts can be obtained from
any district office of the Internal Revenue Service (IRS Publication 590).
-------
DS-8
<PAGE>
[IRS Form 5305-A Page 1 of 2]
[CAMERA READY COPY]
DS-9
<PAGE>
[IRS Form 5305-A Page 2 of 2]
[CAMERA READY COPY]
ARTICLE VIII
See Exhibit A to Form 5305-A for additional terms applicable to your GT Global
IRA. Exhibit A is incorporated in and made part of your GT Global IRA by this
reference.
[CAMERA READY COPY]
DS-10
<PAGE>
----------------
GT GLOBAL IRA
EXHIBIT A TO FORM 5305-A,
ARTICLE VIII
- ----------------------------------------------------------
The following provisions constitute Article VIII of Form 5305-A which is used to
establish your GT Global IRA.
1. The Custodian is under no duty to compel the Depositor to make any
contributions to the Account and shall have no duty to assure that such
contributions are appropriate in amount (except to the extent that no annual
contributions may exceed $2,000 or such other maximum annual level as may be
later authorized by law).
2. The amount of each contribution by the Depositor shall be applied to the
purchase of shares of GT Global Funds (hereinafter "Funds"). The Depositor
acknowledges receipt of the appropriate current prospectus(es) of the Fund(s).
All dividends and capital gain distributions received on securities held in the
Custodial Account (the "Account") shall be reinvested in additional shares of
the Funds and credited to the Account. Shares acquired in the Account will be
held beneficially for the Depositor in the name of the Custodian or its nominee.
3. The Custodian shall deliver to the Depositor all shareholder notices and
reports, prospectuses, financial statements, proxy material and other material
as they are received from the Funds. The Custodian shall vote at all shareholder
meetings of the Funds in accordance with written instructions of the Depositor
which will be secured by the Custodian. If no written instructions are received
from the Depositor, the Depositor's shares shall not be voted except that the
Custodian may vote "present" for purposes of determining the presence of a
quorum.
4. The Custodian may resign upon at least 60 days written notice to the
Depositor and may be removed by the Depositor upon 60 days written notice to the
Custodian. Upon resignation by the Custodian, it shall transfer the assets of
the Account in such a manner as the Depositor shall designate, but in the
absence of such designation, the Custodian will use its best efforts to transfer
the assets of the Account to a successor custodian to be held under an
Individual Retirement Account qualifying under Section 408 of the Internal
Revenue Code. Upon removal of the Custodian by action of the Depositor, the
assets of the Account shall be transferred in accordance with the Depositor's
instructions.
5. If the Depositor does not effectively elect any of the methods of
distribution described above by the April 1 following the calendar year in which
he or she reaches age 70 1/2, the assets of the Account shall be distributed to
the Depositor in equal or substantially equal payments over the Depositor's life
expectancy in accordance with the minimum distribution requirements applicable
to the Account as described in Article IV of Form 5305-A unless the Depositor
effectively elects another method of distribution.
6. By completing the Beneficiary Designation section of the IRA Application,
the Depositor may designate one or more beneficiaries to receive such benefits
in the event of the Depositor's death. Should the Depositor die without an
effective designation of beneficiary, the assets of the Account shall be
distributed to the Depositor's surviving spouse, or if there is no surviving
spouse, to the Depositor's estate in a single payment, unless another method of
distribution has been elected by such spouse or estate, as applicable.
7. In the event the Depositor's contribution to the Account in any year
exceeds $2,000, such excess amount shall be deemed to be a "rollover
contribution" permitted under Article I of the Account agreement, unless the
Depositor certifies otherwise to the Custodian in a form satisfactory to it.
-------
DS-11
<PAGE>
----------------
GT GLOBAL IRA
NOTES
- ----------------------------------------------------------
-------
DS-12
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Funds
P.O. Box 7345, San Francisco, CA 94120-7345 IRA APPLICATION
800/223-2138
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (ACCOUNT NO. --------------------------------)
TYPE OF ACCOUNT: / / CONTRIBUTORY / / ROLLOVER
/ / THIS IS A TRANSFER. I HAVE ATTACHED A COMPLETED IRA TRANSFER AUTHORIZATION.
Name
- ------------------------------------------------------------ Telephone Number ( )
Address ---------------------------------------------
- ----------------------------------------------------------- --------------------------------------------------------------
Street Social Security Number / / or Taxpayer I.D. Number / /
- -------------------------------------------------------------- (Check applicable box)
City State Zip Code Date of Birth
------------------------------------------------------
FUND SELECTION & INITIAL CONTRIBUTION
Enclosed is a check for $ ------------------ made payable to GT Global Investor Services, Inc. (as agent for the Custodian) to
be invested in the Fund(s) hereby specified. EACH GT GLOBAL MUTUAL FUND ISSUES MULTIPLE CLASSES OF SHARES. PLEASE READ THE
PROSPECTUS OF THE APPLICABLE CLASS OF SUCH FUNDS CAREFULLY BEFORE YOU INVEST. (If this is a transfer from another IRA or a
direct rollover, please indicate Fund preference and the percentage of the contribution you wish allocated to each Fund only.
Also complete the separate IRA Transfer Authorization Form or the IRA Direct Rollover Authorization, as applicable.)
</TABLE>
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER: / / CLASS A SHARES
/ / CLASS B SHARES (NOT AVAILABLE FOR THE DOLLAR FUND) / / CLASS C SHARES (NEW
DIMENSION FUND ONLY) OR / / ADVISOR CLASS SHARES. If a class share box is not
checked, your investment will be made in Class A Shares.
<TABLE>
<CAPTION>
INITIAL CONTRIBUTION INITIAL CONTRIBUTION
<S> <C> <C> <C>
07 / / GT GLOBAL $ OR % 25 / / GT GLOBAL NEW $ OR %
WORLDWIDE ----------------- ---------------- DIMENSION FUND ----------------- ----------------
GROWTH FUND
05 / / GT GLOBAL $ OR % 26 / / GT GLOBAL $ OR %
INTERNATIONAL ----------------- ---------------- DEVELOPING ----------------- ----------------
GROWTH FUND MARKETS FUND
16 / / GT GLOBAL $ OR % 03 / / GT GLOBAL EUROPE $ OR %
EMERGING ----------------- ---------------- GROWTH FUND ----------------- ----------------
MARKETS FUND
22 / / GT GLOBAL $ OR % 13 / / GT GLOBAL LATIN $ OR %
CONSUMER ----------------- ---------------- AMERICA GROWTH ----------------- ----------------
PRODUCTS AND FUND
SERVICES FUND
17 / / GT GLOBAL $ OR % 24 / / GT GLOBAL AMERICA $ OR %
FINANCIAL ----------------- ---------------- SMALL CAP GROWTH ----------------- ----------------
SERVICES FUND FUND
11 / / GT GLOBAL $ OR % 06 / / GT GLOBAL AMERICA $ OR %
HEALTH CARE ----------------- ---------------- MID CAP GROWTH ----------------- ----------------
FUND FUND
19 / / GT GLOBAL $ OR % 23 / / GT GLOBAL AMERICA $ OR %
INFRASTRUCTURE ----------------- ---------------- VALUE FUND ----------------- ----------------
FUND
21 / / GT GLOBAL $ OR % 04 / / GT GLOBAL JAPAN $ OR %
NATURAL ----------------- ---------------- GROWTH FUND ----------------- ----------------
RESOURCES FUND
15 / / GT GLOBAL $ OR % 10 / / GT GLOBAL GROWTH $ OR %
TELECOMMUNICATIONS ----------------- ---------------- & INCOME FUND ----------------- ----------------
FUND
02 / / GT GLOBAL NEW $ OR % 08 / / GT GLOBAL $ OR %
PACIFIC GROWTH ----------------- ---------------- STRATEGIC INCOME ----------------- ----------------
FUND FUND
01 / / GT GLOBAL $ OR % 09 / / GT GLOBAL $ OR %
DOLLAR FUND ----------------- ---------------- GOVERNMENT INCOME ----------------- ----------------
FUND
18 / / GT GLOBAL HIGH $ OR % TOTAL INITIAL $
INCOME FUND ----------------- ---------------- CONTRIBUTION: --------------------
CONTRIBUTION YEAR: --------------------
</TABLE>
NOTE: Minimum Initial Contribution -- $100 per Fund.
Maximum Annual Individual Contribution (except for rollovers and
transfers) -- $2,000.
Maximum Annual Individual and Spousal Contribution (except for rollovers
and transfers) -- $4,000 (in any combination, provided no more than
$2,000 is invested in any one account).
<TABLE>
<S> <C> <C>
TELEPHONE EXCHANGE
I, either directly or through the Authorized Agent, if any, named below, hereby
authorize the Transfer Agent of the GT Global Fund, to honor any telephone, telex
or telegraphic instructions believed to be authentic for exchange between any of
the Funds distributed by GT Global, Inc ("GT Global"). I understand and agree
that the account will be subject to the telephone exchange privilege described in
the applicable GT Global Fund's current prospectus and agree that GT Global, GT
Global Funds and the Funds' Transfer Agent, their officers and employees, will
not be responsible for the authenticity of any telephone, telex, or telegraphic
instructions nor be liable for any loss arising out of any such telephone, telex
or telegraphic instructions effected including any such loss due to negligence on
the part of such entities.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER OR ADVISOR) ONLY
We hereby submit this IRA Application for the purchase of shares including shares
purchased under a Right of Accumulation or Letter of Intent in accordance with
the terms of our Selling Agreement with GT Global and with the Prospectus(es) for
the GT Global Fund(s). We agree to notify GT Global of any purchases properly
made under a Letter of Intent or Right of Accumulation.
</TABLE>
Broker/Dealer or Advisor Name_________________________________________________
Main Office Address___________________________________________________________
Branch Number_______ Representative's Number______ Representative's Name______
<TABLE>
<S> <C>
Branch Address ------------------------- Telephone Number------------------
For Class A, B and C Shares only:
Broker/Dealer's Authorized Signature X ----------- Title------------------------
For Advisor Class Shares only:
We hereby submit this IRA Application for the purchase of Advisor Class Shares in accordance with the terms of our
Advisor Class Agreement with GT Global and with the Prospectus and Statement of Additional Information of each Fund
purchased.
Advisor's Authorized Signature X ------------------------- Title------------------------
</TABLE>
DS-13
<PAGE>
<TABLE>
<S> <C> <C>
DESIGNATION OF BENEFICIARY(IES)
If you require more room to name additional beneficiaries, please provide
the necessary information on a separate sheet, and indicate next to each
name whether beneficiary is primary or contingent.
PRIMARY BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest
remaining in my IRA upon my death:
</TABLE>
<TABLE>
<S> <C> <C> <C>
1. Name -------------------------------- Address -----------------------------------------------------
Relationship --- Date of Birth --- Social Security Number ---------------- Share of Account --%
2. Name -------------------------------- Address -----------------------------------------------------
Relationship ----- DOB -- Social Security Number ---------------- Share of Account --%
CONTINGENT BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my IRA upon my death:
1. Name -------------------------------- Address -----------------------------------------------------
Relationship ----- DOB -- Social Security Number ---------------- Share of Account --%
2. Name -------------------------------- Address -----------------------------------------------------
Relationship ----- DOB -- Social Security Number ---------------- Share of Account --%
</TABLE>
Unless otherwise indicated above, the benefit payable hereunder shall be paid
in equal shares to the Primary Beneficiaries who survive the Participant. If
no Primary Beneficiary(ies) survives the Participant, the payment shall be
made in equal shares (or as otherwise indicated above) to the Contingent
Beneficiary(ies) who survive the Participant. The Participant reserves the
right to change the above beneficiary by filing a new Beneficiary Designations
Form with the Custodian. Should no named beneficiary survive the date of
distribution, the account shall be distributed to my surviving spouse, or if
there is no surviving spouse, in a single payment to my estate. ONLY THE MOST
RECENT EXECUTED DESIGNATION OF BENEFICIARY(IES) ON FILE WITH GT GLOBAL
INVESTOR SERVICES, INC. (AS AGENT FOR THE CUSTODIAN) WILL BE HONORED.
CONSENT OF SPOUSE
I consent to the above Beneficiary Designation.
Signature of Spouse:
------------------------------------------------------------------
Date:
------------------
(Note: May be required in community property states if any person other than
or in addition to Participant's Spouse is designated as Beneficiary.)
<TABLE>
<S> <C> <C>
REDUCED SALES CHARGES
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES ONLY
/ / I certify that I qualify for the Right of Accumulation sales charge
discount described in the prospectus and statement of additional
information of the Fund(s) purchased.
/ / I own shares of more than one GT Global Mutual Fund. Below is a schedule
showing the numbers of each of my Shareholder Accounts.
/ / The registration of some of my shares differs from that shown on this IRA
Application. Below is a schedule showing the account number(s) and full
registration in each case.
STATEMENT OF INTENTION -- CLASS A SHARES ONLY
I agree to the Statement of Intention set forth in the Prospectus(es) for the
Fund(s) in which I am investing. Although I am not obligated to do so, it is my
intention to invest over a thirteen-month period in Class A Shares of the GT
Global Mutual Funds, in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
LIST OF OTHER GT GLOBAL MUTUAL FUND ACCOUNTS:
- -------------------------------------------
- ----------------------------------------------------------------------------
- -------------------------------------------
- ----------------------------------------------------------------------------
- -------------------------------------------
- ----------------------------------------------------------------------------
Account Numbers Account Registrations
AGREEMENT AND SIGNATURE
I acknowledge receipt of the Disclosure Statement and IRA Agreement (IRS Form
5305-A) for the GT Global IRA. I acknowledge receipt of the current
Prospectus(es) of the Fund(s) in which I have directed GT Global Investor
Services, Inc. (as agent for the Custodian) to invest my contribution(s). I
agree to the terms and provisions set forth in this IRA Application including
those contained in the Telephone Exchange section, the Disclosure Statement,
the Individual Retirement Custodial Account Agreement (IRS Form 305-A) and the
Prospectus(es). AS REQUIRED BY THE INTERNAL REVENUE SERVICE, I CERTIFY, UNDER
PENALTIES OF PERJURY, THAT THE TAXPAYER IDENTIFICATION NUMBER GIVEN ON THE
FACE OF THIS IRA APPLICATION IS CORRECT AND THAT I AM NOT SUBJECT TO BACKUP
WITHHOLDING IN MY IRA(S). THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR
CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS
REQUIRED TO AVOID BACKUP WITHHOLDING.
SignatureX_______________________________ Date _______________________________
Individual
FOR GT GLOBAL USE ONLY
ACCEPTED:
X_____________________________________________________ _______________________
Signature of Custodian or its Agent Date
DS-14
<PAGE>
<TABLE>
<S> <C>
[LOGO] IRA DIRECT ROLLOVER
GT Global Funds AUTHORIZATION
P.O. Box 7345, San Francisco, CA 94120-7345
800/223-2138
TO CURRENT PLAN ADMINISTRATOR OR 403(b) CUSTODIAN:
Name of Current Plan Administrator or 403(b) Custodian: Telephone ( )
--------------------------------- -------------------------
Address: ------------------------------------- ------------------------------------- ------------------ ------------------
Street City State Zip Code
Plan Account: -------------------------------------------------------------------------------------------------------------
Plan Account Name Plan Account Number Name of Plan Participant
</TABLE>
Please pay my entire eligible rollover distribution from the plan identified
above directly to my GT Global IRA Custodian, for
__________________________, IRA Account #________________________________
Participant Name (GT Global Account #, if known)
I. ROLLOVER/DIRECT ROLLOVER FROM AN EMPLOYER PLAN
<TABLE>
<CAPTION>
<S> <C>
A. I certify that my employer's qualified plan, qualified annuity, or 403(b) plan has made or will make an Eligible
Rollover Distribution which is being paid in a Direct Rollover to the Custodian of my IRA.
B. This Direct Rollover is not part of a series of payments over my life expectancy(ies) or over a period of 10 years or
more.
C. This Direct Rollover does not include any "after tax" employee contributions made by me to the employer's plan.
D. This Direct Rollover does not include any required minimum distributions with respect to the employer's plan.
E. I certify that I am eligible to establish an IRA with this Direct Rollover of an Eligible Rollover Distribution, and
that I am:
/ / 1. the plan participant;
/ / 2. the surviving spouse of the deceased plan participant; or
/ / 3. the spouse or former spouse of the plan participant under a Qualified Domestic Relations Order.
</TABLE>
II. ADDITIONAL INFORMATION FOR ROLLOVERS BEGINNING AT AGE 70 1/2
(Complete the following only if the direct rollover is being made after the
Participant's required beginning date, the April 1st following the calendar
year during which the Participant attained age 70 1/2):
<TABLE>
<CAPTION>
<S> <C>
1. My oldest primary beneficiary under the distribution plan is: --------------------------
Birthdate --------------------- Relationship ---------------------
</TABLE>
2. My life expectancy / / was / / was not being recalculated. The life
expectancy of my spouse beneficiary / / was / / was not being recalculated.
III. COMMINGLING AUTHORIZATION
(Check if applicable):
/ / I authorize the Custodian to commingle this direct rollover with my
regular IRA contributions. I understand that commingling regular IRA
contributions with direct rollover contributions from employer plans may
preclude me from rolling over funds in my rollover IRA into another
qualified plan or 403(b) plan. With such knowledge, I authorize and direct
the Custodian to place regular IRA contributions in my rollover IRA or
vice versa.
Please make this direct payment either in the form of a check made payable, or
by wire, to GT Global Investor Services, Inc., for the benefit of my IRA. All
checks should be mailed to GT Global Investor Services, Inc. (as agent for the
Custodian), P.O. Box 7345, San Francisco, CA 94120-7345.
SIGNATURE OF PARTICIPANT
I hereby irrevocably elect, pursuant to IRS Regulation 1.402(a)(5)-1T to treat
this contribution as a rollover contribution. I understand that this will not
be a valid IRA rollover unless PART I and PART II (and, if applicable, PART
III) are correct statements. I acknowledge that, due to the complexities
involved in the tax treatment of eligible rollover distributions from
qualified plans, qualified annuities, or 403(b) plans and direct rollovers to
IRAs, the Custodian has recommended that I consult with my tax advisor or the
Internal Revenue Service before completing this transaction to make certain
that this transaction qualifies as a rollover and is appropriate in my
individual circumstances. I hereby release the Custodian from any claim for
damages on account of the failure of this transaction to qualify as a valid
rollover.
<TABLE>
<S> <C> <C>
X
- -------------------------------------------- -------------------- ----------------------------------------------------------------
Participant's Signature Date Signature Guarantee (if required by current plan)
</TABLE>
FOR GT GLOBAL USE ONLY
GT Global Investor Services, Inc., (as agent for the GT Global IRA Custodian)
agrees to accept the direct rollover described above and upon receipt of such
rollover funds will apply those funds to investments as designated by the
Participant.
X__________________________________________________ __________________________
Signature of Custodian or its Agent Date
DS-15
<PAGE>
IRA DIRECT ROLLOVER INSTRUCTIONS
Since the eligible rollover distributions(1) that you take from an
employer-sponsored qualified plan(2) are subject to 20% federal income tax
withholding unless you roll over these assets directly to an IRA or other
eligible retirement plan, you may wish to arrange for a direct rollover to a GT
Global IRA.
TO FACILITATE A DIRECT ROLLOVER TO A GT GLOBAL IRA, PLEASE FOLLOW THESE STEPS:
1. Complete the front portion of this form;
2. Complete the GT Global IRA Application; and
3. Return them to GT Global Investor Services, Inc. at P.O. Box 7345, San
Francisco, CA 94120-7345.
GT Global Investor Services, Inc. will establish an IRA in your name, and
provide you and your current plan administrator or 403(b) custodian with your GT
Global IRA account number.
Your current plan administrator or 403(b) custodian can then send the assets
directly to your GT Global IRA (by check or wire), or give you a check made
payable to your GT Global IRA.
(1) An "eligible rollover distribution" subject to 20% withholding is generally
any partial or total distribution, except: (a) substantially equal periodic
payments made for life or joint lives (or life expectancy or joint life
expectancies) or for a specified period of 10 years or more; (b) required
minimum distributions; (c) non-taxable distributions (e.g., after-tax
contributions); and (d) certain DE MINIMIS distributions, corrective
distributions, loans and other distributions specified in the Internal
Revenue Code and applicable regulations. You should verify with the
distributing employer and your tax adviser whether a distribution is an
"eligible rollover distribution."
(2) "Qualified" plans include 401(k), 403(b) and other pension and
profit-sharing plans. Section 457 deferred compensation plans for
government and tax-exempt entity employees are not "qualified." An IRA is
not considered a "qualified" plan, even if the assets held in the IRA
originated from a qualified plan. You may use the IRA Transfer
Authorization to transfer your IRA assets to a GT Global IRA. If you
receive a distribution from another IRA, you may be eligible to roll it
over to a GT Global IRA.
DS-16
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Funds SUPPLEMENTAL APPLICATION
P.O. Box 7345, San Francisco, CA 94120-7345 FOR AUTOMATIC INVESTMENT PLAN
800/223-2138
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION
PLEASE NOTE: Automatic Investment Plan may ONLY be used for current year IRA contributions.
Please supply the following information exactly as it appears on the Fund's records.
- ------------------------------------------------------------ ------------------------------------------------------------
Name Account Number
- ------------------------------------------------------------ ------------------------------------------------------------
Address Telephone Number
- ------------------------------------------------------------ ------------------------------------------------------------
City State Zip Code Social Security Number
------------------------------------
AUTOMATIC INVESTMENT PLAN Date of Birth
I hereby authorize the Transfer Agent of the GT Global Funds to debit my personal checking account on the designated dates
in order to purchase shares in the Fund(s) indicated at the applicable public offering price determined on that day.
Please indicate if your purchase is for / / Class A Shares, / / Class B Shares (not available for the Dollar Fund) or / /
Class C Shares (New Dimension Fund only).
Fund: ------------------------- $ ---------- or -----% Fund: ------------------------- $ ---------- or -----%
Fund: ------------------------- $ ---------- or -----% Fund: ------------------------- $ ---------- or -----%
Fund: ------------------------- $ ---------- or -----% Fund: ------------------------- $ ---------- or -----%
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select: -------------
(MONTH)
(The request for participation in the Plan must be received by the 1st day of the month in which you wish investments to
begin.)
Amount of each debit (minimum $100) $ -----------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan
Application.
</TABLE>
<TABLE>
<S> <C> <C>
BANK AUTHORIZATION
</TABLE>
<TABLE>
<S> <C> <C>
- -------------------- ------------------------------------ ------------
Bank Name Bank Address Bank Account Number
</TABLE>
<TABLE>
<S> <C> <C> <C>
AGREEMENT AND SIGNATURES
IF YOU HAVE SELECTED A SPECIAL INVESTMENT OPTION, PLEASE COMPLETE THE SECTION BELOW.
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions
contained herein will continue until the Transfer Agent of the GT Global Funds receives written notice of any
change or revocation. Any change in these instructions must be in writing with all signatures guaranteed (if
applicable).
- -------------------------------------------------
Date
X X
- ------------------------------------------------ -------------------------------------------------
Signature Signature
- ------------------------------------------------- ------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ------------------------------------------------ -------------------------------------------------
Signature Signature
- ------------------------------------------------- ------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S.
stock exchange; (4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution.
A notary public is NOT an acceptable guarantor. An investor with questions concerning the GT Global Funds
signature guarantee requirement should contact the Transfer Agent.
</TABLE>
DS-17
<PAGE>
DS-18
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Funds IRA TRANSFER
P.O. Box 7345, San Francisco, CA 94120-7345 AUTHORIZATION
800/223-2138
</TABLE>
Please complete a separate Transfer Authorization for each Account to be
transferred.
TO EXISTING CUSTODIAN:
Name of Existing Custodian_____________________ Telephone_(________)__________
Address________________________ ______________________ ___________ ___________
Street City State Zip Code
Individual Policy or Account:______________________ in the name of ___________
Account Name Account Number Your Name
Please liquidate/transfer in kind* $________________ or ________________% of
my IRA identified above and transfer those funds by a check, made payable to
GT Global Investor Services, Inc., for
-------------------------------------------,
Investor's Name
IRA Account #
---------------------------------------------------
Existing GT Global Account Number, if applicable
AGE 70 1/2 RESTRICTIONS
(Please complete this section if you will be age 70 1/2 or older in the
transfer year.)
The following transfer restrictions apply to this transaction:
<TABLE>
<S> <C> <C>
1. Required Minimum Distribution. I authorize the Custodian or Trustee named above (select one):
/ / to distribute my required minimum distribution to me prior to transferring my IRA assets.
/ / to segregate and retain minimum distribution amount. Distribute on --------------------------, 19 -----.
2. Required Elections. (Complete only if you have reached your required beginning date, I.E., April 1 following the year
in which you attain age 70 1/2.)
a. My oldest primary beneficiary with respect to the transferring IRA is:
Name ---------------------------------------- Birthdate ---------- Relationship
-------------------------------------
b. My life expectancy / / was / / was not being recalculated.
c. The life expectancy of my spouse beneficiary / / was / / was not being recalculated / / Not Applicable. I am
aware that the elections indicated above became irrevocable as of my required beginning date and will apply to
the SEP-IRA with the new Custodian indicated below.
</TABLE>
THIS FORM, ALONG WITH ALL CHECK(S) SHOULD BE MAILED TO: GT GLOBAL INVESTOR
SERVICES, INC. (AS AGENT FOR THE CUSTODIAN), P.O. BOX 7345, SAN FRANCISCO, CA
94120-7345.
<TABLE>
<S> <C> <C>
X
- ---------------------------------------- ---------------------------------------- ----------------------------------------
Investor's Signature Date Signature Guarantee
(if required by current Custodian)
</TABLE>
* If this IRA currently holds shares of a GT Global Fund, you may request a
direct transfer of shares.
FOR GT GLOBAL USE ONLY
GT Global Investor Services, Inc. (as agent for the GT Global IRA Custodian)
agrees to accept the transfer described above and upon written receipt will
apply the proceeds to investments as designated by the Investor.
X_______________________________ _____________________________________________
Signature of Custodian or its
Agent Date
DS-19
<PAGE>
DS-20
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Funds
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
San Francisco, CA 94111-4624
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION EXISTING
SHAREHOLDER ACCOUNT NUMBER
</TABLE>
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies)
and date of trust instrument. Registration for Uniform Gifts/Transfers to
Minors accounts should be in the same name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C> <C>
--------------------------------------
Owner Social Security Number / / or Taxpayer Identification Number ("TIN") / /
- -------------------------------------- (Check applicable box)
Co-owner 1 If more than one owner, social security number or TIN should be provided for first
- -------------------------------------- owner listed. If a purchase is made under Uniform Gift/Transfer to Minors Act, social
Co-owner 2 security number of the minor must be provided.
-------------------------------------- Resident of / / U.S. / / Other (specify)------------------------------
Street Address Failure to provide TIN will result in 31% withholding on redemptions and exchanges.
( ) ( )
------------------------------------------------------------------------------------------------------------------------------
City, State, Zip Code Home Telephone Business Telephone
</TABLE>
FUND SELECTION $500 MINIMUM INITIAL INVESTMENT REQUIRED FOR EACH FUND SELECTED
FOR CLASS A AND CLASS B SHARES.
CHECKS SHOULD BE MADE PAYABLE TO "GT GLOBAL INVESTOR
SERVICES, INC."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A
Shares / / Class B Shares or / / Advisor Class Shares
If a class share box is not checked, your investment will be made in Class A
Shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per Fund.
<TABLE>
<S> <C> <C> <C> <C>
07 / / GT GLOBAL WORLDWIDE GROWTH FUND ---------- 03 / / GT GLOBAL EUROPE GROWTH FUND ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND ----------
16 / / GT GLOBAL EMERGING MARKETS FUND ---------- 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH ----------
FUND
26 / / GT GLOBAL DEVELOPING MARKETS FUND ---------- 06 / / GT GLOBAL AMERICA MID CAP GROWTH FUND ----------
25 / / GT GLOBAL NEW DIMENSION FUND ---------- 23 / / GT GLOBAL AMERICA VALUE FUND ----------
11 / / GT GLOBAL HEALTH CARE FUND ---------- 04 / / GT GLOBAL JAPAN GROWTH FUND ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND ---------- 10 / / GT GLOBAL GROWTH & INCOME FUND ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND ---------- 09 / / GT GLOBAL GOVERNMENT INCOME FUND ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND ---------- 08 / / GT GLOBAL STRATEGIC INCOME FUND ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND ---------- 18 / / GT GLOBAL HIGH INCOME FUND ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 01 / / GT GLOBAL DOLLAR FUND ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND ---------- Total percentage must equal 100%.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Rebalance frequency -- check one: / / Monthly / / Quarterly / / Semi annually / / Annually
</TABLE>
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains distributions and dividends will be reinvested in additional
shares of the same class unless appropriate boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in
cash / / Pay capital gain distributions and dividends in cash.
Investment will be split according to allocation.
<TABLE>
<S> <C>
AGREEMENTS & SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Funds receives written notice of any change or revocation. ANY CHANGE
IN THESE INSTRUCTIONS MUST BE SIGNED IN WRITING.
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
</TABLE>
DS-21
<PAGE>
----------------
GT GLOBAL IRA
NOTES
- ----------------------------------------------------------
-------
DS-22
<PAGE>
----------------
GT GLOBAL IRA
NOTES
- ----------------------------------------------------------
-------
DS-23
<PAGE>
----------------
GT GLOBAL IRA
NOTES
- ----------------------------------------------------------
January 1998 IRAQA712005M
-------
DS-24
<PAGE>
------------------------
QUESTIONS AND ANSWERS
FOR EMPLOYEES
- ----------------------------------------------------------
Q. AM I ELIGIBLE FOR A SIMPLE IRA?
A. You are eligible to participate in your employer's SIMPLE IRA for a
calendar year if (i) you are an employee of an "eligible employer," (ii) you
received at least $5,000 in compensation from your employer during any two
preceding calendar years, and (iii) you are reasonably expected to receive at
least $5,000 in compensation during the current calendar year. Depending on the
criteria selected by your employer, you might not be eligible to participate in
your employer's SIMPLE IRA if you are covered under a collective bargaining
agreement for which retirement benefits were the subject of good faith
bargaining. Consult your employer's plan document (Form 5305-SIMPLE if your
employer designates the custodian for your SIMPLE IRA or Form 5304-SIMPLE if
your employer does not designate the required custodian) to determine whether
you are eligible to participate in its SIMPLE IRA.
You are an employee of an eligible employer for a calendar year if your
employer (i) employs no more than 100 employees who received at least $5,000 of
compensation from your employer during the preceding calendar year and (ii) does
not maintain another qualified plan for the calendar year. If your employer was
eligible for a particular calendar year and in a subsequent calendar year
exceeds this 100 employee limit, your employer will be an eligible employer for
an additional two calendar years.
Q. HOW MUCH CAN I CONTRIBUTE?
A. You can contribute up to $6,000 per year to your SIMPLE IRA through a
Salary Reduction Agreement that designates the percentage of your compensation
that your employer will withhold from your paycheck, on a pre-tax basis, and
contribute to your SIMPLE IRA. This limit may be adjusted from time to time by
the Internal Revenue Service to reflect increases in the cost of living.
Q. WHEN CAN I START MAKING CONTRIBUTIONS?
A. You can elect to make contributions to your SIMPLE IRA for a calendar year
at any time during November and December of the preceding calendar year by
completing a Salary Reduction Agreement and filing it with your employer. For
future calendar years, you do not need to refile a Salary Reduction Agreement,
but you can change your contributions for a calendar year by completing a new
Salary Reduction Agreement and giving it to your employer during November or
December of the preceding calendar year. For example, you can increase your
contributions from 5% of your compensation in 1998 to 6% of your compensation in
1999 by filing a new Salary Reduction Agreement with your employer in November
or December of 1998.
You can stop making contributions to your SIMPLE IRA at any time; however, if
you stop making contributions at any time during a calendar year, you may not be
eligible to start making contributions again until the beginning of the next
calendar year (and will need to complete a new Salary Reduction Agreement and
give it to your employer during November or December of the preceding calendar
year).
Q. HOW MUCH DOES MY EMPLOYER CONTRIBUTE?
A. Generally, for any calendar year, your employer will contribute to your
SIMPLE IRA an amount equal to 100% of your contributions to your SIMPLE IRA, up
to a maximum of 3% of your compensation for that calendar year. However, your
employer may choose either (i) to match 100% of your contributions, up to a
maximum of 1% of your compensation for a calendar year (but your employer may
only elect this lower maximum contribution twice during any five year period),
or (ii) to contribute an amount equal to 2% of your compensation (not taking
into account compensation over $160,000, as adjusted by the Internal Revenue
Service to reflect increases in the cost of living) for a calendar year if you
receive at least $5,000 of compensation from your employer for that year. If
your employer elects to contribute anything other than 100% of your
contributions, up to 3% of your compensation for a calendar year,
[LOGO]
-------
1
<PAGE>
------------------------
GT GLOBAL SIMPLE IRA
it will notify you within a reasonable amount of time before November 1st of the
preceding calendar year so that you can adjust your contributions for the coming
calendar year.
Q. ARE CONTRIBUTIONS TO MY SIMPLE IRA TAXABLE?
A. Your contributions to your SIMPLE IRA are made on a "pre-tax" basis, which
means that compensation that would otherwise have been subject to federal income
tax at the time you received it will not be taxed if, instead, it is withheld
from your paycheck by your employer and contributed to your SIMPLE IRA. Your
contributions are taken into account, however, for purposes of social security,
medicare, railroad retirement, and unemployment taxes. Amounts contributed by
your employer to your SIMPLE IRA are not subject to federal income tax at the
time they are contributed nor taken into account for purposes of social
security, medicare, railroad retirement, and unemployment taxes. Contributions
and earnings on contributions to your SIMPLE IRA are not taxed until
distributed.
Q. WHEN CAN I WITHDRAW MONEY FROM MY SIMPLE IRA?
A. You can withdraw all or part of your money at any time, but ordinary
federal (and, in most cases, state or local) income taxes will be due on
withdrawals of contributions and earnings from your SIMPLE IRA in the year the
withdrawals are made. In addition, if you withdraw money prior to reaching age
59 1/2, you may be subject to a 10% federal penalty on early withdrawals. This
penalty is increased to 25% if you make a withdrawal from your SIMPLE IRA at any
time during the two-year period beginning on the date you first participated in
a SIMPLE IRA. After age 59 1/2, you may withdraw money from your IRA without
penalty. Under current law, you must begin withdrawing money by April 1
following the year in which you reach age 70 1/2.
Q. CAN I CONSOLIDATE MY SIMPLE IRA ASSETS WITH MY OTHER IRA ASSETS?
A. You may transfer your SIMPLE IRA assets to another SIMPLE IRA or, at any
time after expiration of the two-year period beginning on the date you first
participated in a SIMPLE IRA, to any other IRA. However, you may not include
regular or spousal IRA assets in your SIMPLE IRA.
Q. WHAT IS THE DIFFERENCE BETWEEN A SIMPLE IRA TRANSFER AND A SIMPLE IRA
ROLLOVER?
A. A SIMPLE IRA transfer moves your SIMPLE IRA assets directly from one
financial institution to another. You may, for instance, consolidate your SIMPLE
IRA at GT Global by transferring SIMPLE IRA assets from a bank, trust company,
insurance company or mutual fund to your SIMPLE IRA or to another IRA at GT
Global (presumably, in the latter case after the two-year participation
requirement in your other SIMPLE IRA is met); your current custodian will
liquidate your SIMPLE IRA assets (if not currently held in GT Global Funds) and
send the check directly to GT Global Investor Services, Inc.
A SIMPLE IRA rollover reinvests SIMPLE IRA assets distributed to you. With a
rollover you can take receipt of your SIMPLE IRA assets for up to 60 days before
reinvesting them in another SIMPLE IRA or, after the two-year period described
above, another IRA. (Please note that you must reinvest your SIMPLE IRA assets
within 60 days to maintain their tax-deferred status.) You may do only one
rollover in any 12-month period. There is no restriction on the number of SIMPLE
IRA transfers you may effect in a year.
Q. WHAT FORMS OR REPORTS DO I FILE FOR MY SIMPLE IRA CONTRIBUTIONS?
A. You file no special forms with the Internal Revenue Service regarding your
contributions to your SIMPLE IRA.
Q. WHAT FORMS OR REPORTS DOES MY EMPLOYER FILE FOR MY SIMPLE IRA?
A. Your employer will give you a copy of the completed plan document (either
Form 5305-SIMPLE or Form 5304-SIMPLE). Your employer will also report your
contributions to your SIMPLE IRA on Form W-2.
Q. WHAT REPORTS WILL GT GLOBAL PROVIDE?
A. Prior to January 31 of each year, GT Global will provide you with a
statement showing your SIMPLE IRA account balance as of December 31st of the
previous year and your SIMPLE IRA account activity for that previous year. If
your employer has used Form 5305-SIMPLE to establish its SIMPLE plan you will
also receive by January 31 of each year a copy of Form 1099-R filed with the
Internal Revenue Service showing
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GT GLOBAL SIMPLE IRA
distributions made from your SIMPLE IRA during the previous year. Otherwise, the
custodian you designated on Form 5304-SIMPLE will provide you with this
information. GT Global will also report your contributions and account value to
the IRS on Form 5498.
Q. IF I ALREADY HAVE AN IRA, CAN MY EMPLOYER AND I MAKE THE SIMPLE IRA
CONTRIBUTIONS TO THAT?
A. No. You need to establish a separate SIMPLE IRA and may use Form 5305-SA to
do so.
----------------------------------------------------------
QUESTIONS AND ANSWERS
FOR EMPLOYERS
- ----------------------------------------------------------
Q. AM I ELIGIBLE TO ESTABLISH A SIMPLE IRA FOR MY EMPLOYEES?
A. If you (i) employ no more than 100 employees who received at least $5,000
in compensation from you during the preceding calendar year and (ii) do not
maintain another qualified plan during the current year. Generally, if you were
eligible for a particular calendar year and in a subsequent calendar year employ
more than 100 employees, you will be an eligible employer for an additional two
calendar years.
Q. WHAT EMPLOYEES MUST BE COVERED?
A. At a minimum, any employee is eligible to participate who (i) received at
least $5,000 in compensation from you during any two preceding calendar years,
and (ii) is reasonably expected to receive at least $5,000 in compensation
during the calendar year. You may choose to make all your employees eligible or
expand the group of eligible employees by reducing the minimum compensation
necessary for the current year or prior years, or both. You may exclude any
employee who is covered by a collective bargaining agreement for which
retirement benefits were the subject of good faith bargaining between you and
the employee's union. (If you use an individually designed plan document, rather
than the Internal Revenue Service model form (Form 5304-SIMPLE or Form
5305-SIMPLE), you may also exclude any employee who is a nonresident alien and
received no United States-sourced income from you.)
Q. HOW MUCH CAN AN EMPLOYEE CONTRIBUTE?
A. Each employee can contribute up to $6,000 per year to his or her SIMPLE IRA
through a Salary Reduction Agreement that designates the percentage of the
employee's compensation that will be withheld from his or her paycheck, on a
pre-tax basis, and contributed to his or her SIMPLE IRA. This limit may be
adjusted from time to time by the Internal Revenue Service to reflect increases
in the cost of living.
Q. WHEN CAN EMPLOYEES START MAKING CONTRIBUTIONS?
A. Employees can elect to make contributions to a SIMPLE IRA for a calendar
year at any time during November and December of the preceding calendar year by
completing a Salary Reduction Agreement and filing it with the employer. For
future calendar years, employees do not need to refile a Salary Reduction
Agreement, but employees can change their contributions for a calendar year by
completing a new Salary Reduction Agreement and giving it to the employer during
November or December of the preceding calendar year. An employee may terminate
his or her contributions to the SIMPLE IRA at any time; however, if an employee
stops making contributions at any time during a calendar year, you may elect,
under your SIMPLE IRA plan, to preclude the employee from making contributions
again until the beginning of the next calendar year after completing a new
Salary Reduction Agreement during November or December of the preceding calendar
year.
Q. HOW MUCH DOES THE EMPLOYER CONTRIBUTE?
A. Generally, for any calendar year, the employer will contribute to each
employee's SIMPLE IRA an amount equal to 100% of the employee's contributions to
his or her SIMPLE IRA, up to a maximum of 3% of the employee's
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GT GLOBAL SIMPLE IRA
compensation for that calendar year. However, an employer may elect (i) to match
100% of each employee's contributions up to a maximum of 1% of compensation for
a calendar year (but the employer may only elect this lower maximum contribution
twice during any five year period), or (ii) to contribute an amount equal to 2%
of each employee's compensation (not taking into account compensation over
$160,000, as adjusted from time to time by the Internal Revenue Service to
reflect increases in the cost of living) for a calendar year, but only to the
extent that such employee receives compensation from the employer for that year
in excess of $5,000. If you elect to contribute anything other than 100% of the
employee contributions, up to 3% of the employee's compensation for a calendar
year, you must notify your employees within a reasonable amount of time before
November 1st of the preceding calendar year so that the employees can adjust
their contributions for the next calendar year.
Q. ARE MY CONTRIBUTIONS DEDUCTIBLE?
A. As an employer, your contributions are deductible for federal income tax
purposes in your tax year including the end of the calendar year for which they
are made. Contributions are treated as made for a particular tax year if they
are made for that year and paid by the due date (including extensions) of your
federal income tax return for that year.
Q. ARE SIMPLE IRA CONTRIBUTIONS TAXABLE?
A. Subject to the applicable limits, all contributions to an employee's SIMPLE
IRA are made on a "pre-tax" basis and not taxed until distributed. Salary
reduction contributions are taken into account, however, for purposes of social
security, medicare, railroad retirement, and unemployment taxes (but employer
contributions are not).
Q. WHEN CAN AN EMPLOYEE WITHDRAW MONEY FROM HIS OR HER SIMPLE IRA?
A. An employee can withdraw all or part of his or her money at any time, but
ordinary federal (and, in most cases, state or local) income taxes will be due
on withdrawals of contributions and earnings from a SIMPLE IRA in the year the
withdrawals are made. In addition, if an employee withdraws money prior to
reaching age 59 1/2, he or she may be subject to a 10% federal penalty on early
withdrawals. This penalty is increased to 25% if the withdrawal is made at any
time during the two-year period beginning on the date the employee first
participated in a SIMPLE IRA. After age 59 1/2, an employee may withdraw money
from his or her SIMPLE IRA without penalty. Under current law, an employee must
begin withdrawing money by April 1 following the year in which he or she reaches
age 70 1/2.
An employee may transfer his or her SIMPLE IRA assets to another SIMPLE IRA
or, anytime after having participated in the SIMPLE IRA for two years, to any
other IRA.
Q. WHAT'S THE DIFFERENCE BETWEEN FORM 5305-SIMPLE AND FORM 5304-SIMPLE?
A. If you want to be sure that all your employees have the same SIMPLE IRA
custodian (the GT Global SIMPLE IRA Custodian) which you designate, use Form
5305-SIMPLE to establish your SIMPLE plan. Otherwise, if you will permit each
employee to select his or her own custodian, use Form 5304-SIMPLE. Form
5304-SIMPLE also requires that either you or the custodian selected by the
employee provide the employee with the procedures for withdrawal of SIMPLE IRA
contributions. With Form 5304-SIMPLE, your employees may still select the GT
Global SIMPLE IRA Custodian as their Custodian.
If you use Form 5305-SIMPLE and a designated financial institution, only Class
A or Advisor Class GT Global Mutual Fund shares may be purchased for employees'
SIMPLE IRAs. With Form 5304-SIMPLE, Class A, Class B or Advisor Class shares may
be purchased for the SIMPLE IRAs. Advisor Class shares are not sold directly to
the general public and are only available through certain employee benefit
plans, financial institutions and other entities that have entered into specific
agreements with GT Global. Please see a Fund prospectus for more information.
Q. WHAT FORMS OR REPORTS DOES AN EMPLOYER FILE FOR A SIMPLE IRA PLAN?
A. All SIMPLE IRA contributions made by an employee are reported on Form W-2.
You do not have to file any annual information returns (such as Form 5500).
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[LOGO]
GT GLOBAL SIMPLE
INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT AND APPLICATION
- --------------------------------------------------------------------------------
- --------------------------------------------
1. GENERAL
- --------------------------------------------
Internal Revenue Service Regulations require that you be given this Disclosure
Statement for the purpose of informing you of the restrictions and limitations
on how you may use a SIMPLE Individual Retirement Account (SIMPLE IRA). Please
read this Disclosure Statement together with the Form 5305-SIMPLE or Form 5304-
SIMPLE signed by your employer that is used to establish the SIMPLE plan, the
Custodial Agreement or Form 5305-SA that is used to establish the IRA into which
SIMPLE contributions will be made and the prospectus(es) for the GT Global
Fund(s) in which you are investing. The provisions of the Form 5305-SIMPLE or
Form 5304-SIMPLE, Custodial Agreement and prospectus(es) must prevail over this
statement in any instance where the statement is incomplete or appears to be in
conflict.
- --------------------------------------------
2. IRREVOCABILITY OF ACCOUNT
- --------------------------------------------
The Internal Revenue Service requires that you receive this disclosure
statement at least 7 days prior to the establishment of your SIMPLE IRA. Because
of this requirement, your application will not be accepted by the Custodian
until at least 7 days after the date you received this disclosure statement.
Prior to such acceptance, you may receive back the entire amount that you have
contributed, without reduction for fees or other expenses. If your employer used
Form 5305-SIMPLE or your employer used Form 5304-SIMPLE and you selected the GT
Global SIMPLE IRA Custodian, you may request that your contribution be returned
to you by writing to GT Global Investor Services, Inc. (agent for the
Custodian), P.O. Box 7345, San Francisco, CA 94120-7345 or by calling GT Global
Investor Services, Inc. toll free at (800) 223-2138 within 7 days of the date
you have signed the Custodial Agreement. All telephone requests must be
confirmed in writing. If you selected a Custodian other than the GT Global
SIMPLE IRA Custodian, you should send the written request to your Custodian
within 7 days of signing the Custodial Agreement. Once your application for a GT
Global SIMPLE IRA is accepted by the Custodian, it cannot be revoked by you.
- --------------------------------------------
3. ELIGIBLE EMPLOYEE
- --------------------------------------------
You are eligible to participate in a GT Global SIMPLE IRA for a calendar year
if (i) you are an employee of an "eligible employer" and your employer has
authorized your participation in a SIMPLE IRA by signing Form 5305-SIMPLE or
Form 5304-SIMPLE, (ii) you received at least $5,000 in compensation from your
employer during any two preceding calendar years, and (iii) you are reasonably
expected to receive at least $5,000 in compensation during the current calendar
year. You must also establish an IRA into which SIMPLE plan contributions can be
made.
Depending on the criteria selected by your employer, as set forth in Form
5305-SIMPLE or Form 5304-SIMPLE, you may not be eligible to participate in a
SIMPLE IRA if you are covered under a collective bargaining agreement for which
retirement benefits were the subject of good faith bargaining.
An eligible employer for a calendar year is an employer that (i) employs no
more than 100 employees who received at least $5,000 in compensation during the
preceding calendar year and (ii) does not maintain another qualified plan for
that calendar year. If your employer was eligible for a particular calendar year
and in a subsequent calendar year exceeds this 100 employee limit, your employer
will be an eligible employer for an additional two calendar years.
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GT GLOBAL SIMPLE IRA
- --------------------------------------------
4. YOUR SIMPLE IRA
- --------------------------------------------
A SIMPLE IRA is a combination of a SIMPLE plan and individual retirement
account (IRA). Under the SIMPLE plan, your employer makes salary reduction and
other contributions to an IRA on your behalf, as described in Section 5. Your
SIMPLE IRA is a trust or custodial account created or organized in the United
States for your exclusive benefit or for the benefit of your beneficiaries. The
SIMPLE IRA must be created by written instrument that meets the following
requirements:
(1) The trustee or custodian must be a bank, federally insured credit union,
savings and loan association, or (under federal regulations) another person
eligible to act as trustee or custodian;
(2) Your interest in the SIMPLE IRA is nonforfeitable; that is, it is fully
vested at all times;
(3) No part of the trust or custodial funds may be invested in life insurance
contracts or certain collectibles nor may the assets be commingled with other
property except in a common trust fund or common investment fund; and
(4) Your interest in the SIMPLE IRA must begin to be distributed by April 1 of
the year following the year in which you reach age 70(1)/(2). The distribution
may be made in a single sum, or you may receive periodic distributions, starting
by April 1 of the year following the year in which you reach age 70(1)/(2), so
long as your entire interest in the SIMPLE IRA is distributed over one of the
following periods:
(a) Your life;
(b) The joint lives of you and your designated beneficiary;
(c) A specific period not extending beyond your life expectancy; or
(d) A specific period not extending beyond the life expectancy of you and
your designated beneficiary.
If the amount distributed is less than the minimum amount required to be
distributed to you under the Internal Revenue Code, an excise tax will be
imposed on you in an amount equal to 50% of the excess of the amount required to
be distributed to you over the amount you actually receive.
(5) If you die after distributions have begun, your beneficiary must receive
the remaining payments at least as rapidly as under the method of distribution
being used on the date of your death. If you die before distributions have begun
or if your surviving spouse dies before distributions have begun, any interest
remaining must, by December 31 of the calendar year which contains the fifth
anniversary of your death or the death of your surviving spouse, be distributed
in a single sum. If your (or your surviving spouse's) designated beneficiary
wishes to receive an immediate annuity which provides for payments over the
beneficiary's life or over a specific period not exceeding the beneficiary's
life expectancy, the beneficiary must elect to receive such payments by December
31 following the calendar year of your death. Such payments also must begin by
that date. If your designated beneficiary is your spouse, annuity payments need
not commence until December 31 of the year you would have attained age
70(1)/(2). This annuity contract will not allow one's life expectancy to be
recalculated. The election will also apply to beneficiaries who make additional
contributions or rollovers in their own names to the IRA. An amount is not
distributed if it is rolled over into an Individual Retirement Account, annuity,
or retirement bond for the benefit of the beneficiary.
(6) If your surviving spouse is your designated beneficiary, your SIMPLE IRA
assets may be rolled over into his or her own IRA. No rollover from your SIMPLE
IRA is available for a beneficiary other than your surviving spouse, and such
non-spouse beneficiary must take the SIMPLE IRA assets in the form of a taxable
distribution.
- --------------------------------------------
5. CONTRIBUTIONS
- --------------------------------------------
Contributions to your SIMPLE IRA are made by your employer in the form of (i)
your salary reduction contributions, and (ii) additional employer contributions.
SALARY REDUCTION CONTRIBUTIONS
You may elect to have withheld from your regular paycheck, on a pre-tax basis,
a percentage of your compensation, which your employer will contribute on your
behalf to your SIMPLE IRA. The maximum amount of salary reduction contributions
that may be made on your behalf for a calendar year is $6,000. This limit may be
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GT GLOBAL SIMPLE IRA
adjusted from time to time to reflect increases in the cost of living increases
announced by the Internal Revenue Service.
ADDITIONAL EMPLOYER CONTRIBUTIONS
Generally, for any calendar year, your employer will contribute to your SIMPLE
IRA an amount equal to 100% of your salary reduction contributions to your
SIMPLE IRA, up to a maximum of 3% of your compensation for that calendar year.
However, your employer may choose either (i) to match 100% of your contributions
up to a maximum of 1% of your compensation for a calendar year (but your
employer may elect this lower maximum contribution only twice during any five
year period), or (ii) to contribute an amount equal to 2% of your compensation
for a calendar year if you receive at least $5,000 from your employer for that
year. For purposes of determining the 2% additional employer contribution, your
employer may not take into account any compensation that you earn in excess of
$160,000. This limit may be adjusted from time to time to reflect cost of living
increases announced by the Internal Revenue Service. This limit does not apply
for purposes of determining the amount of an employer matching contribution.
- --------------------------------------------
6. TAXATION OF CONTRIBUTIONS AND EARNINGS
- --------------------------------------------
Your salary reduction contributions to your SIMPLE IRA are made on a "pre-tax"
basis, which means that compensation that would otherwise have been subject to
federal income tax at the time you received it will not be taxed if, instead, it
is withheld from your paycheck by your employer and contributed to your SIMPLE
IRA, subject to the $6,000 maximum, as adjusted. Your contributions are taken
into account for purposes of federal social security, medicare, railroad
retirement and unemployment taxes.
Your employer's contributions to your SIMPLE IRA, to the extent not in excess
of the maximum contributions described above, are not included in your gross
income in the year of contribution for federal income tax purposes or for
purposes of federal social security, medicare, railroad retirement and
unemployment taxes.
Contributions to your SIMPLE IRA are not taxed until distributed, as described
in Section 8 below.
- --------------------------------------------
7. TRANSFERS AND ROLLOVERS
- --------------------------------------------
Transfers allow you to transfer IRA assets directly from one IRA to another on
a tax-free basis. You may transfer assets between SIMPLE IRAs (regardless of
whether they are maintained by the same trustee or custodian) on a tax-free
basis at any time in accordance with the rules of the SIMPLE IRAs involved in
the transfer. In addition, if you have participated in a SIMPLE IRA for at least
two years, you may transfer your SIMPLE IRA assets to an IRA that is not a
SIMPLE IRA (regardless of whether the IRA and the SIMPLE IRA are maintained by
the same trustee or custodian) in accordance with the rules of the IRA and
SIMPLE IRA involved in the transfer.
You may rollover all or a portion of certain distributions from a SIMPLE IRA
to a SIMPLE IRA maintained by another trustee or custodian, at any time. In
addition, if you have participated in a SIMPLE IRA for at least two years, you
may rollover all or a portion of certain distributions from the SIMPLE IRA to an
IRA that is not a SIMPLE IRA (regardless of whether the IRA and the SIMPLE IRA
are maintained by the same trustee or custodian). In order to be treated as a
rollover, the rollover must be completed within 60 days of the distribution.
Only certain distributions are eligible for rollover treatment. These include
one-time lump sum distributions of the entire balance of your SIMPLE IRA and
installments distributions of less than 10 years. Distributions in the form of
annuities and required distributions (based upon your attainment of age 70 1/2)
are not eligible for rollover treatment. Generally, you are permitted to
rollover a distribution from your SIMPLE IRA no more than once during any
12-month period.
- --------------------------------------------
8. DISTRIBUTIONS
- --------------------------------------------
Distributions from your SIMPLE IRA are taxed as ordinary income for the
calendar year in which they are received, regardless of their source. They are
not eligible for capital gains treatment or the special 5-year averaging rules
that apply (for tax years beginning prior to 2000) to lump sum distributions
from qualified employer plans.
As provided in Form 5305-SA, you may elect to have your SIMPLE IRA distributed
in: a single sum payment; an annuity contract; or equal annual installments over
a specified period
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GT GLOBAL SIMPLE IRA
not to exceed your life expectancy or the joint life and last survivor
expectancy of you and your designated beneficiary. In general, you must begin
receiving distributions from your SIMPLE IRA no later than April 1 following the
calendar year in which you reach age 70 1/2. There is a prescribed minimum
amount for such distributions and an excise tax may be imposed if the amount
distributed to you is less than the required amount. If you die before your
SIMPLE IRA is completely distributed to you, the remaining balance in your
SIMPLE IRA will be distributed to your beneficiary(ies) either in accordance
with the method of distribution in effect at your death (if on or after the
required beginning date) or as otherwise permitted (if your death occurs prior
to the required beginning date).
- --------------------------------------------
9. PREMATURE DISTRIBUTIONS
- --------------------------------------------
A penalty tax of 10% is imposed on taxable distributions made to you or your
beneficiaries before you attain age 59(1)/(2). No penalty tax will be imposed if
the distribution is (i) a return of nondeductible contributions, (ii) made on
account of your death or disability, (iii) made in substantially equal payments
over life or life expectancy as permitted in accordance with the provisions of
Section 72(t)(2) of the Code and the regulations promulgated thereunder, or (iv)
contributed as a "rollover" within 60 days. In addition, the penalty tax does
not apply if the distribution is made (i) to pay for medical expenses in excess
of 7.5% of your adjusted gross income, (ii) if you are unemployed, to pay for
medical insurance premiums after you have received unemployment compensation for
a specified period, or, for distributions made after 1997, (iii) to pay for
certain qualified higher education expenses of you or certain of your family
members or (iv) to pay for certain expenses associated with the purchase of a
first home by you or certain of your family members. This tax is in addition to
any tax that is due because you must include the premature distribution in your
gross income. If this 10% penalty tax otherwise applies and you receive a
distribution from your SIMPLE IRA within the two-year period beginning on the
date you first participated in the SIMPLE IRA, the penalty tax applicable to
that distribution is increased to 25%.
- --------------------------------------------
10. TAXABILITY OF ACCOUNT
- --------------------------------------------
Your SIMPLE IRA is exempt from tax unless you or your beneficiaries engage in
a prohibited transaction under Section 4975 of the Internal Revenue Code.
Examples of prohibited transactions include your borrowing from the SIMPLE IRA
or your selling property to or buying property from the SIMPLE IRA.
If you engage in a prohibited transaction, your IRA will lose its tax exempt
status as of the first day of the tax year in which the prohibited transaction
occurs. Once your SIMPLE IRA loses its exempt status, you must include the fair
market value of its assets in your income for that tax year. You will also be
subject to the 10% or 25% penalty tax on premature distributions.
If you use your SIMPLE IRA or any portion thereof as security for a loan, the
portion so used will be treated as distributed to you and will be currently
taxable and subject to the 10% or 25% tax on premature distributions.
- --------------------------------------------
11. FINANCIAL DISCLOSURES
- --------------------------------------------
Contributions to your SIMPLE IRA will be invested in shares of a GT Global
Fund. You may receive earnings on your shares in the form of income dividends or
net realized capital gain distributions. Such earnings will be reinvested in
additional shares of a GT Global Fund. The growth in value of the SIMPLE IRA is
neither guaranteed nor projected. The gross income received by a GT Global Fund
is reduced by the fees paid to the manager of the Fund, Chancellor LGT Asset
Management, Inc., and by expenses incurred by the Fund, such as accounting fees,
taxes, interest, trustee fees and brokerage charges. Each Fund's prospectus
contains more complete information including charges, expenses, the risks of
global and emerging market investing and other matters of interest to a
prospective investor.
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- --------------------------------------------
12. MISCELLANEOUS
- --------------------------------------------
You are required to file form 5329 (Return for Individual Retirement Savings
Arrangements) for a taxable year in which you are subject to penalty taxes in
connection with your SIMPLE IRA.
The enclosed agreement has been approved as to form for use in establishing
custodial accounts by the Internal Revenue Service. The Internal Revenue Service
approval is a determination as to form only and does not represent a
determination of the merits of the account.
- --------------------------------------------
13. ADDITIONAL INFORMATION
- --------------------------------------------
Additional information on Individual Retirement Accounts (including IRS
Publication 590) can be obtained from any district office of the Internal
Revenue Service.
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<PAGE>
[IRS Form 5305-SA Page 1 of 2]
[CAMERA READY COPY]
DS-6
<PAGE>
[IRS Form 5305-SA Page 2 of 2]
[CAMERA READY COPY]
ARTICLE VIII
See Exhibit A to Form 5305-SA for additional terms applicable to your GT
Global SIMPLE IRA. Exhibit A is incorporated in and made part of your GT Global
SIMPLE IRA by this reference.
[CAMERA READY COPY]
DS-7
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EXHIBIT A TO FORM 5305-SA,
ARTICLE VIII
- ----------------------------------------------------------
The following provisions constitute Article VIII of Form 5305-SA which is used
to establish your GT Global SIMPLE IRA.
1. The Custodian is under no duty to compel the Participant to make any
contributions to the Account and shall have no duty to assure that such
contributions are appropriate in amount.
2. The amount of each contribution by the Participant or by Participant's
employer shall be applied to the purchase of shares of GT Global Funds
(hereinafter "Funds"). The Participant acknowledges receipt of the appropriate
current prospectus(es) of the Fund(s). All dividends and capital gain
distributions received on securities held in the Custodial Account (the
"Account") shall be reinvested in additional shares of the Funds and credited to
the Account. Shares acquired in the Account will be held beneficially for the
Participant in the name of the Custodian or its nominee.
3. The Custodian shall deliver to the Participant all shareholder notices and
reports, prospectuses, financial statements, proxy material and other material
as they are received from the Funds. The Custodian shall vote at all shareholder
meetings of the Funds in accordance with written instructions of the Participant
which will be secured by the Custodian. If no written instructions are received
from the Participant, the Participant's shares shall not be voted except that
the Custodian may vote "present" for purposes of determining the presence of a
quorum.
4. The Custodian may resign upon at least 60 days written notice to the
Participant and Participant's employer, as applicable, and may be removed by the
Participant upon 60 days written notice to the Custodian and Participant's
employer, as applicable. Upon resignation by the Custodian, it shall transfer
the assets of the Account in such a manner as the Participant shall designate,
but in the absence of such designation, the Custodian will use its best efforts
to transfer the assets of the Account to a successor custodian to be held under
an Individual Retirement Account qualifying under Section 408 of the Internal
Revenue Code. Upon removal of the Custodian by action of the Participant, the
assets of the Account shall be transferred in accordance with the Participant's
instructions.
5. If the Participant does not effectively elect any of the methods of
distribution described above by the April 1 following the calendar year in which
he or she reaches age 70 1/2, the assets of the Account shall be distributed to
the Participant in equal or substantially equal payments over the Participant's
life expectancy in accordance with the minimum distribution requirements
applicable to the Account as described in Article IV of Form 5305-SA unless the
Participant effectively elects another method of distribution.
6. By completing the Beneficiary Designation section of the SIMPLE IRA
Application, the Participant may designate one or more beneficiaries to receive
such benefits in the event of the Participant's death. Should the Participant
die without an effective designation of beneficiary, the assets of the Account
shall be distributed to the Participant's surviving spouse, or if there is no
surviving spouse, to the Participant's estate in a single payment, unless
another method of distribution has been elected by such spouse or estate, as
applicable.
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<PAGE>
[IRS Form 5305-SIMPLE Page 1 of 6]
[CAMERA READY COPY]
DS-9
<PAGE>
[IRS FORM 5305-SIMPLE PAGE 2 OF 6]
[CAMERA READY COPY]
See Exhibit A to Form 5305-SIMPLE for additional terms applicable to your GT
Global SIMPLE plan. Exhibit A on page DS-14 is incorporated in and made part of
your GT Global SIMPLE plan by this reference.
[CAMERA READY COPY]
DS-10
<PAGE>
[IRS Form 5305-SIMPLE Page 3 of 6]
[CAMERA READY COPY]
DS-11
<PAGE>
[IRS Form 5305-SIMPLE Page 4 of 6]
[CAMERA READY COPY]
DS-12
<PAGE>
[IRS Form 5305-SIMPLE Page 5 of 6]
[CAMERA READY COPY]
DS-13
<PAGE>
[IRS Form 5305-SIMPLE Page 6 of 6]
[CAMERA READY COPY]
EXHIBIT A TO FORM 5305-SIMPLE
ARTICLE VI
The following provisions constitute Article VI of Form 5305-SIMPLE which is used
to establish your GT Global SIMPLE Plan.
WITHDRAWALS (INCLUDING TRANSFERS AND ROLLOVERS).
An employee may withdraw all or a part of his or her contribution to the
employee's SIMPLE IRA by submitting to GT Global Investor Services, Inc., as
agent for the GT Global SIMPLE IRA Custodian, a request in such form as the
Custodian may reasonably require. A request for a transfer of the employee's
SIMPLE IRA account balance or subsequent contributions to another SIMPLE IRA
(or, after at least two years from the employee's initial participation in this
SIMPLE plan, to another IRA) will be made without cost or penalty if made at any
time, in writing in a form acceptable to the Custodian, during the 60-day period
preceding January 1 each year (I.E., from November 1 to December 31), or for the
year the employee first becomes eligible to participate, the 60-day period
beginning when the employee becomes eligible provided that the specified amount
of the existing account balance and/or subsequent contributions are, at the time
of the transfer, invested in shares of GT Global Dollar Fund. Contributions
received by the Custodian after its receipt of a transfer request applicable to
those contributions will automatically be invested in shares of GT Global Dollar
Fund so that the transfer can be made without cost or penalty. However, if the
employee maintains the existing investment to be transferred, or specifically
requests that a subsequent contribution to be transferred, be invested in shares
of a GT Global Fund for which a sales charge is applicable rather than GT Global
Dollar Fund, the transfer will not be made without cost or penalty since the
sales charge will not be refunded. The transfer request will remain in effect
until the employee revokes or modifies it in a form and manner acceptable to the
Custodian.
Further information about how to make withdrawals or transfers from your SIMPLE
IRA, including the forms which may be necessary, may be obtained by calling GT
Global at 1-800-223-2138.
DS-14
<PAGE>
[IRS Form 5304-SIMPLE Page 1 of 6]
[CAMERA READY COPY]
DS-15
<PAGE>
[IRS Form 5304-SIMPLE Page 2 of 6]
[CAMERA READY COPY]
DS-16
<PAGE>
[IRS Form 5304-SIMPLE Page 3 of 6]
[CAMERA READY COPY]
DS-17
<PAGE>
[IRS Form 5304-SIMPLE Page 4 of 6]
[CAMERA READY COPY]
DS-18
<PAGE>
[IRS Form 5304-SIMPLE Page 5 of 6]
[CAMERA READY COPY]
DS-19
<PAGE>
[IRS Form 5304-SIMPLE Page 6 of 6]
[CAMERA READY COPY]
DS-20
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Funds
P.O. Box 7345, San Francisco, CA 94120-7345 SIMPLE IRA APPLICATION
800/223-2138
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION
TYPE OF ACCOUNT: / / CONTRIBUTORY / / SIMPLE IRA ROLLOVER / / SIMPLE IRA TRANSFER*
-----------------------------------------------------------------------------------------------------------
* I HAVE ATTACHED A COMPLETED SIMPLE IRA TRANSFER AUTHORIZATION.
Name Employer Name
- ------------------------------------------------------------ ----------------------------------------------------
Address Address
---------------------------------------------------------- -----------------------------------------------------------
STREET STREET
-------------------------------------------------------- ------------------------------------------------------------
CITY STATE ZIP CODE CITY STATE ZIP CODE
Tel. No. ( ) Fax No. ( ) Tel. No. ( ) Fax No. ( )
---------------------- ---------------------- -----------------------------
Social Security Number -----------------------------
-------------------------------------------- Form of employer's plan:
(or Taxpayer Identification Number) / / Form 5305-SIMPLE. (Please send this Application and the
Date of Birth Custodial Account Agreement (Form 5305-SA) to GT Global,
----------------------------------------------------- Inc. ("GT Global").)
/ / Form 5304-SIMPLE. (Please send this Application and the
Custodial Account Agreement (Form 5305-SA) to the
institution you selected as custodian.)
FUND SELECTION & INITIAL CONTRIBUTION
Each GT Global Mutual Fund issues multiple classes of shares. Please read the prospectus of the applicable class of such
Funds carefully before you invest. Please check applicable box:
/ /Enclosed is a check for $ --------- made payable to GT Global Investor Services, Inc. (as agent for the Custodian) to be
invested as a rollover contribution from another SIMPLE IRA in the Fund(s) hereby specified.
</TABLE>
/ /This is a transfer from another SIMPLE IRA to be invested in the Fund(s)
hereby specified. (Please indicate only thePERCENTAGE of the transfer you
wish
allocated to each Fund. Please complete the separate SIMPLE IRA Transfer
Authorization Form.)
/ /The above-referenced employer will make contributions to my SIMPLE-IRA to
be invested in the Fund(s) hereby specified. (Please indicate only the
PERCENTAGE of each contribution that you wish allocated to each Fund.)
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER: / / CLASS A SHARES
/ / CLASS B SHARES (NOT AVAILABLE FOR DOLLAR FUND) / / CLASS C SHARES (NEW
DIMENSION FUND ONLY) (CLASS B AND C SHARES ARE NOT AVAILABLE IF YOUR EMPLOYER
USED FORM 5305-SIMPLE) OR / / ADVISOR CLASS SHARES. If a class share box is
not checked, your investment will be made in Class A shares.
<TABLE>
<CAPTION>
INITIAL CONTRIBUTION INITIAL CONTRIBUTION
<S> <C> <C> <C>
07 / / GT GLOBAL $ OR % 13 / / GT GLOBAL $ OR %
WORLDWIDE GROWTH ----------------- ---------------- LATIN AMERICA GROWTH ----------------- ----------------
FUND FUND
05 / / GT GLOBAL $ OR % 24 / / GT GLOBAL $ OR %
INTERNATIONAL ----------------- ---------------- AMERICA SMALL CAP ----------------- ----------------
GROWTH FUND GROWTH FUND
16 / / GT GLOBAL $ OR % 06 / / GT GLOBAL $ OR %
EMERGING MARKETS ----------------- ---------------- AMERICA MID CAP ----------------- ----------------
FUND GROWTH FUND
22 / / GT GLOBAL $ OR % 23 / / GT GLOBAL $ OR %
CONSUMER ----------------- ---------------- AMERICA VALUE FUND ----------------- ----------------
PRODUCTS
AND
SERVICES
FUND
17 / / GT GLOBAL $ OR % 04 / / GT GLOBAL $ OR %
FINANCIAL SERVICES ----------------- ---------------- JAPAN GROWTH FUND ----------------- ----------------
FUND
11 / / GT GLOBAL $ OR % 10 / / GT GLOBAL $ OR %
HEALTH CARE FUND ----------------- ---------------- GROWTH & INCOME FUND ----------------- ----------------
19 / / GT GLOBAL $ OR % 08 / / GT GLOBAL $ OR %
INFRASTRUCTURE ----------------- ---------------- STRATEGIC INCOME ----------------- ----------------
FUND FUND
21 / / GT GLOBAL $ OR % 09 / / GT GLOBAL $ OR %
NATURAL RESOURCES ----------------- ---------------- GOVERNMENT INCOME ----------------- ----------------
FUND FUND
15 / / GT GLOBAL $ OR % 18 / / GT GLOBAL $ OR %
TELECOMMUNICATIONS ----------------- ---------------- HIGH INCOME FUND ----------------- ----------------
FUND
02 / / GT GLOBAL $ OR % 25 / / GT GLOBAL NEW $ OR %
NEW PACIFIC GROWTH ----------------- ---------------- DIMENSION FUND ----------------- ----------------
FUND
01 / / GT GLOBAL $ OR % 26 / / GT GLOBAL $ OR %
DOLLAR FUND ----------------- ---------------- DEVELOPING MARKETS ----------------- ----------------
FUND
03 / / GT GLOBAL $ OR % TOTAL INITIAL $
EUROPE GROWTH FUND ----------------- ---------------- CONTRIBUTION: --------------------
CONTRIBUTION YEAR: --------------------
</TABLE>
NOTE: Minimum Initial Contribution -- $100 per Fund
Maximum Annual SIMPLE IRA Contribution -- See Disclosure Statement
<TABLE>
<S> <C> <C>
TELEPHONE EXCHANGE
I, either directly or through the Authorized Agent, if any, named below, hereby authorize the Transfer Agent of the GT Global
Fund, to honor any telephone, telex or telegraphic instructions believed to be authentic for exchange between any of the Funds
distributed by GT Global. I understand and agree that the account will be subject to the telephone exchange privilege described
in the applicable GT Global Fund's current prospectus and agree that GT Global, GT Global Funds and the Funds' Transfer Agent,
their officers and employees, will not be responsible for the authenticity of any telephone, telex, or telegraphic instructions
nor be liable for any loss arising out of any such telephone, telex or telegraphic instructions effected including any such
loss due to negligence on the part of such entities.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER OR ADVISOR) ONLY
We hereby submit this SIMPLE IRA Application for the purchase of shares including shares purchased under a Right of
Accumulation or Letter of Intent in accordance with the terms of our Selling Agreement with GT Global and with the
Prospectus(es) for the GT Global Fund(s). We agree to notify GT Global of any purchases properly made under a Letter of Intent
or Right of Accumulation.
Broker/Dealer or Advisor Name --------------------------------------------------
Main Office Address --------------------------------------------------
Branch Number --------------- Representative's Number --------------- Representative's Name ---------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Branch Address -------------------------- Telephone Number---------------------------------------
For Class A, B and C shares only:
Broker/Dealer's Authorized Signature X Title ----------------------------------------------------
--------------------
For Advisor Class shares only: We hereby submit this SIMPLE IRA Application for the purchase of Advisor Class shares in
accordance with the terms of our Advisor Class Agreement with GT Global and with the Prospectus and Statement of
Additional Information of each Fund purchased.
Advisor's Authorized Signature X Title ----------------------------------------------------
---------------------------
</TABLE>
DS-21
<PAGE>
<TABLE>
<S> <C>
DESIGNATION OF BENEFICIARY(IES)
If you require more room to name additional beneficiaries, please provide the necessary information on a separate sheet,
and indicate next to each name whether beneficiary is primary or contingent.
PRIMARY BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my SIMPLE IRA upon my death:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------ Date of Birth -------- Social Security Number ------------------------ Share of Account %
------
2. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------------- DOB -------- Social Security Number ------------------------ Share of Account %
------
CONTINGENT BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my SIMPLE IRA upon my death:
1. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------------- DOB -------- Social Security Number ------------------------ Share of Account %
------
2. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------------- DOB -------- Social Security Number ------------------------ Share of Account %
------
</TABLE>
Unless otherwise indicated above, the benefit payable hereunder shall be paid
in equal shares to the Primary Beneficiaries who survive the Participant. If
no Primary Beneficiary(ies) survives the Participant, the payment shall be
made in equal shares (or as otherwise indicated above) to the Contingent
Beneficiary(ies) who survive the Participant. The Participant reserves the
right to change the above beneficiary by filing a new Beneficiary Designations
Form with the Custodian. Should no named beneficiary survive the date of
distribution, the account shall be distributed to my surviving spouse, or if
there is no surviving spouse, in a single payment to my estate. ONLY THE MOST
RECENT EXECUTED DESIGNATION OF BENEFICIARY(IES) ON FILE WITH GT GLOBAL
INVESTOR SERVICES, INC. (AS AGENT FOR THE CUSTODIAN) WILL BE HONORED.
CONSENT OF SPOUSE
I consent to the above Beneficiary Designation.
Signature of Spouse: _________________________________ Date: ________________
(Note: May be required in community property states if any person other than
or in addition to Participant's Spouse is designated as Beneficiary.)
<TABLE>
<S> <C>
REDUCED SALES CHARGES
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES ONLY
/ / I certify that I qualify for the Right of Accumulation sales charge
discount described in the prospectus and statement of additional
information of the Fund(s) purchased.
/ / I own shares of more than one GT Global Mutual Fund. Below is a schedule
showing the numbers of each of my Shareholder Accounts.
/ / The registration of some of my shares differs from that shown on this
SIMPLE IRA Application. Below is a schedule showing the account number(s)
and full registration in each case.
STATEMENT OF INTENTION -- CLASS A SHARES ONLY
I agree to the Statement of Intention set forth in the Prospectus(es) for the
Fund(s) in which I am investing. Although I am not obligated to do so, it is my
intention to invest over a thirteen-month period in Class A Shares of the GT
Global Mutual Funds, in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
LIST OF OTHER GT GLOBAL MUTUAL FUND ACCOUNTS:
______________________________________ _______________________________
______________________________________ _______________________________
______________________________________ _______________________________
Account Numbers Account Registrations
AGREEMENT AND SIGNATURE
I acknowledge receipt of the Disclosure Statement and IRA Agreement (IRS Form
5305-SA) for the GT Global SIMPLE IRA. I acknowledge receipt of the current
Prospectus(es) of the Fund(s) in which I have directed GT Global Investor
Services, Inc. (as agent for the Custodian) to invest my contribution(s). I
agree to the terms and provisions set forth in this SIMPLE IRA Application
including those contained in the Telephone Exchange section, the Disclosure
Statement, the Individual Retirement Custodial Account Agreement (IRS Form
5305-SA) and the Prospectus(es). AS REQUIRED BY THE INTERNAL REVENUE SERVICE,
I CERTIFY, UNDER PENALTIES OF PERJURY, THAT THE TAXPAYER IDENTIFICATION NUMBER
GIVEN ON THE FACE OF THIS SIMPLE IRA APPLICATION IS CORRECT AND THAT I AM NOT
SUBJECT TO BACKUP WITHHOLDING IN MY IRA(S). THE INTERNAL REVENUE SERVICE DOES
NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE
CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
Signature X_______________________________ Date ______________________________
Individual
FOR GT GLOBAL USE ONLY
ACCEPTED:
X_____________________________________________________ _______________________
Signature of Custodian or its Agent Date
DS-22
<PAGE>
<TABLE>
<S> <C>
logo GT Global Funds SUPPLEMENTAL APPLICATION
P.O. Box 7345, San Francisco, CA 94120-7345 FOR AUTOMATIC INVESTMENT PLAN
800/223-2138
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION
PLEASE NOTE: Automatic Investment Plan may ONLY be used for current year IRA contributions.
Please supply the following information exactly as it appears on the Fund's records.
- ------------------------------------------------------------ ------------------------------------------------------------
Name Account Number
- ------------------------------------------------------------ ------------------------------------------------------------
Address Telephone Number
- ------------------------------------------------------------ ------------------------------------------------------------
City State Zip Code Social Security Number
------------------------------------
AUTOMATIC INVESTMENT PLAN Date of Birth
I hereby authorize the Transfer Agent of the GT Global Funds to debit my personal checking account on the designated dates
in order to purchase shares in the Fund(s) indicated at the applicable public offering price determined on that day.
Please indicate if your purchase is for / / Class A Shares, / / Class B Shares or / / Class C Shares (New Dimension Fund
only).
Fund: ------------------------- $ ---------- or ---% Fund: ------------------------- $ ---------- or -----%
Fund: ------------------------- $ ---------- or ---% Fund: ------------------------- $ ---------- or -----%
Fund: ------------------------- $ ---------- or ---% Fund: ------------------------- $ ---------- or -----%
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select:-------------
(MONTH)
(The request for participation in the Plan must be received by the 1st day of the month in which you wish investments to
begin.)
Amount of each debit (minimum $100) $ -----------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan
Application.
</TABLE>
<TABLE>
<S> <C> <C>
BANK AUTHORIZATION
</TABLE>
<TABLE>
<S> <C> <C>
- -------------------- ------------------------------------ ------------
Bank Name Bank Address Bank Account Number
</TABLE>
<TABLE>
<S> <C> <C> <C>
AGREEMENT AND SIGNATURES
IF YOU HAVE SELECTED A SPECIAL INVESTMENT OPTION, PLEASE COMPLETE THE SECTION BELOW.
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions
contained herein will continue until the Transfer Agent of the GT Global Funds receives written notice of any
change or revocation. Any change in these instructions must be in writing with all signatures guaranteed (if
applicable).
- -------------------------------------------------
Date
X X
- ------------------------------------------------ -------------------------------------------------
Signature Signature
- ------------------------------------------------- ------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ------------------------------------------------ -------------------------------------------------
Signature Signature
- ------------------------------------------------- ------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S.
stock exchange; (4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution.
A notary public is NOT an acceptable guarantor. An investor with questions concerning the GT Global Mutual
Funds signature guarantee requirement should contact the Transfer Agent.
</TABLE>
DS-23
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Funds SIMPLE IRA
P.O. Box 7345, San Francisco, CA 94120-7345 TRANSFER AUTHORIZATION
800/223-2138
</TABLE>
Please complete a separate Transfer Authorization for each SIMPLE IRA Account
to be transferred.
TO EXISTING SIMPLE IRA CUSTODIAN:
Name of Existing SIMPLE IRA Custodian______________ Telephone_(________)______
Address________________________ ______________________ ___________ ___________
Street City State Zip Code
Individual Account:_____________________________ in the name of ______________
Account Name Account Number Your Name
Please liquidate/transfer in kind* $________________ or ________________% of
my SIMPLE IRA identified above and transfer those funds by a check, made
payable to:
GT Global Investor Services, Inc., for __________________________, IRA Account
#________________________________
Investor's
Name Existing GT Global Account
Number, if applicable
AGE 70 1/2 RESTRICTIONS
(Please complete this section if you will be age 70 1/2 or older in the
transfer year.)
The following transfer restrictions apply to this transaction:
<TABLE>
<CAPTION>
<S> <C> <C>
1. Required Minimum Distribution. I authorize the Custodian or Trustee named above (select one):
/ / to distribute my required minimum distribution to me prior to transferring my SIMPLE IRA assets.
/ / to segregate and retain minimum distribution amount. Distribute on -------------, 19 --.
2. Required Elections. (Complete only if you have reached your required beginning date, I.E., April 1, following the
year in which you attain age 70 1/2.)
a. My oldest primary beneficiary with respect to the transferring SIMPLE IRA is:
Name ------------------- Birthdate ----------- Relationship
-------------------
b. My life expectancy / / was / / was not being recalculated.
c. The life expectancy of my spouse beneficiary / / was / / was not being recalculated / / Not Applicable. I am
aware that the elections indicated above became irrevocable as of my required beginning date and will apply to the
SIMPLE IRA with the new Custodian indicated below.
</TABLE>
THIS FORM, ALONG WITH ALL CHECK(S), SHOULD BE MAILED TO:
IF YOUR EMPLOYER HAS USED FORM 5305-SIMPLE:
GT GLOBAL INVESTOR SERVICES, INC. (AS AGENT FOR THE CUSTODIAN), P.O. BOX 7345,
SAN FRANCISCO, CA 94120-7345
IF YOUR EMPLOYER HAS USED FORM 5304-SIMPLE:
------------------------------------------------------------------------------
Name of Your Custodian Address
<TABLE>
<S> <C> <C>
X
- ---------------------------------------- ---------------------------------------- ----------------------------------------
Investor's Signature Date Signature Guarantee
(if required by current Custodian)
</TABLE>
* If this SIMPLE IRA currently holds shares of a GT Global Mutual Fund, you may
request a direct transfer of shares.
FOR GT GLOBAL OR CUSTODIAN USE ONLY
GT Global Investor Services, Inc. (as agent for the GT Global SIMPLE IRA
Custodian), or if applicable, the undersigned Custodian, agrees to accept the
transfer described above and upon written receipt will apply the proceeds to
investments as designated by the Investor.
X_______________________________ _____________________________________________
Signature of Custodian or its
Agent Date
DS-24
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Funds
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
San Francisco, CA 94111-4624
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION EXISTING
SHAREHOLDER ACCOUNT NUMBER
</TABLE>
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies)
and date of trust instrument. Registration for Uniform Gifts/Transfers to
Minors accounts should be in the same name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C> <C>
--------------------------------------
Owner Social Security Number / / or Taxpayer Identification Number ("TIN") / /
- -------------------------------------- (Check applicable box)
Co-owner 1 If more than one owner, social security number or TIN should be provided for first
- -------------------------------------- owner listed. If a purchase is made under Uniform Gift/Transfer to Minors Act, social
Co-owner 2 security number of the minor must be provided.
-------------------------------------- Resident of / / U.S. / / Other (specify)------------------------------
Street Address Failure to provide TIN will result in 31% withholding on redemptions and exchanges.
( ) ( )
------------------------------------------------------------------------------------------------------------------------------
City, State, Zip Code Home Telephone Business Telephone
</TABLE>
FUND SELECTION $500 MINIMUM INITIAL INVESTMENT REQUIRED FOR EACH FUND SELECTED
FOR CLASS A AND CLASS B SHARES.
CHECKS SHOULD BE MADE PAYABLE TO "GT GLOBAL INVESTOR
SERVICES, INC."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A
Shares / / Class B Shares or / / Advisor Class Shares
If a class share box is not checked, your investment will be made in Class A
shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per Fund.
<TABLE>
<S> <C> <C> <C> <C>
07 / / GT GLOBAL WORLDWIDE GROWTH FUND ---------- 03 / / GT GLOBAL EUROPE GROWTH FUND ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND ----------
16 / / GT GLOBAL EMERGING MARKETS FUND ---------- 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH ----------
FUND
26 / / GT GLOBAL DEVELOPING MARKETS FUND ---------- 06 / / GT GLOBAL AMERICA MID CAP GROWTH FUND ----------
25 / / GT GLOBAL NEW DIMENSION FUND ---------- 23 / / GT GLOBAL AMERICA VALUE FUND ----------
11 / / GT GLOBAL HEALTH CARE FUND ---------- 04 / / GT GLOBAL JAPAN GROWTH FUND ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND ---------- 10 / / GT GLOBAL GROWTH & INCOME FUND ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND ---------- 09 / / GT GLOBAL GOVERNMENT INCOME FUND ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND ---------- 08 / / GT GLOBAL STRATEGIC INCOME FUND ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND ---------- 18 / / GT GLOBAL HIGH INCOME FUND ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 01 / / GT GLOBAL DOLLAR FUND ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND ---------- Total percentage must equal 100%.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Rebalance frequency -- check one: / / Monthly / / Quarterly / / Semi annually / / Annually
</TABLE>
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains distributions and dividends will be reinvested in additional
shares of the same class unless appropriate boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in
cash / / Pay capital gain distributions and dividends in cash.
Investment will be split according to allocation.
<TABLE>
<S> <C>
AGREEMENTS & SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Funds receives written notice of any change or revocation. ANY CHANGE
IN THESE INSTRUCTIONS MUST BE SIGNED IN WRITING.
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
</TABLE>
DS-25
<PAGE>
-------------------------
GT GLOBAL SIMPLE IRA
NOTES
- --------------------------------------------------------------------------------
-------
DS-26
<PAGE>
-------------------------
GT GLOBAL SIMPLE IRA
NOTES
- --------------------------------------------------------------------------------
-------
DS-27
<PAGE>
-------------------------
GT GLOBAL SIMPLE IRA
NOTES
- --------------------------------------------------------------------------------
January 1998 SIMQA712005M
-------
DS-28
<PAGE>
--------------------
QUESTIONS AND ANSWERS
FOR EMPLOYEES
- ----------------------------------------------------------
Q. AM I ELIGIBLE FOR A SEP-IRA?
A. You are eligible to participate in your employer's SEP for a calendar year
if (i) you have established an IRA into which contributions can be made, (ii)
your employer has adopted a SEP-IRA arrangement, (iii) you are at least 21 years
old, and (iv) you have performed services for your employer in at least three of
the preceding five calendar years. Depending on the criteria selected by your
employer, you might not be eligible to participate in your employer's SEP-IRA if
(i) you did not receive at least $400 (or other amount as adjusted by the
Internal Revenue Service to reflect cost-of-living increases) in compensation
from the employer in the calendar year, (ii) you are covered under a collective
bargaining agreement for which retirement benefits were the subject of good
faith bargaining, or (iii) you are a nonresident alien and you received no
earned income from your employer from sources within the United States. Consult
your employer's Form 5305-SEP to determine whether you are eligible to
participate in its SEP-IRA.
Q. HOW MUCH DOES MY EMPLOYER CONTRIBUTE?
A. Generally, for 1998 and subsequent years, your employer may, but is not
required to, contribute up to a maximum of 15% of your compensation for that
year (not taking into account compensation in excess of $160,000) or $24,000,
whichever is less, to your SEP-IRA. (However, if your employer makes
contributions for you under any other qualified retirement plan, your employer's
total contributions on your behalf to your SEP-IRA and such plans(s) generally
may not exceed 25% of your compensation for that year or $30,000, whichever is
less.) The $160,000, $24,000 and $30,000 limitations may be adjusted from time
to time by the Internal Revenue Service to reflect increases in the cost of
living.
Q. HOW MUCH CAN I CONTRIBUTE?
A. Since you have an IRA into which your employer's SEP-IRA contributions are
made, you may contribute to that IRA. The same rules apply to your SEP-IRA
contributions as for a regular IRA. You can contribute up to the lesser of
$2,000 or 100% of compensation per year to your SEP-IRA (or up to the lesser of
$4,000 or 100% of compensation to your SEP-IRA and a spousal IRA established on
behalf of your spouse, provided no more than $2,000 is contributed to each). The
deductibility of your SEP-IRA contribution generally depends on whether you (or
your spouse) are an active participant in an employer's retirement plan and on
your (or your and your spouse's) adjusted gross income for the year. You will be
treated as an active participant for any year in which your employer makes a
contribution to your SEP-IRA, and if your adjusted gross income exceeds certain
levels, the amount of your IRA contribution that is deductible is phased down
and ultimately eliminated. (See Section 6 of the Disclosure Statement for
further details.)
Q. ARE THE EMPLOYER'S CONTRIBUTIONS TO MY SEP-IRA TAXABLE?
A. Amounts contributed by your employer to your SEP-IRA, to the extent not in
excess of the applicable limitations, are not subject to federal income tax at
the time they are contributed nor taken into account for purposes of social
security, medicare, railroad retirement, and unemployment taxes. Employer
contributions, as well as deductible contributions by you, and earnings on these
contributions to your SEP-IRA are not taxed until distributed.
[LOGO]
-------
1
<PAGE>
--------------------
GT GLOBAL SEP-IRA
Q. WHEN CAN I WITHDRAW MONEY FROM MY SEP-IRA?
A. You can withdraw all or part of your money at any time, but ordinary
federal (and, in most cases, state or local) income taxes will be due on
withdrawals of contributions (other than your non-deductible contributions) and
earnings from your SEP-IRA in the year the withdrawals are made. In addition, if
you withdraw money prior to reaching age 59 1/2, you may be subject to a 10%
federal penalty on early withdrawals. Under current law, you must begin
withdrawing money by April 1 following the year in which you reach age 70 1/2.
Q. CAN I CONSOLIDATE MY SEP-IRA ASSETS WITH MY OTHER IRA ASSETS?
A. You may transfer your SEP-IRA assets to any other IRA at any time.
Q. WHAT IS THE DIFFERENCE BETWEEN A SEP-IRA TRANSFER AND A SEP-IRA ROLLOVER?
A. A SEP-IRA transfer moves your IRA assets directly from one financial
institution to another. You may, for instance, consolidate your SEP-IRA at GT
Global, Inc. ("GT Global") by transferring SEP-IRA assets from a bank, trust
company, insurance company or mutual fund to your SEP-IRA or to another IRA at
GT Global; your current custodian will liquidate your SEP-IRA assets (if not
currently held in GT Global Funds) and send the check directly to GT Global.
A SEP-IRA rollover reinvests SEP-IRA assets distributed to you. With a
rollover you can take receipt of your SEP-IRA assets for up to 60 days before
reinvesting them in another SEP-IRA or another IRA. (Please note that you must
reinvest your SEP-IRA assets within 60 days to maintain their tax-deferred
status.) You may do only one rollover in any 12-month period. There is no
restriction on the number of SEP-IRA transfers you may effect in a year.
Q. WHAT FORMS OR REPORTS DO I FILE FOR MY SEP-IRA CONTRIBUTIONS?
A. Your deductible SEP-IRA contributions are reported on your Form 1040. You
must report your nondeductible SEP-IRA contributions on Form 8606 and file it
with the Internal Revenue Service along with your Form 1040 for the year. If you
are subject to a penalty tax for excess contributions or early distributions,
you may also have to file Form 5329 with your Form 1040.
Q. WHAT FORMS OR REPORTS DOES MY EMPLOYER FILE FOR MY SEP-IRA?
A. Your employer need not file annual information returns (such as Form 5500)
with the Internal Revenue Service if the employer has established the SEP using
Form 5305-SEP and given you a copy of the completed Form 5305-SEP. Employer
contributions that are within the applicable limits are not reported on Form
W-2.
Q. WHAT REPORTS WILL I RECEIVE FROM
GT GLOBAL?
A. Prior to January 31 of each year, GT Global will provide you with a
statement showing your SEP-IRA account balance as of December 31st of the
previous year and your SEP-IRA account activity for that previous year. You will
also receive by January 31 of each year a copy of Form 1099-R filed with the
Internal Revenue Service showing distributions made from your SEP-IRA during the
previous year. In addition, GT Global will send you a copy of Form 5498 that
reports to the Internal Revenue Service any contributions that you make to your
SEP-IRA between January 1 of the previous year and April 15 of the current year,
as well as the account's value on December 31.
Q. CAN I PARTICIPATE IN MY EMPLOYER'S
SAR-SEP?
A. You may be eligible to participate in your employer's SAR-SEP if it was
established prior to 1997 (no new SAR-SEP could be established after 1996). The
eligibility requirements for a SAR-SEP generally are the same as for a SEP-IRA
(see the first question above). Consult your employer's form 5305A-SEP or other
SAR-SEP documents to determine whether you are eligible to participate in its
SAR-SEP.
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<PAGE>
--------------------
GT GLOBAL SEP-IRA
If you are eligible, in general you may contribute up to $10,000 or 15% of
your compensation (not taking into account compensation in excess of $160,000),
whichever is less, through elective deferrals each year. However, your elective
deferrals plus any SEP-IRA contributions from your employer may not exceed 15%
of your compensation or $30,000, whichever is less. Special rules may apply to
limit your SAR-SEP deferral contribution if you are a "highly compensated
employee" or more than half of the company's eligible employees choose not to
make elective deferrals. Your elective deferrals are not subject to income tax
when contributed, although they are treated as wages for purposes of social
security, medicare, railroad retirement and unemployment taxes.
----------------------------------------------------------
QUESTIONS AND ANSWERS
FOR EMPLOYERS
- ----------------------------------------------------------
Q. AM I ELIGIBLE TO ESTABLISH A SEP-IRA FOR MY EMPLOYEES?
A. Yes. Generally, you may use the enclosed Form 5305-SEP to establish the SEP
if (i) you do not currently maintain any other qualified retirement or did not
previously maintain a defined benefit plan, (ii) you do not use the services of
leased employees, (iii) you are not a member of an affiliated service group or
controlled group (if you are, then all eligible employees of the members of the
group must participate in the SEP), and (iv) each eligible employee has
established an IRA into which SEP contributions can be made.
Q. WHAT EMPLOYEES MUST BE COVERED?
A. At a minimum, any employee is eligible to participate who (i) has
established an IRA into which contributions can be made, (ii) is at least 21
years old, and (iii) has performed services for you in at least three of the
preceding five calendar years. You may choose to make all your employees
eligible or expand the group of eligible employees by reducing the minimum age
or service necessary, or both. You may exclude any employee who does not have at
least $400 (or such amount as adjusted by the Internal Revenue Service) in
compensation from you for the year, is covered by a collective bargaining
agreement for which retirement benefits were the subject of good faith
bargaining between you and the employee's union, or is a nonresident alien and
receives no United States-source earned income from you.
Q. HOW MUCH CAN AN EMPLOYEE CONTRIBUTE?
A. An employee makes no contributions under the SEP. An employee may, however,
contribute to his or her IRA, subject to applicable limits.
Q. HOW MUCH DOES THE EMPLOYER CONTRIBUTE?
A. Generally, for 1998 and subsequent years, the employer may, but is not
required to, contribute up to a maximum of 15% of each employee's compensation
for that year (not taking into account compensation in excess of $160,000) or
$24,000, whichever is less, to his or her SEP-IRA. (However, if you make
contributions for an employee under any other qualified retirement plan, the
total contributions on that employee's behalf to the employee's SEP-IRA and such
plans(s) generally may not exceed 25% of the employee's compensation for that
year or $30,000, whichever is less.) The $160,000, $24,000 and $30,000
limitations may be adjusted from time to time by the Internal Revenue Service to
reflect increases in the cost of living. Form 5305-SEP requires that your
contributions be a uniform percentage of each eligible employee's compensation.
Q. ARE MY CONTRIBUTIONS DEDUCTIBLE?
A. As an employer, your contributions are deductible for federal income tax
purposes in your tax year including the end of the calendar year for which they
are made. Contributions are treated as made for a particular tax year if they
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<PAGE>
--------------------
GT GLOBAL SEP-IRA
are made for that year and paid by the due date (including extensions) of your
federal income tax return for that year.
Q. ARE THE EMPLOYER'S SEP-IRA CONTRIBUTIONS TAXABLE?
A. Subject to the applicable limits, all employer contributions to an
employee's SEP-IRA are made on a "pre-tax" basis and not taxed until
distributed.
Q. WHEN CAN AN EMPLOYEE WITHDRAW MONEY FROM HIS OR HER SEP-IRA?
A. An employee can withdraw all or part of his or her money at any time, but
ordinary federal (and, in most cases, state or local) income taxes will be due
on withdrawals of contributions (other than the employee's non-deductible
contributions) and earnings from the SEP-IRA in the year the withdrawals are
made. In addition, if an employee withdraws money prior to reaching age 59 1/2,
he or she may be subject to a 10% federal penalty on early withdrawals. After
age 59 1/2, an employee may withdraw money from his or her IRA without penalty.
Under current law, an employee must begin withdrawing money by April 1 following
the year in which he or she reaches age 70 1/2.
An employee may transfer his or her SEP-IRA assets to another SEP-IRA or to
any other IRA.
Q. WHAT FORMS OR REPORTS DOES AN EMPLOYER FILE FOR A SEP-IRA PLAN?
A. If you use Form 5305-SEP to establish the SEP and give a completed copy to
each eligible employee, you do not have to file any annual information returns
(such as Form 5500). Your SEP-IRA contributions are not reported on Form W-2.
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<PAGE>
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[LOGO]
GT GLOBAL SIMPLIFIED EMPLOYEE PENSION INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT AND APPLICATION
- --------------------------------------------------------------------------------
- --------------------------------------------
1. GENERAL
- --------------------------------------------
Internal Revenue Service Regulations require that you be given this Disclosure
Statement for the purpose of informing you of the restrictions and limitations
on how you may use a Simplified Employee Pension Individual Retirement Account
(SEP-IRA). Please read this Disclosure Statement together with the Custodial
Agreement and the prospectus(es) for the GT Global Fund(s) in which you are
investing. The provisions of the Custodial Agreement and prospectus(es) must
prevail over this statement in any instance where the statement is incomplete or
appears to be in conflict.
- --------------------------------------------
2. IRREVOCABILITY OF ACCOUNT
- --------------------------------------------
The Internal Revenue Service requires that you receive this disclosure
statement at least 7 days prior to the establishment of your SEP-IRA. Because of
this requirement, your application will not be accepted by the Custodian until
at least 7 days after the date you received this disclosure statement, as
indicated by you in the IRA Custodial Agreement. Prior to such acceptance, you
may receive back the entire amount that you have contributed, without reduction
for fees or other expenses. You may request that your contribution be returned
to you by writing to GT Global Investor Services, Inc. (agent for the
Custodian), P.O. Box 7345, San Francisco, CA 94120-7345 or by calling GT Global
Investor Services, Inc. toll free at (800) 223-2138 within 7 days of the date
you have signed the Custodial Agreement. All telephone requests must be
confirmed in writing. Once your application for a GT Global SEP-IRA is accepted
by the Custodian, it cannot be revoked by you.
- --------------------------------------------
3. ELIGIBLE EMPLOYEE
- --------------------------------------------
You are eligible to participate in a GT Global SEP-IRA if (i) your employer
has adopted a SEP-IRA arrangement by using Form 5305-SEP and (ii) you are
designated by your employer as an "eligible employee." You must also establish
an IRA into which your employer's contributions can be made.
Generally, you are an "eligible employee" and must be allowed to participate
for any year in which you (i) are at least 21 years old and (ii) have performed
services for your employer in at least three of the immediately preceding five
calendar years. However, you may be excluded from participation in any year if
you (i) did not receive at least $400 in compensation from the employer for the
calendar year (an amount that is adjusted from time to time to reflect increases
in the cost of living), (ii) are covered under a collective bargaining agreement
for which retirement benefits were the subject of good faith bargaining, or
(iii) are a nonresident alien receiving no United States-sourced earned income
from your employer. Consult your employer's Form 5305-SEP to determine whether
you are eligible to participate in its SEP-IRA.
- --------------------------------------------
4. YOUR IRA ACCOUNT
- --------------------------------------------
A SEP-IRA is a combination of a simplified employer pension (SEP) and an
individual retirement account (IRA). Under the SEP, your employer (or you, if
you are self-employed) may make contributions to an individual retirement
account (IRA) for your retirement. Your IRA is a trust or custodial account
created or organized in the United States for your exclusive benefit or for the
benefit of your beneficiaries. The IRA must be created by written instrument
that meets the following requirements:
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<PAGE>
--------------------
GT GLOBAL SEP-IRA
(1) The trustee or custodian must be a bank, federally insured credit union,
savings and loan association, or (under federal regulations) another person
eligible to act as trustee or custodian;
(2) Except for rollovers, transfers and employer contributions, under
applicable law, the trustee or custodian will not accept employee contributions
of more than $2,000 in any tax year. You may make rollover and transfer
contributions in amounts greater than $2,000. Employer contributions may also be
made to your SEP-IRA. Both employee and employer contributions to your SEP-IRA
are subject to the limitations described below. All contributions must be in
cash.
(3) Your interest in the SEP-IRA is nonforfeitable; that is, it is fully
vested at all times;
(4) No part of the trust or custodial funds may be invested in life insurance
contracts or certain collectibles nor may the assets be commingled with other
property except in a common trust fund or common investment fund; and
(5) Your interest in the SEP-IRA must begin to be distributed by April 1 of
the year following the year in which you reach age 70(1)/(2). The distribution
may be made in a single sum, or you may receive periodic distributions, starting
by April 1 of the year following the year in which you reach age 70(1)/(2), so
long as your entire interest in the custodial account is distributed over one of
the following periods:
(a) Your life;
(b) The joint lives of you and your designated beneficiary;
(c) A specific period not extending beyond your life expectancy; or
(d) A specific period not extending beyond the life expectancy of you and
your designated beneficiary.
If the amount distributed is less than the minimum amount required to be
distributed to you under the Internal Revenue Code, an excise tax will be
imposed on you in an amount equal to 50% of the excess of the amount required to
be distributed to you over the amount you actually receive.
(6) If you die after distributions have begun, your beneficiary must receive
the remaining payments at least as rapidly as under the method of distribution
being used on the date of your death. If you die before distributions have begun
or if your surviving spouse dies before distributions have begun, any interest
remaining must, by December 31 of the calendar year which contains the fifth
anniversary of your death or the death of your surviving spouse, be distributed
in a single sum. If your (or your surviving spouse's) designated beneficiary
wishes to receive an immediate annuity which provides for payments over the
beneficiary's life or over a specific period not exceeding the beneficiary's
life expectancy, the beneficiary must elect to receive such payments by December
31 following the calendar year of your death. Such payments also must begin by
that date. If your designated beneficiary is your spouse, annuity payments need
not commence until December 31 of the year you would have attained 70(1)/(2).
This annuity contract will not allow one's life expectancy to be recalculated.
The election will also apply to beneficiaries who make additional contributions
or rollovers in their own names to the IRA. An amount is not distributed if it
is rolled over into an Individual Retirement Account, annuity, or retirement
bond for the benefit of the beneficiary.
(7) If your surviving spouse is your designated beneficiary, your SEP-IRA
assets may be rolled over into his or her own IRA (whether or not a SEP-IRA). No
rollover from your IRA is available for a beneficiary other than your surviving
spouse, and such non-spouse beneficiary must take the IRA assets in the form of
a taxable distribution.
If you maintain an IRA other than the IRA(s) into which your employer's SEP
contributions are made, that IRA may provide different rates of return and
different terms concerning, among other things, transfers and withdrawal of
funds from the IRA.
- --------------------------------------------
5. EMPLOYER CONTRIBUTIONS
- --------------------------------------------
Generally, your employer (or you, if you are self-employed) may, but is not
required to, contribute to your SEP-IRA up to a maximum of 15% of your
compensation for that calendar year or $24,000, whichever is less. You and your
employer must ensure that contributions in excess of general IRA limits are made
under a valid SEP and are proper. The total contributions by your employer on
your behalf to your
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DS-2
<PAGE>
--------------------
GT GLOBAL SEP-IRA
SEP-IRA and any other qualified retirement plan may not exceed 25% of your
compensation for that calendar year or $30,000, whichever is less.
Form 5305-SEP requires your employer to make contributions to the SEP-IRAs of
its eligible employees in amounts that are a uniform percentage of each eligible
employee's compensation. For purposes of determining the amount of your
employer's contribution, your employer may not take into account any
compensation that you earn in excess of $160,000. Your compensation does not
include your employer's contribution to your SEP-IRA.
Your employer's contributions to your SEP-IRA, to the extent not in excess of
the maximum contributions described above, are not included in your gross income
in the year of contribution for federal income tax purposes or for purposes of
federal social security and unemployment taxes. Employer contributions and
earnings on those contributions are not taxed until distributed, as described in
Section 10 below.
- --------------------------------------------
6. EMPLOYEE CONTRIBUTIONS
- --------------------------------------------
ELIGIBILITY
If neither you nor your spouse is an active participant (see A. below), you
may make a contribution of up to the lesser of $2,000 (or $4,000 in the case of
a SEP-IRA and a Spousal IRA) or 100% of compensation and take a deduction for
the entire amount contributed. If you or your spouse (in most cases) are an
active participant but have an adjusted gross income (AGI) below a certain level
(see B. below), you may make a fully deductible contribution as under current
law. If, however, you or your spouse (in most cases) is an active participant
and your combined AGI is above the specified level, the amount of the deductible
contribution you may make to a SEP-IRA is phased down and eventually eliminated.
A. ACTIVE PARTICIPANT. You are an "active participant" for a year if you are
covered by a retirement plan. Generally, you are covered by a "retirement plan"
for a year if your employer or union has a retirement plan under which money is
added to your account or you are eligible to earn retirement credits. For
example, if you are covered under a profit-sharing plan, certain government
plans, a salary reduction arrangement (such as a tax sheltered annuity
arrangement or a 401(k) plan), or a plan which promises you a retirement benefit
which is based upon the number of years of service you have with the employer (a
"defined benefit plan"), you are likely to be an active participant. Your Form
W-2 for the year should indicate your participation status. If you are eligible
to participate in your employer's SEP-IRA, you will be deemed to be an active
participant for any year in which your employer makes a contribution to your
SEP-IRA.
You are an active participant for a year even if you are not yet vested in
your retirement benefit. Also, if you make required contributions or voluntary
employee contributions to a retirement plan, you are an active participant. In
certain plans you may be an active participant even if you were only with the
employer for part of the year. You will be deemed an active participant in your
employer's defined benefit plan even if you do not make required contributions
and even if you elect not to participate or waive participation. In other plans,
however, you will not be deemed an active participant if you elect not to
participate.
You are generally not considered an active participant if you are covered in a
government-sponsored plan only because of your services as 1) an Armed Forces
Reservist, for less than 91 days of active service, or 2) a volunteer
firefighter covered for firefighting service. Of course, if you are covered in
any other plan, these exceptions do not apply.
If you are married but file a separate return, your spouse's active
participation affects your ability to make deductible contributions for 1997 if
you lived together for any part of the year. For 1998, your combined AGI will
also affect your ability to make deductible contributions in this situation. If
you lived apart from your spouse for the entire year and you file a separate
return, you are treated as unmarried for purposes of your SEP-IRA deductions and
thus your spouse's active participation does not affect your ability to make
deductible contributions.
B. MODIFIED ADJUSTED GROSS INCOME (AGI). If you are an active participant, you
must look at your Adjusted Gross Income for the year (if you and your spouse
file a joint tax return, you use your combined AGI) to determine whether you can
make deductible SEP-IRA contributions.
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DS-3
<PAGE>
--------------------
GT GLOBAL SEP-IRA
Your tax return will show you how to calculate your AGI which, for purposes of
determining the deductible amount of your SEP-IRA contribution, is calculated
without taking into account any SEP-IRA deduction, any foreign earned income or
foreign housing exclusion or any excludable series EE savings bond interest. If
you are at or below a certain AGI level, called the Threshold Level, you are
treated as if you were not an active participant and can make a deductible
contribution under the same rules as a person who is not an active participant.
If you are single (or if you are married, filed separately and lived apart
from your spouse during the entire year), your Threshold Level is $25,000 for
1997 and $30,000 for 1998. The Threshold Level if you are married and file a
joint tax return is $40,000 for 1997 and $50,000 for 1998, and if you are
married but file a separate tax return, the Threshold Level is $0. For 1998, if
you are married and not an active participant but your spouse is, your Threshold
Level is $150,000.
If your AGI is $10,000 or more above your Threshold Level and you are an
active participant, you will not be able to deduct any of your contributions to
your SEP-IRA. If your AGI is less than $10,000 above your Threshold Level, you
will still be able to make a deductible contribution but it will be limited in
amount. The amount by which your AGI exceeds your Threshold Level (AGI-Threshold
Level) is called your Excess AGI. The Maximum Allowable Deduction is $2,000 (or
$4,000 for a Spousal IRA). You can calculate your Deduction Limit as follows:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-EXCESS AGI MAXIMUM
- ------------------- X ALLOWABLE DEDUCTION = DEDUCTION LIMIT
$10,000
</TABLE>
You must round up the result to the next highest $10 level (the next highest
number which ends in zero). For example, if the result is $1,525, you must round
it up to $1,530. If the final result is below $200 but above zero, your
Deduction Limit is $200. Your Deduction Limit cannot, in any event, exceed 100%
of your compensation.
EXAMPLE 1: Ms. Smith, a single person, is an active participant and has an AGI
of $36,619. She calculates her deductible SEP-IRA contribution for 1998 as
follows:
HER AGI IS $36,619.
HER THRESHOLD LEVEL IS $30,000.
HER EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($36,619-$30,000) = $6,619.
HER MAXIMUM ALLOWABLE DEDUCTION IS $2,000.
SO, HER SEP-IRA DEDUCTION LIMIT FOR 1998 IS:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$6,619
- --------------- X $2,000 = $676 (ROUNDED TO $680)
$10,000
</TABLE>
EXAMPLE 2: For 1997 Mr. and Mrs. Young file a joint tax return. Each spouse
earns more than $2,000, and Mrs. Young is an active participant. They have a
combined AGI of $44,255. They may each contribute to an IRA or SEP-IRA for 1997
and calculate their deductible contributions to each IRA as follows:
THEIR AGI IS $44,255.
THEIR THRESHOLD LEVEL IS $40,000.
THEIR EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($44,255-$40,000) = $4,255.
THE MAXIMUM ALLOWABLE DEDUCTION FOR EACH SPOUSE IS
$2,000.
SO, EACH SPOUSE MAY COMPUTE HIS OR HER IRA DEDUCTION
LIMIT FOR 1997 AS FOLLOWS:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$4,255
- --------------- X $2,000 = $1,149 (ROUNDED TO
$10,000 $1,150)
</TABLE>
EXAMPLE 3: If, in example 2, Mr. Young did not earn any compensation, or
elected to be treated as earning no compensation, for 1997 Mrs. Young could
establish a Spousal IRA (consisting of an account for herself and one for her
husband). The amount of deductible contributions for 1997 which could be made to
the SEP-IRA and the Spousal IRA is calculated using a Maximum Allowable
Deduction of $4,000 rather than $2,000.
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$4,255
- --------------- X $4,000 = $2,298 (ROUNDED TO
$10,000 $2,300)
</TABLE>
The $2,300 must then be divided between the two accounts but no more than
$2,000 may be contributed to either the SEP-IRA or the Spousal IRA.
EXAMPLE 4: In 1998, Mr. and Mrs. Young file a joint return. Mrs. Young is an
active participant, and Mr. Young is not. They have a
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<PAGE>
--------------------
GT GLOBAL SEP-IRA
combined AGI of $55,000. They may each contribute to an IRA for 1998 and
calculate their deductible contributions to each IRA as follows:
THEIR AGI IS $55,000.
SINCE THIS IS LESS THAN $150,000, MR. YOUNG IS NOT
AFFECTED BY MRS. YOUNG'S ACTIVE PARTICIPANT STATUS.
HIS ALLOWABLE DEDUCTION FOR 1998 IS $2,000.
MRS. YOUNG'S THRESHOLD LEVEL IS $50,000.
HER EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($55,000-50,000) = $5,000.
THE MAXIMUM ALLOWABLE DEDUCTION FOR EACH SPOUSE IS
$2,000.
MRS. YOUNG'S IRA DEDUCTION LIMIT FOR 1998 IS:
<TABLE>
<C> <S>
$10,000-$5,000
- --------------- X $2,000 = $1,000
$10,000
</TABLE>
EXAMPLE 5: For 1997, Mr. Jones, a married person, files a separate tax return
and lived with Mrs. Jones during the year and is an active participant. He has
$1,500 of compensation and wishes to make a deductible contribution to a
SEP-IRA.
HIS AGI IS $1,500.
HIS THRESHOLD LEVEL IS $0.
HIS EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($1,500-$0) = $1,500.
HIS MAXIMUM ALLOWABLE DEDUCTION IS $2,000.
SO, HIS SEP-IRA DEDUCTION LIMIT FOR 1997 IS:
<TABLE>
<C> <S>
$10,000-$1,500
- --------------- X $2,000 = $1,700
$10,000
</TABLE>
Even through his SEP-IRA deduction limit under the formula is $1,700, Mr.
Jones may not deduct an amount in excess of his compensation, so, his actual
deduction is limited to $1,500.
As an alternative, you may determine your Deduction Limit by consulting the
Table found in IRS Publication 590.
NOTE: Check to see if the Publication has been updated to reflect the
increased Threshold Levels and other changes for 1998 resulting from the
Taxpayer Relief Act of 1997.
SPOUSAL IRAS
As noted in Example 3 above, you may contribute to a Spousal IRA even if your
spouse has earned some compensation during the year. Provided your spouse does
not make a contribution to an IRA, you may set up a Spousal IRA consisting of an
account for your spouse as well as an account for yourself. The maximum
deductible amount for the Spousal IRA is the lesser of $4,000 or 100% of
compensation.
NONDEDUCTIBLE CONTRIBUTIONS TO SEP-IRAS
Even if you are above the Threshold Level and thus may not make a deductible
contribution of $2,000 ($4,000 with a Spousal IRA), you may still contribute up
to the lesser of 100% of compensation or $2,000 to a SEP-IRA ($4,000 with a
Spousal IRA). The amount of your contribution which is not deductible will be a
nondeductible contribution to the SEP-IRA. You may also choose to make a
contribution nondeductible even if you could have deducted part or all of the
contribution. Interest or other earnings on your SEP-IRA contribution whether
from deductible or nondeductible contributions will not be taxed until taken out
of your SEP-IRA and distributed to you.
If you make a nondeductible contribution to a SEP-IRA you must report the
amount of the nondeductible contribution to the IRS as a part of your tax return
for the year.
You may make a $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, without having to know how
much will be deductible. When you fill out your tax return you may then figure
out how much is deductible.
You may withdraw a SEP-IRA contribution made for a year any time before April
15 of the following year. If you do so, you must also withdraw the earnings
attributable to that portion and report the earnings as income for the year for
which the contribution was made. If some portion of your contribution is not
deductible, you may decide either to withdraw the nondeductible amount, or to
leave it in the SEP-IRA and designate that portion as a nondeductible
contribution on your tax return.
SEP-IRA DISTRIBUTIONS
Because nondeductible SEP-IRA contributions are made using income which has
already been taxed (that is, they are not deductible contributions), the portion
of the SEP-IRA distributions consisting of nondeductible contributions will not
be taxed again when received by you. If you make any nondeductible SEP-IRA
contributions, each distribution from your SEP-IRA will consist of a nontaxable
portion (return of nondeductible contributions) and a taxable portion (return of
deductible contributions, if any, and account earnings).
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<PAGE>
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GT GLOBAL SEP-IRA
Thus, you may not take a distribution which is entirely tax-free if you have
made any deductible contributions. The following formula is used to determine
the nontaxable portion of your distributions for a taxable year:
<TABLE>
<S> <C> <C> <C> <C>
REMAINING
NONDEDUCTIBLE TOTAL NONTAXABLE
CONTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
- -------------------------- X (FOR THE = (FOR THE
YEAR-END TOTAL IRA YEAR) YEAR)
ACCOUNT BALANCES
</TABLE>
To figure the year-end total IRA account balance you treat all of your IRAs as
a single IRA. This includes all regular IRAs, as well as SEP-IRAs, SIMPLE IRAs
and Rollover IRAs. You also add back the distributions taken during the year.
EXAMPLE: An individual makes the following contributions to his or her IRAs
and SEP-IRAs:
<TABLE>
<CAPTION>
YEAR DEDUCTIBLE NONDEDUCTIBLE
- --------- ----------- --------------
<S> <C> <C>
1993 $ 2,000
1994 1,800
1995 1,000 $ 1,000
1996 600 1,400
----------- -------
$ 5,400 $ 2,400
</TABLE>
<TABLE>
<S> <C>
Deductible Contributions: $ 5,400
Nondeductible Contributions: 2,400
Earnings on IRAs and
SEP-IRAs: 1,200
---------
Total Account Balance of IRAs
and SEP-IRAs as of 12/31/96: $9,000
(including distributions in 1996)
</TABLE>
In 1997, the individual takes a distribution of $3,000. The total account
balance in the IRAs and SEP-IRAs on 12/31/96, plus 1997 distributions, is
$9,000. The nontaxable portion of the distributions for 1997 is figured as
follows:
<TABLE>
<S> <C> <C> <C>
TOTAL NONDEDUCTIBLE CONTRIBUTIONS $2,400
TOTAL ACCOUNT BALANCE IN THE ------ X $3,000 = $800
IRAS AND SEP-IRAS PLUS $ 9,000
DISTRIBUTIONS
</TABLE>
Thus, $800 of the $3,000 distribution in 1997 will not be included in the
individual's taxable income. The remaining $2,200 will be taxable for 1997.
SALARY REDUCTION CONTRIBUTIONS
Generally, if your SEP-IRA is used as part of a salary reduction SEP (a
SAR-SEP) established before 1997, you may elect to reduce your annual
compensation, up to a maximum of $10,000 or 15% of compensation (not taking into
account compensation in excess of $160,000), whichever is less, and contribute
that amount to your SEP-IRA. If your employer also contributes to your SEP-IRA,
these contributions plus your elective deferrals may not exceed 15% of your
compensation (not taking into account compensation in excess of $160,000) or
$30,000, whichever is less.
- --------------------------------------------
7. TAX-FREE TRANSFER CONTRIBUTIONS
- --------------------------------------------
Transfers allow you to transfer IRA assets directly from one IRA trustee or
custodian to another on a tax-free basis. If you already have an IRA with
another trustee or custodian, you may direct that trustee or custodian to
transfer your IRA assets to your GT Global SEP-IRA without tax consequences, in
accordance with the rules of your existing account. You may not take a deduction
for the amount. To authorize the GT Global SEP-IRA Custodian to arrange a direct
transfer from your existing IRA, please complete the attached IRA Transfer
Authorization as well as the SEP-IRA Application.
- --------------------------------------------
8. TAX-FREE ROLLOVER CONTRIBUTIONS
- --------------------------------------------
Rollover contributions permit you to contribute amounts you are eligible to,
or actually, receive from one retirement program to another without incurring
any income tax liability. The source of a rollover contribution to an IRA or
SEP-IRA is typically either a distribution from a qualified retirement plan, a
tax-sheltered 403(b) annuity or custodial account, or another IRA or SEP-IRA.
Most distributions may be rolled over to an IRA or SEP-IRA without regard to
whether it is a total or a partial distribution, except for certain
distributions such as minimum required distributions, annuity payments,
installments over a period of ten or more years, and certain payments to
non-spouse beneficiaries and alternate payees that are not eligible for rollover
treatment.
IF YOU ARE ELIGIBLE TO RECEIVE A DISTRIBUTION FROM A QUALIFIED PLAN OR A
403(B) PROGRAM, you may wish to have your eligible rollover distribution paid
directly to your GT Global SEP-IRA in order to avoid 20% withholding on the
distribution (which will be credited against your federal income taxes). If you
have a direct rollover of your eligible distribution, no income tax will be
withheld and your distribution will not be taxed until you take it out of your
SEP-IRA. To facilitate a direct rollover, please complete the attached IRA
Direct Rollover Authorization as
-------
DS-6
<PAGE>
--------------------
GT GLOBAL SEP-IRA
well as the SEP-IRA Application. If, instead, you have your eligible rollover
distribution paid to you, you will receive only 80% of the payment (because of
the required 20% withholding), all or part of which may be rolled over into a GT
Global SEP-IRA within 60 days of your receipt of the distribution. The amount
rolled over will not be taxed until you take it out of your SEP-IRA. NOTE that
if you want to avoid being taxed on the amount that was withheld, you will need
to find other money to replace the 20% that was withheld and contribute it to
your SEP-IRA within the 60-day period.
This mandatory withholding does not apply to distributions you receive from
another IRA. All or part of an eligible distribution from another IRA may be
rolled over into a GT Global SEP-IRA by the 60th day after you receive the
benefits from your first IRA.
Whether you do a direct rollover or a rollover of amounts that are initially
paid to you, you will not be taxed on (nor can you take a deduction for) the
amount you roll over. You will not be taxed on the amount transferred, and you
cannot take a tax deduction for that amount. You will be taxed on the portion of
the distribution, if any, which is not reinvested within 60 days. The following
summarizes some of the other rules applicable to rollover contributions.
Rollovers between individual retirement programs may occur only once in any
12-month period, BUT THIS LIMIT DOES NOT APPLY TO A TRUSTEE-TO-TRUSTEE TRANSFER
DESCRIBED IN SECTION 7 ABOVE.
If property has been received from a retirement program, it may be sold and
the proceeds of the sale rolled over. For example, if you were to receive a
distribution consisting of stock, you could sell the stock and contribute the
money you received from the sale to your SEP-IRA within the 60-day period from
your receipt of the stock. If you did not contribute all of the money you
received from the sale, you would be taxed on the portion not rolled over.
In general, you may roll over all or part of a distribution from your
employer's qualified plan or 403(b) program (except the portion, if any,
representing your own employee contributions to the plan) to your new SEP-IRA.
You may do this even though you are not otherwise allowed to make deductible
contributions into an IRA or SEP-IRA.
Tax-free rollover treatment will also apply, in certain circumstances, where
you receive a distribution in a parent-subsidiary or controlled group
relationship. Any amounts distributed from an employer's qualified plan will not
be eligible for five-year forward averaging if part of the distribution is
rolled-over into an IRA.
If you roll over an amount into an IRA from a qualified plan, you may be
allowed at a later date to roll those proceeds back into another qualified plan.
In order to do so, however, the proceeds may not have been mixed with regular
contributions or funds from other sources.
Since many of the rules with respect to rollover situations are rather
complex, you should check with your own tax adviser as to your ability to effect
a rollover in your particular circumstances.
- --------------------------------------------
9. EXCESS CONTRIBUTIONS
- --------------------------------------------
Generally, an excess contribution is the amount of any contributions to your
SEP-IRA (other than a proper rollover or transfer contribution) for a taxable
year that exceeds your IRA contribution limit (including, for a SAR-SEP, your
elective deferral limit) for that year. If you make an excess contribution, no
income tax deduction will be allowed for the excess contribution, and you may be
subject to a 6% excise tax on the amount of the excess contribution.
The 6% excise tax is imposed with respect to the tax year for which the excess
contribution is made and for each later year until the excess amount is
eliminated. The amount of this excise tax for any year cannot exceed 6% of the
value of the account, determined as of the close of that tax year.
If you make a contribution to your SEP-IRA for a taxable year which exceeds
your SEP-IRA contribution limit, whether deductible or nondeductible, you may be
permitted to designate the contribution as a nondeductible IRA contribution by
the due date for filing your Federal income tax return, not including
extensions. As an alternative, you may withdraw the contribution from your
SEP-IRA and the earnings thereon at any time prior to the due date for filing
your Federal income tax return (including extensions) for the taxable year for
which the contribution was made. If this is done, the return of the contribution
will not be includible in your gross income as an IRA distribution, and
-------
DS-7
<PAGE>
--------------------
GT GLOBAL SEP-IRA
the contribution will not be subject to the 6% excise tax on excess
contributions (assuming the contribution is not deducted on your return).
However, the earnings on the contribution will be taxable income in the year for
which the contribution was made, and may possibly be subject to the 10% tax on
early distributions if you are under age 59 1/2 (see Section 11 below).
If you make an excess contribution to your SEP-IRA that exceeds your SEP-IRA
contribution limit, and you withdraw the excess contribution after the due date
for filing your Federal income tax return (including extensions), the returned
excess contribution will not be includible in your gross income as an IRA
distribution (subject to possible premature distribution penalties) if: (1) your
total IRA and SEP-IRA contributions for the year were not more than $4,000 with
a Spousal IRA and (2) you did not deduct the excess contribution on your return
(or if the deduction you claimed was disallowed by the Internal Revenue
Service). However, you must pay the 6% excise tax on the excess contribution for
each taxable year that it is still in your SEP-IRA at the end of the following
year. Under this procedure, you are not required to withdraw any earnings
attributable to the excess contribution.
You may also eliminate an excess contribution from your SEP-IRA in a
subsequent year by not contributing the maximum amount for that year and
applying the excess contribution to the subsequent year's contribution. You may
be entitled to a deduction for the amount of the excess contribution that is
applied in the subsequent year, provided you did not previously deduct the
excess contribution (or if the deduction you claimed was disallowed by the
Internal Revenue Service). However, if you incorrectly deducted an excess
contribution in a closed taxable year (I.E., one for which the period to assess
a deficiency has expired), the amount of the excess contribution cannot be
deducted again in the subsequent year in which it is applied.
- --------------------------------------------
10. DISTRIBUTIONS
- --------------------------------------------
Taxable distributions from your SEP-IRA are taxed as ordinary income
regardless of their source. They are not eligible for capital gains treatment or
the special five-year averaging rules that apply (for tax years beginning prior
to 2000) to lump sum distributions from qualified employer plans.
As provided in Form 5305-A, you may elect to have your SEP-IRA distributed in:
a single sum payment; an annuity contract; or equal annual installments over a
specified period not to exceed your life expectancy or the joint life and last
survivor expectancy of you and your designated beneficiary. In general, you must
begin receiving distributions from your SEP-IRA no later than April 1 following
the calendar year in which you reach age 70 1/2. There is a prescribed minimum
amount for such distributions and an excise tax may be imposed if the amount
distributed to you is less than the required amount. If you die before your
SEP-IRA is completely distributed to you, the remaining balance in your SEP-IRA
will be distributed to your beneficiary(ies) either in accordance with the
method of distribution in effect at your death (if on or after the required
beginning date) or as otherwise permitted (if your death occurs prior to the
required beginning date).
- --------------------------------------------
11. PREMATURE DISTRIBUTIONS
- --------------------------------------------
A penalty tax of 10% is imposed on taxable distributions made to you or your
beneficiaries before you attain age 59(1)/(2). No penalty tax will be imposed if
the distribution is (i) a return of nondeductible contributions, (ii) made on
account of your death or disability, (iii) made in substantially equal payments
over life or life expectancy as permitted in accordance with the provisions of
Section 72(t)(2) of the Code and the regulations promulgated thereunder, or (iv)
contributed as a "rollover" within 60 days. In addition, the penalty tax does
not apply if the distribution is made (i) to pay for medical expenses in excess
of 7.5% of your adjusted gross income, (ii) if you are unemployed, to pay for
medical insurance premiums after you have received unemployment compensation for
a specified period or, for distributions made after 1997, (iii) to pay for
certain qualified higher education expenses of you or certain of your family
members or (iv) to pay for certain expenses associated with the purchase of a
first home by you or certain of your family members. This tax is in addition to
any tax that is due because you must include the portion of the premature
distribution attributable to deductible contributions and all earnings in your
gross income.
-------
DS-8
<PAGE>
--------------------
GT GLOBAL SEP-IRA
- --------------------------------------------
12. TAXABILITY OF ACCOUNT
- --------------------------------------------
Your SEP-IRA is exempt from tax unless you or your beneficiaries engage in a
prohibited transaction under Section 4975 of the Internal Revenue Code. Examples
of prohibited transactions include your borrowing from the SEP-IRA or your
selling property to or buying property from the SEP-IRA.
If you engage in a prohibited transaction, your SEP-IRA will lose its tax
exempt status as of the first day of the tax year in which the prohibited
transaction occurs. Once your SEP-IRA loses its exempt status, you must include
the fair market value of its assets in your income for that tax year. You will
also be subject to the 10% penalty tax on premature distributions.
If you use your SEP-IRA or any portion thereof as security for a loan, the
portion so used will be treated as distributed to you and will be currently
taxable and subject to the 10% tax on premature distributions.
- --------------------------------------------
13. FINANCIAL DISCLOSURES
- --------------------------------------------
Contributions to your SEP-IRA will be invested in shares of a GT Global Fund.
You may receive earnings on your shares in the form of income dividends or net
realized capital gain distributions. Such earnings will be reinvested in
additional shares of a GT Global Fund. The growth in value of the SEP-IRA is
neither guaranteed nor projected. The gross income received by a GT Global Fund
is reduced by the fees paid to the manager of the Fund, Chancellor LGT Asset
Management, Inc., and by expenses incurred by the Fund, such as accounting fees,
taxes, interest, trustee fees and brokerage charges. Each Fund's prospectus
contains more complete information including charges, expenses, the risks of
global and emerging market investing and other matters of interest to a
prospective investor.
- --------------------------------------------
14. MISCELLANEOUS
- --------------------------------------------
You are required to file form 5329 (Return for Individual Retirement Savings
Arrangements) for a taxable year in which you are subject to penalty taxes in
connection with your SEP-IRA.
The enclosed agreement has been approved as to form for use in establishing
custodial accounts by the Internal Revenue Service. The Internal Revenue Service
approval is a determination as to form only and does not represent a
determination of the merits of the account.
The proceeds from the custodial account may be used by you as a rollover
contribution to another account or annuity or retirement bond.
- --------------------------------------------
15. ADDITIONAL INFORMATION
- --------------------------------------------
Additional information on Individual Retirement Accounts can be obtained from
any district office of the Internal Revenue Service (IRS Publication 590).
-------
DS-9
<PAGE>
--------------------
GT GLOBAL SEP-IRA
NOTES
- ----------------------------------------------------------
-------
DS-10
<PAGE>
[IRS FORM 5305-A Page 1 of 2]
[CAMERA READY COPY]
DS-11
<PAGE>
[IRS FORM 5305-A Page 2 of 2]
[CAMERA READY COPY]
ARTICLE VIII
See Exhibit A to Form 5305-A for additional terms applicable to your GT Global
SEP-IRA. Exhibit A is incorporated in and made part of your GT Global SEP-IRA by
this reference.
[CAMERA READY COPY]
DS-12
<PAGE>
--------------------
GT GLOBAL SEP-IRA
EXHIBIT A TO FORM 5305-A,
ARTICLE VIII
- ----------------------------------------------------------
The following provisions constitute Article VIII of Form 5305-A which is used to
establish your GT Global SEP-IRA.
1. The Custodian is under no duty to compel the Depositor to make any
contributions to the Account and shall have no duty to assure that such
contributions are appropriate in amount (except to the extent that no annual
employee contributions (other than elective deferrals) may exceed $2,000 or such
other maximum annual level as may be later authorized by law).
2. The amount of each contribution by the Depositor or by Depositor's employer
shall be applied to the purchase of shares of GT Global Funds (hereinafter
"Funds"). The Depositor acknowledges receipt of the appropriate current
prospectus(es) of the Fund(s). All dividends and capital gain distributions
received on securities held in the Custodial Account (the "Account") shall be
reinvested in additional shares of the Funds and credited to the Account. Shares
acquired in the Account will be held beneficially for the Depositor in the name
of the Custodian or its nominee.
3. The Custodian shall deliver to the Depositor all shareholder notices and
reports, prospectuses, financial statements, proxy material and other material
as they are received from the Funds. The Custodian shall vote at all shareholder
meetings of the Funds in accordance with written instructions of the Depositor
which will be secured by the Custodian. If no written instructions are received
from the Depositor, the Depositor's shares shall not be voted except that the
Custodian may vote "present" for purposes of determining the presence of a
quorum.
4. The Custodian may resign upon at least 60 days written notice to the
Depositor and Depositor's employer, as applicable, and may be removed by the
Depositor upon 60 days written notice to the Custodian and Depositor's employer,
as applicable. Upon resignation by the Custodian, it shall transfer the assets
of the Account in such a manner as the Depositor shall designate, but in the
absence of such designation, the Custodian will use its best efforts to transfer
the assets of the Account to a successor custodian to be held under an
Individual Retirement Account qualifying under Section 408 of the Internal
Revenue Code. Upon removal of the Custodian by action of the Depositor, the
assets of the Account shall be transferred in accordance with the Depositor's
instructions.
5. If the Depositor does not effectively elect any of the methods of
distribution described above by the April 1 following the calendar year in which
he or she reaches age 70 1/2, the assets of the Account shall be distributed to
the Depositor in equal or substantially equal payments over the Depositor's life
expectancy in accordance with the minimum distribution requirements applicable
to the Account as described in Article IV of Form 5305-A unless the Depositor
effectively elects another method of distribution.
6. By completing the Beneficiary Designation section of the SEP-IRA
Application, the Depositor may designate one or more beneficiaries to receive
such benefits in the event of the Depositor's death. Should the Depositor die
without an effective designation of beneficiary, the assets of the Account shall
be distributed to the Depositor's surviving spouse, or if there is no surviving
spouse, to the Depositor's estate in a single payment, unless another method of
distribution has been elected by such spouse or estate, as applicable.
7. In the event the Depositor's contribution to the Account (other than
elective deferrals) in any year exceeds $2,000, such excess amount shall be
deemed to be a "rollover contribution" permitted under Article I of the Account
agreement, unless the Depositor certifies otherwise to the Custodian in a form
satisfactory to it.
-------
DS-13
<PAGE>
--------------------
GT GLOBAL SEP-IRA
NOTES
- ----------------------------------------------------------
-------
DS-14
<PAGE>
[IRS FORM 5305-SEP Page 1 of 2]
[CAMERA READY COPY]
DS-15
<PAGE>
[IRS FORM 5305-SEP Page 2 of 2]
[CAMERA READY COPY]
DS-16
<PAGE>
<TABLE>
<S> <C>
logo GT Global Funds
P.O. Box 7345, San Francisco, CA 94120-7345 SEP-IRA APPLICATION
800/223-2138
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION / / SEP-IRA / / SAR SEP-IRA (established by your employer before 1997)
TYPE OF ACCOUNT: / / CONTRIBUTORY / / ROLLOVER / / TRANSFER
Employer Name
---------------------------------------------------
Name Address
- ------------------------------------------------------------ -----------------------------------------------------------
Address STREET
---------------------------------------------------------- -----------------------------------------------------------
STREET CITY STATE ZIP CODE
-------------------------------------------------------- Tel. No. ( ) Fax No. ( )
CITY STATE ZIP CODE -----------------------------
Tel. No. ( ) Fax No. ( ) -------------------------------
- ------------------- -------------------
Social Security Number / / or Taxpayer I.D. Number / / (Check Applicable Box)
Date of Birth -----------------------------------------------------
FUND SELECTION & INITIAL CONTRIBUTION
Each GT Global Mutual Fund issues multiple classes of shares. Please read the prospectus of the applicable class of such
Funds carefully before you invest. Please check applicable box:
</TABLE>
/ /Enclosed is a check for $_________ made payable to GT Global Investor
Services, Inc. (as agent for the Custodian) to be invested in the Fund(s)
hereby specified.
/ /This is a transfer from another IRA to be invested in the Fund(s) hereby
specified. (Please indicate only the PERCENTAGE of the transfer you wish
allocated to each Fund. Please complete the separate IRA Transfer
Authorization Form.)
/ /The above-referenced employer will make contributions to my SEP-IRA to be
invested in the Fund(s) hereby specified. (Please indicate only the
PERCENTAGE of each contribution that you wish allocated to each Fund.)
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER: / / CLASS A
SHARES / / CLASS B SHARES (CLASS B SHARES ARE NOT AVAILABLE FOR THE DOLLAR
FUND) / / CLASS C SHARES (NEW DIMENSION FUND ONLY) OR / / ADVISOR CLASS
SHARES. If a class share box is not checked, your investment will be made in
Class A Shares.
<TABLE>
<CAPTION>
INITIAL CONTRIBUTION INITIAL CONTRIBUTION
<S> <C> <C> <C>
07 / / GT GLOBAL $ OR % 25 / / GT GLOBAL NEW $ OR %
WORLDWIDE GROWTH ----------------- --------------- DIMENSION FUND ----------------- ---------------
FUND
05 / / GT GLOBAL $ OR % 26 / / GT GLOBAL $ OR %
INTERNATIONAL ----------------- --------------- DEVELOPING MARKETS ----------------- ---------------
GROWTH FUND FUND
16 / / GT GLOBAL $ OR % 03 / / GT GLOBAL $ OR %
EMERGING MARKETS ----------------- --------------- EUROPE GROWTH FUND ----------------- ---------------
FUND
22 / / GT GLOBAL $ OR % 13 / / GT GLOBAL $ OR %
CONSUMER ----------------- --------------- LATIN AMERICA GROWTH ----------------- ---------------
PRODUCTS FUND
AND SER-
VICES FUND
17 / / GT $ OR % 24 / / GT GLOBAL $ OR %
GLOBAL ----------------- --------------- AMERICA SMALL CAP ----------------- ---------------
FINANCIAL GROWTH FUND
SERVICES
FUND
11 / / GT $ OR % 06 / / GT GLOBAL $ OR %
GLOBAL ----------------- --------------- AMERICA MID CAP ----------------- ---------------
HEALTH CARE GROWTH FUND
FUND
19 / / GT $ OR % 23 / / GT GLOBAL $ OR %
GLOBAL ----------------- --------------- AMERICA VALUE FUND ----------------- ---------------
INFRASTRUCTURE
FUND
21 / / GT $ OR % 04 / / GT GLOBAL $ OR %
GLOBAL ----------------- --------------- JAPAN GROWTH FUND ----------------- ---------------
NATURAL
RESOURCES
FUND
15 / / GT $ OR % 10 / / GT GLOBAL $ OR %
GLOBAL ----------------- --------------- GROWTH & INCOME FUND ----------------- ---------------
TELECOMMUNICATIONS
FUND
02 / / GT $ OR % 08 / / GT GLOBAL $ OR %
GLOBAL NEW ----------------- --------------- STRATEGIC INCOME ----------------- ---------------
PACIFIC FUND
GROWTH FUND
01 / / GT $ OR % 09 / / GT GLOBAL $ OR %
GLOBAL ----------------- --------------- GOVERNMENT INCOME ----------------- ---------------
DOLLAR FUND FUND
18 / / GT $ OR % TOTAL INITIAL $
GLOBAL HIGH ----------------- --------------- CONTRIBUTION: -----------------------------
INCOME FUND
CONTRIBUTION YEAR: -----------------------------
</TABLE>
NOTE: Minimum Initial Contribution -- $100 per Fund
Maximum Annual Individual Contribution (except for rollovers and
transfers) -- $2,000
Maximum Annual SEP-IRA Contribution -- See Disclosure Statement
<TABLE>
<S> <C> <C>
TELEPHONE EXCHANGE
I, either directly or through the Authorized Agent, if any, named below, hereby authorize the Transfer Agent of the GT Global
Fund, to honor any telephone, telex or telegraphic instructions believed to be authentic for exchange between any of the Funds
distributed by GT Global, Inc. ("GT Global"). I understand and agree that the account will be subject to the telephone
exchange privilege described in the applicable GT Global Fund's current prospectus and agree that GT Global, GT Global Funds
and the Funds' Transfer Agent, their officers and employees, will not be responsible for the authenticity of any telephone,
telex, or telegraphic instructions nor be liable for any loss arising out of any such telephone, telex or telegraphic
instructions effected including any such loss due to negligence on the part of such entities.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER OR ADVISOR) ONLY
We hereby submit this SEP-IRA Application for the purchase of shares including shares purchased under a Right of Accumulation
or Letter of Intent in accordance with the terms of our Selling Agreement with GT Global and with the Prospectus(es) for the
GT Global Fund(s). We agree to notify GT Global of any purchases properly made under a Letter of Intent or Right of
Accumulation.
Broker/Dealer or Advisor Name --------------------------------------------------
Main Office Address --------------------------------------------------
Branch Number --------------- Representative's Number --------------- Representative's Name ---------------
Branch Address
----------------------------------------------------------- Telephone Number----------------------------------------
For Class A, B and C Shares only:
Broker/Dealer's Authorized Signature X ----------- Title------------------------
For Advisor Class Shares only:
We hereby submit this SEP-IRA Application for the purchase of Advisor Class Shares in accordance with the terms of our
Advisor Class Agreement with GT Global, Inc. and with the Prospectus and Statement of Additional Information of each Fund
purchased.
Advisor's Authorized Signature X ------------------------- Title------------------------
</TABLE>
DS-17
<PAGE>
<TABLE>
<S> <C>
DESIGNATION OF BENEFICIARY(IES)
If you require more room to name additional beneficiaries, please provide the necessary information on a separate sheet,
and indicate next to each name whether beneficiary is primary or contingent.
PRIMARY BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my SEP-IRA upon my death:
</TABLE>
<TABLE>
<S> <C> <C> <C>
1. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------ Date of Birth -------- Social Security Number ------------------------ Share of Account %
------
2. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------------- DOB -------- Social Security Number ------------------------ Share of Account %
------
CONTINGENT BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my SEP-IRA upon my death:
1. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------------- DOB -------- Social Security Number ------------------------ Share of Account %
------
2. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------------- DOB -------- Social Security Number ------------------------ Share of Account %
------
</TABLE>
Unless otherwise indicated above, the benefit payable hereunder shall be paid
in equal shares to the Primary Beneficiaries who survive the Participant. If
no Primary Beneficiary(ies) survives the Participant, the payment shall be
made in equal shares (or as otherwise indicated above) to the Contingent
Beneficiary(ies) who survive the Participant. The Participant reserves the
right to change the above beneficiary by filing a new Beneficiary Designations
Form with the Custodian. Should no named beneficiary survive the date of
distribution, the account shall be distributed to my surviving spouse, or if
there is no surviving spouse, in a single payment to my estate. ONLY THE MOST
RECENT EXECUTED DESIGNATION OF BENEFICIARY(IES) ON FILE WITH GT GLOBAL
INVESTOR SERVICES, INC. (AS AGENT FOR THE CUSTODIAN) WILL BE HONORED.
CONSENT OF SPOUSE
I consent to the above Beneficiary Designation.
Signature of Spouse: _________________________________ Date: ________________
(Note: May be required in community property states if any person other than
or in addition to Participant's Spouse is designated as Beneficiary.)
<TABLE>
<S> <C>
REDUCED SALES CHARGES
</TABLE>
RIGHT OF ACCUMULATION -- Class A Shares only
/ / I certify that I qualify for the Right of Accumulation sales charge
discount described in the Prospectus and Statement of Additional
Information of the Fund(s) purchased.
/ / I own shares of more than one GT Global Mutual Fund. Below is a schedule
showing the numbers of each of my Shareholder Accounts.
/ / The registration of some of my shares differs from that shown on this
SEP-IRA Application. Below is a schedule showing the account number(s) and
full registration in each case.
STATEMENT OF INTENTION -- Class A Shares only
I agree to the Statement of Intention set forth in the Prospectus(es) for the
Fund(s) in which I am investing. Although I am not obligated to do so, it is my
intention to invest over a thirteen-month period in Class A Shares of the GT
Global Mutual Funds, in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
LIST OF OTHER GT GLOBAL MUTUAL FUND ACCOUNTS:
______________________________________ _______________________________
______________________________________ _______________________________
______________________________________ _______________________________
Account Numbers Account Registrations
AGREEMENT AND SIGNATURE
I acknowledge receipt of the Disclosure Statement and IRA Agreement (IRS Form
5305-A) for the GT Global SEP-IRA. I acknowledge receipt of the current
Prospectus(es) of the Fund(s) in which I have directed GT Global Investor
Services, Inc. (as agent for the Custodian) to invest my contribution(s). I
agree to the terms and provisions set forth in this SEP-IRA Application
including those contained in the Telephone Exchange section, the Disclosure
Statement, the Individual Retirement Custodial Account Agreement (IRS Form
5305-A) and the Prospectus(es). AS REQUIRED BY THE INTERNAL REVENUE SERVICE, I
CERTIFY, UNDER PENALTIES OF PERJURY, THAT THE TAXPAYER IDENTIFICATION NUMBER
GIVEN ON THE FACE OF THIS SEP-IRA APPLICATION IS CORRECT AND THAT I AM NOT
SUBJECT TO BACKUP WITHHOLDING IN MY IRA(S). THE INTERNAL REVENUE SERVICE DOES
NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE
CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
Signature X_______________________________ Date ______________________________
Individual
FOR GT GLOBAL USE ONLY
ACCEPTED:
X_____________________________________________________ _______________________
Signature of Custodian or its Agent Date
DS-18
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Funds IRA TRANSFER
P.O. Box 7345, San Francisco, CA 94120-7345 AUTHORIZATION
800/223-2138
</TABLE>
Please complete a separate Transfer Authorization for each Account to be
transferred.
TO EXISTING CUSTODIAN:
Name of Existing Custodian_____________________ Telephone_(________)__________
Address________________________ ______________________ ___________ ___________
Street City State Zip Code
Individual Policy or Account:______________________ in the name of ___________
Account Name Account Number Your Name
Please liquidate/transfer in kind* $________________ or ________________% of
my IRA identified above and transfer those funds by a check,
made payable to:
GT Global Investor Services, Inc., for
_______________________________, IRA Account #________________________________
Investor's Name Existing GT Global
Account
Number, if applicable
AGE 70 1/2 RESTRICTIONS
(Please complete this section if you will be age 70 1/2 or older in the
transfer year.)
The following transfer restrictions apply to this transaction:
<TABLE>
<S> <C> <C>
1. Required Minimum Distribution. I authorize the Custodian or Trustee named above (select one):
/ / to distribute my required minimum distribution to me prior to transferring my IRA assets.
/ / to segregate and retain minimum distribution amount. Distribute on --------------------------, 19 -----.
2. Required Elections. (Complete only if you have reached your required beginning date, I.E., April 1 following the year
in which you attain age 70 1/2.)
a. My oldest primary beneficiary with respect to the transferring IRA is:
Name ------------------ Birthdate ---------- Relationship ------------------
b. My life expectancy / / was / / was not being recalculated.
c. The life expectancy of my spouse beneficiary / / was / / was not being recalculated / / Not Applicable. I am
aware that the elections indicated above became irrevocable as of my required beginning date and will apply to
the SEP-IRA with the new Custodian indicated below.
</TABLE>
THIS FORM, ALONG WITH ALL CHECK(S) SHOULD BE MAILED TO: GT GLOBAL INVESTOR
SERVICES, INC. (AS AGENT FOR THE CUSTODIAN), P.O. BOX 7345, SAN FRANCISCO, CA
94120-7345.
<TABLE>
<S> <C> <C>
X
- ---------------------------------------- ---------------------------------------- ----------------------------------------
Investor's Signature Date Signature Guarantee
(if required by current Custodian)
</TABLE>
* If this IRA currently holds shares of a GT Global Fund, you may request a
direct transfer of shares.
FOR GT GLOBAL USE ONLY
GT Global Investor Services, Inc. (as agent for the GT Global IRA Custodian)
agrees to accept the transfer described above and upon written receipt will
apply the proceeds to investments as designated by the Investor.
X_______________________________ _____________________________________________
Signature of Custodian or its
Agent Date
DS-19
<PAGE>
DS-20
<PAGE>
<TABLE>
<S> <C>
logo GT Global Funds
P.O. Box 7345, San Francisco, CA 94120-7345 IRA DIRECT ROLLOVER AUTHORIZATION
800/223-2138
</TABLE>
TO CURRENT PLAN ADMINISTRATOR OR 403(B) CUSTODIAN:
Name of Current Plan Administrator or 403(b) Custodian:_____________ Telephone
_(________)___________________________________________________________________
Address:_______________________ ______________________ ___________ ___________
Street City State Zip Code
Plan Account:_________________________________________________________________
Plan Account Name Plan Account Number Name of Plan
Participant
Please pay my entire eligible rollover distribution from the plan identified
above directly to my GT Global SEP-IRA Custodian, for
__________________________, IRA Account #_____________________________________
Participant Name (GT Global Account
#, if known)
I. ROLLOVER/DIRECT ROLLOVER FROM AN EMPLOYER PLAN
<TABLE>
<S> <C> <C>
A. I certify that my employer's qualified plan, qualified annuity, or 403(b) plan has made or will make an Eligible
Rollover Distribution which is being paid in a Direct Rollover to the Custodian of my SEP-IRA.
B. This Direct Rollover is not part of a series of payments over my life or life expectancy(ies ) or over a period of
10 years or more.
C. This Direct Rollover does not include any "after tax" employee contributions made by me to the employer's plan.
D. This Direct Rollover does not include any required minimum distributions with respect to the employer's plan.
E. I certify that I am eligible to establish an IRA with this Direct Rollover of an Eligible Rollover Distribution,
and that I am:
/ / 1. the plan participant;
/ / 2. the surviving spouse of the deceased plan participant; or
/ / 3. the spouse or former spouse of the plan participant under a Qualified Domestic Relations Order.
</TABLE>
II. ADDITIONAL INFORMATION FOR ROLLOVERS BEGINNING AT AGE 70 1/2
(Complete the following only if the direct rollover is being made after the
Participant's required beginning date, the April 1st following the calendar
year during which the Participant attained age 70 1/2):
<TABLE>
<S> <C> <C>
1. My oldest primary beneficiary under the distribution plan is: --------------------------
Birthdate --------------------- Relationship ---------------------
2. My life expectancy / / was / / was not being recalculated. The life expectancy of my spouse beneficiary / / was / /
was not being recalculated.
</TABLE>
III. COMMINGLING AUTHORIZATION
(Check if applicable):
/ / I authorize the Custodian to commingle this direct rollover with my
regular IRA contributions. I understand that commingling regular IRA
contributions with direct rollover contributions from employer plans may
preclude me from rolling over funds in my rollover IRA into another
qualified plan or 403(b) plan. With such knowledge, I authorize and direct
the Custodian to place regular IRA contributions in my rollover IRA or
vice versa.
Please make this direct payment either in the form of a check made payable, or
by wire, to GT Global Investor Services, Inc., for the benefit of my SEP-IRA.
All checks should be mailed to GT Global Investor Services, Inc., (as agent
for the Custodian), P.O. Box 7345, San Francisco, CA 94120-7345.
SIGNATURE OF PARTICIPANT
I hereby irrevocably elect, pursuant to IRS Regulation 1.402(a)(5)-1T, to
treat this contribution as a rollover contribution. I understand that this
will not be a valid IRA rollover unless PART I and PART II (and, if
applicable, PART III) are correct statements. I acknowledge that, due to the
complexities involved in the tax treatment of eligible rollover distributions
from qualified plans, qualified annuities, or 403(b) plans and direct
rollovers to IRAs, the Custodian has recommended that I consult with my tax
adviser or the Internal Revenue Service before completing this transaction to
make certain that this transaction qualifies as a rollover and is appropriate
in my individual circumstances. I hereby release the Custodian from any claim
for damages on account of the failure of this transaction to qualify as a
valid rollover.
<TABLE>
<S> <C> <C>
X
- -------------------------------------------------- -------------------- --------------------------------------------------
Participant's Signature Date Signature Guarantee (if required by current plan)
</TABLE>
FOR GT GLOBAL USE ONLY
GT Global Investor Services, Inc. (as agent for the GT Global SEP-IRA
Custodian) agrees to accept the direct rollover described above and upon
receipt of such rollover funds will apply those funds to investments as
designated by the Participant.
X_______________________________ _____________________________________________
Signature of Custodian or its
Agent Date
DS-21
<PAGE>
IRA DIRECT ROLLOVER INSTRUCTIONS
Since the eligible rollover distributions(1) that you take from an
employer-sponsored qualified plan(2) are subject to 20% federal income tax
withholding unless you roll over these assets directly to an IRA or other
eligible retirement plan, you may wish to arrange for a direct rollover to a GT
Global SEP-IRA.
TO FACILITATE A DIRECT ROLLOVER TO A GT GLOBAL SEP-IRA, PLEASE FOLLOW THESE
STEPS:
1. Complete the front portion of this form;
2. Complete the GT Global SEP-IRA Application; and
3. Return them to GT Global Investor Services, Inc. at P.O. Box 7345, San
Francisco, CA 94120-7345.
GT Global Investor Services, Inc. will establish a SEP-IRA in your name, and
provide you and your current plan administrator or 403(b) custodian with your GT
Global SEP-IRA account number. Your current plan administrator or 403(b)
custodian can then send the assets directly to your GT Global SEP-IRA (by check
or wire), or give you a check made payable to your GT Global SEP-IRA.
(1) An "eligible rollover distribution" subject to 20% withholding is generally
any partial or total distribution, except: (a) substantially equal periodic
payments made for life or joint lives (or life expectancy or joint life
expectancies) or for a specified period of 10 years or more; (b) required
minimum distributions; (c) non-taxable distributions (e.g., after-tax
contributions); and (d) certain DE MINIMIS distributions, corrective
distributions, loans and other distributions specified in the Internal
Revenue Code and applicable regulations. You should verify with the
distributing employer and your tax adviser whether a distribution is an
"eligible rollover distribution."
(2) "Qualified" plans include 401(k), 403(b) and other pension and
profit-sharing plans. Section 457 deferred compensation plans for
government and tax-exempt entity employees are not "qualified." An IRA is
not considered a "qualified" plan, even if the assets held in the IRA
originated from a qualified plan. You may use the IRA Transfer
Authorization to transfer your IRA assets to a GT Global IRA. If you
receive a distribution from another IRA, you may be eligible to roll it
over to a GT Global SEP-IRA.
DS-22
<PAGE>
<TABLE>
<S> <C>
logo GT Global Funds SUPPLEMENTAL APPLICATION
P.O. Box 7345, San Francisco, CA 94120-7345 FOR AUTOMATIC INVESTMENT PLAN
800/223-2138
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION
PLEASE NOTE: Automatic Investment Plan may ONLY be used for current year IRA contributions.
Please supply the following information exactly as it appears on the Fund's records.
- ------------------------------------------------------------ ------------------------------------------------------------
Name Account Number
- ------------------------------------------------------------ ------------------------------------------------------------
Address Telephone Number
- ------------------------------------------------------------ ------------------------------------------------------------
City State Zip Code Social Security Number
------------------------------------
AUTOMATIC INVESTMENT PLAN Date of Birth
I hereby authorize the Transfer Agent of the GT Global Funds to debit my personal checking account on the designated dates
in order to purchase shares in the Fund(s) indicated at the applicable public offering price determined on that day.
Please indicate if your purchase is for / / Class A Shares, / / Class B Shares or / / Class C Shares (New Dimension Fund
only).
Fund: ------------------------- $ ---------- or ---% Fund: ------------------------- $ ---------- or -----%
Fund: ------------------------- $ ---------- or ---% Fund: ------------------------- $ ---------- or -----%
Fund: ------------------------- $ ---------- or ---% Fund: ------------------------- $ ---------- or -----%
/ / Monthly on the 25th day / / Quarterly beginning on the 25th day of the month you first select: -------------
(MONTH)
(The request for participation in the Plan must be received by the 1st day of the month in which you wish investments to
begin.)
Amount of each debit (minimum $100) $ -----------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan
Application.
</TABLE>
<TABLE>
<S> <C> <C>
BANK AUTHORIZATION
</TABLE>
<TABLE>
<S> <C> <C>
- -------------------- ------------------------------------ ------------
Bank Name Bank Address Bank Account Number
</TABLE>
<TABLE>
<S> <C> <C> <C>
AGREEMENT AND SIGNATURES
IF YOU HAVE SELECTED A SPECIAL INVESTMENT OPTION, PLEASE COMPLETE THE SECTION BELOW.
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions
contained herein will continue until the Transfer Agent of the GT Global Funds receives written notice of any
change or revocation. Any change in these instructions must be in writing with all signatures guaranteed (if
applicable).
- -------------------------------------------------
Date
X X
- ------------------------------------------------- ------------------------------------------------------
Signature Signature
- ------------------------------------------------- ------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ------------------------------------------------- ------------------------------------------------------
Signature Signature
- ------------------------------------------------- ------------------------------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust company; (3) a member firm of a U.S.
stock exchange; (4) a foreign branch of any of the foregoing; or (5) any other eligible guarantor institution.
A notary public is NOT an acceptable guarantor. An investor with questions concerning the GT Global Funds
signature guarantee requirement should contact the Transfer Agent.
</TABLE>
DS-23
<PAGE>
DS-24
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Funds
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
San Francisco, CA 94111-4624
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION EXISTING
SHAREHOLDER ACCOUNT NUMBER
</TABLE>
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies)
and date of trust instrument. Registration for Uniform Gifts/Transfers to
Minors accounts should be in the same name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C> <C>
--------------------------------------
Owner Social Security Number / / or Taxpayer Identification Number ("TIN") / /
- -------------------------------------- (Check applicable box)
Co-owner 1 If more than one owner, social security number or TIN should be provided for first
- -------------------------------------- owner listed. If a purchase is made under Uniform Gift/Transfer to Minors Act, social
Co-owner 2 security number of the minor must be provided.
-------------------------------------- Resident of / / U.S. / / Other (specify)------------------------------
Street Address Failure to provide TIN will result in 31% withholding on redemptions and exchanges.
( ) ( )
------------------------------------------------------------------------------------------------------------------------------
City, State, Zip Code Home Telephone Business Telephone
</TABLE>
FUND SELECTION $500 MINIMUM INITIAL INVESTMENT REQUIRED FOR EACH FUND SELECTED
FOR CLASS A AND CLASS B SHARES.
CHECKS SHOULD BE MADE PAYABLE TO "GT GLOBAL INVESTOR
SERVICES, INC."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A
Shares / / Class B Shares or / / Advisor Class Shares
If a class share box is not checked, your investment will be made in Class A
shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per Fund.
<TABLE>
<S> <C> <C> <C> <C>
07 / / GT GLOBAL WORLDWIDE GROWTH FUND ---------- 03 / / GT GLOBAL EUROPE GROWTH FUND ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND ----------
16 / / GT GLOBAL EMERGING MARKETS FUND ---------- 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH ----------
FUND
26 / / GT GLOBAL DEVELOPING MARKETS FUND ---------- 06 / / GT GLOBAL AMERICA MID CAP GROWTH FUND ----------
25 / / GT GLOBAL NEW DIMENSION FUND ---------- 23 / / GT GLOBAL AMERICA VALUE FUND ----------
11 / / GT GLOBAL HEALTH CARE FUND ---------- 04 / / GT GLOBAL JAPAN GROWTH FUND ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND ---------- 10 / / GT GLOBAL GROWTH & INCOME FUND ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND ---------- 09 / / GT GLOBAL GOVERNMENT INCOME FUND ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND ---------- 08 / / GT GLOBAL STRATEGIC INCOME FUND ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND ---------- 18 / / GT GLOBAL HIGH INCOME FUND ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 01 / / GT GLOBAL DOLLAR FUND ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND ---------- Total percentage must equal 100%.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Rebalance frequency -- check one: / / Monthly / / Quarterly / / Semi annually / / Annually
</TABLE>
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains distributions and dividends will be reinvested in additional
shares of the same class unless appropriate boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in
cash / / Pay capital gain distributions and dividends in cash.
Investment will be split according to allocation.
<TABLE>
<S> <C>
AGREEMENTS & SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Funds receives written notice of any change or revocation. ANY CHANGE
IN THESE INSTRUCTIONS MUST BE SIGNED IN WRITING.
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
</TABLE>
DS-25
<PAGE>
DS-26
<PAGE>
--------------------
GT GLOBAL SEP-IRA
NOTES
- --------------------------------------------------------------------------------
-------
DS-27
<PAGE>
--------------------
GT GLOBAL SEP-IRA
NOTES
- --------------------------------------------------------------------------------
January 1998 SEPQA712005M
-------
DS-28
<PAGE>
-----------------------
QUESTIONS AND ANSWERS
- ----------------------------------------------------------
Q. AM I ELIGIBLE FOR A ROTH IRA?
A. Any individual who receives earned income from employment (including
self-employment) and whose income is below certain levels can contribute to a
Roth IRA.
Q. HOW MUCH CAN I CONTRIBUTE?
A. You can contribute up to $2,000 (or 100% of compensation, whichever is
less) per year to any combination of traditional IRAs and Roth IRAs. If you are
married, your spouse (whether or not employed) can also contribute up to $2,000
each year to any combination of his or her own IRAs and Roth IRAs, provided that
the total amount contributed by both of you to traditional IRAs and Roth IRAs
does not exceed your combined compensation.
If you are single, the $2,000 maximum contribution will be reduced if your
modified adjusted gross income ("AGI") exceeds $95,000 and will be eliminated if
your modified AGI exceeds $110,000. If you are married and file a joint tax
return, the $2,000 maximum contribution will be reduced if the combined modified
AGI of you and your spouse exceeds $150,000 and will be eliminated if your
modified AGI exceeds $160,000. If you are married and file separately, you will
be treated as a single taxpayer provided that you do not live with your spouse
at any time during the year. If you are married and file separately and you live
with your spouse at any time during the year, the $2,000 maximum contribution
will be reduced at any modified AGI level and will be eliminated if your
modified AGI exceeds $10,000.
Q. WHEN MUST I MAKE MY CONTRIBUTION?
A. You can make a contribution for each tax year any time between January 1 of
that year and April 15 of the following year. (If you make a contribution after
December 31 that you wish to be considered as a contribution for the prior year,
you will need to so designate in writing.) You are not required to make a
contribution every year, but you cannot over-contribute in any year to make up
for a year for which you did not contribute at all or made only a partial
contribution.
Q. ARE MY ROTH IRA CONTRIBUTIONS TAX-DEDUCTIBLE?
A. No. All contributions to your Roth IRA are made on an after-tax basis, and
none of your contributions are tax deductible.
Q. WHEN CAN I WITHDRAW MONEY FROM MY ROTH IRA?
A. You can withdraw all or part of your money at any time. However, for the
year the withdrawals are made, you will be subject to ordinary income tax on
withdrawals of earnings on your contributions UNLESS the withdrawals are made
(i) after you attain age 59 1/2 or become disabled, or for certain first home
purchases and (ii) after the 5-taxable year period beginning with the first
taxable year for which you or your spouse made a contribution to a Roth IRA (or,
for distributions allocable to a rollover or conversion from a traditional IRA,
in which the rollover or conversion was made). If your withdrawal is taxable and
occurs before you attain age 59 1/2, you may also be subject to a 10% federal
penalty on early withdrawals.
Generally, withdrawals of amounts representing contributions to a Roth IRA are
not taxable. For this purpose, withdrawals from a Roth IRA are deemed to be
attributable to contributions rather than earnings until all contributions have
been withdrawn. Unlike with traditional IRAs, you are not required to begin
withdrawing money from your Roth IRA when you attain age 70 1/2.
[LOGO]
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1
<PAGE>
-----------------------
GT GLOBAL ROTH IRA
Q. CAN I CONSOLIDATE MY OTHER IRA ASSETS WITH THE ASSETS IN MY GT GLOBAL ROTH
IRA?
A. Generally, all of your Roth IRAs can be consolidated by using either a Roth
IRA Transfer or a Roth IRA Rollover. In addition, you may rollover distributions
from a traditional IRA to a GT Global Roth IRA (or you may convert any
traditional IRA to a GT Global Roth IRA) if your adjusted gross income in the
year of rollover or conversion is $100,000 or less. The amount rolled over or
converted will be included in your gross income for the tax year in which the
rollover or conversion occurred; however, if you rollover a distribution from or
convert a traditional IRA to a Roth IRA on or before December 31, 1998, the
amount includible in your gross income will be spread out ratably over 1998
through 2001, rather than includible all in 1998.
Q. WHAT IS THE DIFFERENCE BETWEEN A ROTH IRA TRANSFER AND A ROTH IRA ROLLOVER?
A. A Roth IRA Transfer moves your Roth IRA assets directly from one financial
institution to another. You may, for instance, consolidate your Roth IRA at GT
Global by transferring Roth IRA assets from a bank, trust company, insurance
company or mutual fund; your current custodian will liquidate your Roth IRA
assets (if not currently held in GT Global Funds) and send the check directly to
GT Global.
A Roth IRA Rollover reinvests traditional IRA or Roth IRA assets distributed
to you. With a rollover you can take receipt of your IRA assets for up to 60
days before reinvesting them (please note that you must reinvest your IRA assets
within 60 days to maintain their tax-deferred status). You may do only one
rollover between traditional IRAs or between Roth IRAs in any 12-month period. A
rollover from a traditional IRA to a Roth IRA is not subject to the one-
rollover-per-year limit, and there is no restriction on the number of Roth IRA
Transfers you effect in a year.
If you rollover assets distributed from a traditional IRA and also have made
or plan to make a regular Roth IRA contribution for the same tax year, you may
wish to roll the IRA assets into a separate Roth Conversion IRA and use a
regular Roth IRA for your regular contributions.
Q. I AM ELIGIBLE TO RECEIVE A DISTRIBUTION FROM AN EMPLOYER-SPONSORED PLAN.
CAN I ROLL IT OVER TO A ROTH IRA AND KEEP IT TAX-DEFERRED?
A. No. A distribution from an employer-sponsored plan may be rolled over to a
traditional IRA, but not to a Roth IRA.
Q. WHAT FORMS OR REPORTS DO I FILE FOR MY ROTH IRA CONTRIBUTIONS?
A. If you make contributions to your Roth IRA, you must file Form 8606 with
the IRS (and you should keep copies of all IRS Forms 8606 that you file).
You do not report any interest income, dividends or capital gains or losses
that occur in your Roth IRA.
Q. WHAT FORMS OR REPORTS DOES GT GLOBAL FILE FOR MY ROTH IRA?
A. GT Global will report to the IRS: your annual contributions, if any; your
rollover contributions and the market value of your Roth IRA at December 31 of
each year (Form 5498); and any distributions (Form 1099R).
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2
<PAGE>
-----------------------
[LOGO]
GT GLOBAL ROTH
INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT AND APPLICATION
- --------------------------------------------------------------------------------
- --------------------------------------------
1. GENERAL
- --------------------------------------------
Internal Revenue Service Regulations require that you be given this Disclosure
Statement for the purpose of informing you of the restrictions and limitations
on how you may use a Roth Individual Retirement Account (IRA). Please read this
Disclosure Statement together with the Custodial Agreement and the
prospectus(es) for the GT Global Fund(s) in which you are investing. The
provisions of the Custodial Agreement and prospectus(es) must prevail over this
statement in any instance where the statement is incomplete or appears to be in
conflict.
- --------------------------------------------
2. IRREVOCABILITY OF ACCOUNT
- --------------------------------------------
The Internal Revenue Service requires that you receive this disclosure
statement at least 7 days prior to the establishment of your Roth IRA. Because
of this requirement, your application will not be accepted by the Custodian
until at least 7 days after the date you received this disclosure statement, as
indicated by you in the Roth IRA Custodial Agreement. Prior to such acceptance,
you may receive back the entire amount that you have contributed, without
reduction for fees or other expenses. You may request that your contribution be
returned to you by writing to GT Global Investor Services, Inc. (agent for the
Custodian), P.O. Box 7345, San Francisco, CA 94120-7345 or by calling GT Global
Investor Services, Inc. toll free at (800) 223-2138 within 7 days of the date
you have signed the Custodial Agreement. All telephone requests must be
confirmed in writing. Once your application for a GT Global Roth IRA is accepted
by the Custodian, it cannot be revoked by you.
- --------------------------------------------
3. ELIGIBLE INDIVIDUAL
- --------------------------------------------
Generally, you may open a Roth IRA at any time (provided your adjusted gross
income does not exceed certain levels). Unlike a traditional IRA, you may
contribute to a Roth IRA even if you have attained age 70 1/2.
- --------------------------------------------
4. YOUR ROTH IRA ACCOUNT
- --------------------------------------------
A Roth IRA is a trust or custodial account created or organized in the United
States for your exclusive benefit or for the benefit of your beneficiaries. The
Roth IRA must be created by written instrument that meets the following
requirements:
(1) The trustee or custodian must be a bank, federally insured credit union,
savings and loan association, or (under federal regulations) another person
eligible to act as trustee or custodian.
(2) Except for rollovers and transfers, under applicable law, the trustee or
custodian will not accept contributions of more than $2,000 in any tax year. You
may make rollover and transfer contributions in amounts greater than $2,000. All
contributions must be in cash except for rollovers and transfers which may, in
the discretion of the trustee or custodian, be made in kind.
(3) Your interest in the Roth IRA is nonforfeitable; that is, it is fully
vested at all times.
(4) No part of the trust or custodial funds may be invested in life insurance
contracts or certain collectibles nor may the assets be commingled with other
property except in a common trust fund or common investment fund.
(5) If you die before the total amount in your Roth IRA has been distributed
(or if your surviving spouse, as your beneficiary, dies before distributions
have begun), any interest remaining must, by December 31 of the calendar year
which contains the fifth anniversary of your death (or the death of your
surviving spouse), be distributed in a single sum. However, if your (or your
surviving spouse's) designated beneficiary wishes to receive payments over the
beneficiary's life or over a specific period not exceeding the beneficiary's
life expectancy, the beneficiary must elect to receive such payments by December
31 following the calendar year of your death. Such payments also must begin by
that date. If your designated beneficiary is your spouse, payments
-------
DS-1
<PAGE>
-----------------------
GT GLOBAL ROTH IRA
need not commence until December 31 of the year you would have attained 70 1/2
and your spouse may make additional contributions or rollovers in his or her own
name to the IRA.
(6) If your surviving spouse is your designated beneficiary, your Roth IRA
assets may be rolled over into his or her own Roth IRA. No rollover from your
Roth IRA is available for a beneficiary other than your surviving spouse.
- --------------------------------------------
5. CONTRIBUTIONS
- --------------------------------------------
MAXIMUM AMOUNT OF CONTRIBUTIONS
The maximum amount that you may contribute to any combination of traditional
IRAs and Roth IRAs is $2,000 per year or 100% of your compensation, whichever is
less. If you are married, your spouse, whether or not employed, can also
contribute up to $2,000 each year to any combination of traditional IRAs and
Roth IRAs, provided that the total amount contributed to any combination of
traditional IRAs and Roth IRAs by you and your spouse for any year may not
exceed your combined compensation.
The maximum contribution will be reduced if your modified adjusted gross
income (AGI) (or, if you are married, the combined AGI of you and your spouse)
exceeds certain levels. Your tax return will show you how to calculate your AGI,
which, for purposes of determining the maximum amount of your Roth IRA
contributions, is calculated without taking into account any foreign earned
income or foreign housing exclusion or any excludable series EE savings bond
interest. Your AGI will include any deduction you take with respect to your
contributions to a traditional IRA. If you are at or below a certain AGI level,
called the Threshold Level, you can make the maximum contribution to your Roth
IRA.
If you are single (or if you are married, file separately and live apart from
your spouse during the entire year), your Threshold AGI Level is $95,000. The
Threshold Level if you are married and file a joint tax return is $150,000. If
you are married and live together but file a separate tax return, the Threshold
Level is $0.
If your AGI is $15,000 or more above your Threshold Level ($10,000 in the case
of a joint return), you will not be able to make any contribution to a Roth IRA.
If your AGI is less than $15,000 above your Threshold Level ($10,000 in the case
of a joint return), you will still be able to make a contribution, but it will
be limited in amount. The amount by which your AGI exceeds your Threshold Level
(AGI-Threshold Level) is called your Excess AGI. The maximum allowable
contribution ($2,000) is called your Maximum Contribution. You can calculate
your contribution limit as follows:
<TABLE>
<S> <C> <C> <C> <C>
IF YOU FILE
SEPARATELY:
$15,000-EXCESS AGI MAXIMUM
- ------------------- X CONTRIBUTION = CONTRIBUTION LIMIT
$15,000
IF YOU FILE JOINTLY:
$10,000-EXCESS AGI MAXIMUM
- ------------------- X CONTRIBUTION = CONTRIBUTION LIMIT
$10,000
</TABLE>
You must round the result to the next highest $10 level (the next highest
number which ends in zero). For example, if the result is $1,525, you must round
it up to $1,530. If the final result is below $200 but above zero, your
Contribution Limit is $200. Your Contribution Limit cannot, in any event, exceed
100% of your compensation.
EXAMPLE 1: Ms. Smith, a single person, has AGI of $103,619. She calculates her
Contribution Limit as follows:
HER AGI IS $103,619.
HER THRESHOLD LEVEL IS $95,000.
HER EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($103,619-$95,000) = $8,619.
HER MAXIMUM CONTRIBUTION IS $2,000.
SO, HER CONTRIBUTION LIMIT IS:
<TABLE>
<S> <C> <C> <C> <C>
$15,000-$8,619
- --------------- X $2,000 = $851 (ROUNDED TO $860)
$15,000
</TABLE>
EXAMPLE 2: Mr. and Mrs. Young file a joint tax return. Each spouse earns more
than $2,000, and they have a combined AGI of $154,255. They may each contribute
to a Roth IRA and calculate their contributions to each Roth IRA as follows:
THEIR AGI IS $154,255.
THEIR THRESHOLD LEVEL IS $150,000.
THEIR EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($154,255-$150,000) = $4,255.
THE MAXIMUM DEDUCTION FOR EACH SPOUSE IS
$2,000.
SO, EACH SPOUSE MAY COMPUTE HIS OR HER ROTH IRA CONTRIBUTION LIMIT AS FOLLOWS:
<TABLE>
<S> <C> <C> <C> <C>
$10,000-$4,255
- --------------- X $2,000 = $1,149 (ROUNDED TO
$10,000 $1,150)
</TABLE>
The same result is achieved in this example even if one of the spouses did not
have any compensation income for the year as long as the spouse earning
compensation income for the year earned at least the amount contributed to both
Roth IRAs.
-------
DS-2
<PAGE>
-----------------------
GT GLOBAL ROTH IRA
EXAMPLE 3: Mr. Jones, a married person, files a separate tax return and lived
with Mrs. Jones during the year. He has $1,500 of compensation and wishes to
make a contribution to a Roth IRA.
HIS AGI IS $1,500.
HIS THRESHOLD LEVEL IS $0.
HIS EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($1,500-$0) = $1,500.
HIS MAXIMUM CONTRIBUTION IS $2,000.
SO, HIS CONTRIBUTION LIMIT IS:
<TABLE>
<C> <S>
$15,000-$1,500
- --------------- X $2,000 = $1,800
$15,000
</TABLE>
Even through his Roth IRA contribution limit under the formula is $1,800, Mr.
Jones may not contribute an amount in excess of his compensation, so his actual
contribution is limited to $1,500.
EXAMPLE 4: If, in example 2, the Youngs filed separate tax returns and lived
together during the year, and Mr. Young's AGI is $21,000, his Contribution Limit
is calculated as follows:
HIS AGI IS $21,000.
HIS THRESHOLD LEVEL IS $0.
HIS EXCESS AGI IS (AGI-THRESHOLD LEVEL) OR
($21,000-$0) = $21,000.
HIS MAXIMUM CONTRIBUTION IS $2,000.
SO, HIS CONTRIBUTION LIMIT IS:
<TABLE>
<C> <S>
$15,000-$21,000
- ---------------- X $2,000 = $0
$15,000
</TABLE>
Mr. Young would not be entitled to make any Roth IRA contribution under these
circumstances.
EXAMPLE 5: If, in example 4, Mr. and Mrs. Young lived apart the entire year,
Mr. Young would determine his Contribution Limit under the rules applicable to
single persons. Accordingly, Mr. Young's Contribution Limit would be the full
amount of his Maximum Contribution ($2,000).
TAX EFFECT OF CONTRIBUTIONS
All contributions to your Roth IRA (and, if applicable, your spouse's Roth
IRA) are made on an after-tax basis and are not tax deductible.
- --------------------------------------------
6. TAX-FREE TRANSFER CONTRIBUTIONS
- --------------------------------------------
Transfers allow you to transfer Roth IRA assets directly from one Roth IRA
trustee or custodian to another on a tax-free basis. If you already have a Roth
IRA with another trustee or custodian, you may direct that trustee or custodian
to transfer your Roth IRA assets to your GT Global Roth IRA without tax
consequences, in accordance with the rules of your existing account. To
authorize the GT Global Roth IRA Custodian to arrange a direct transfer from
your existing Roth IRA, please complete the attached Roth IRA Transfer
Authorization as well as the Roth IRA Application.
- --------------------------------------------
7. TAX-FREE ROLLOVER CONTRIBUTIONS
- --------------------------------------------
Rollover contributions permit you to contribute amounts you receive from one
Roth IRA to another Roth IRA without incurring any income tax liability. Most
distributions from a Roth IRA may be rolled over to another Roth IRA without
regard to whether it is a total or a partial distribution, except for certain
distributions such as those in the form of annuity payments, installments over a
period of ten or more years, and certain payments to non-spouse beneficiaries
that are not eligible for rollover treatment. All or part of an eligible
distribution from another Roth IRA may be rolled over into a GT Global Roth IRA
by the 60th day after you receive the benefits from your first Roth IRA.
You will not be taxed on the amount you roll over. You will be taxed on the
portion of the distribution attributable to earnings on your contributions, if
any, which is otherwise taxable and not reinvested within 60 days. The following
summarizes some of the other rules applicable to rollover contributions.
Rollovers between Roth IRAs may occur only once in any 12-month period, BUT
THIS LIMIT DOES NOT APPLY TO A TRUSTEE-TO-TRUSTEE TRANSFER DESCRIBED IN SECTION
6 ABOVE.
If property has been received from a Roth IRA, it may be sold and the proceeds
of the sale rolled over. For example, if you were to receive a distribution
consisting of stock, you could sell the stock and contribute the money you
received from the sale to your Roth IRA within the 60-day period from your
receipt of the stock. If you did not contribute all of the money you received
from the sale, you would be taxed on the portion not rolled over and that is
attributable to earnings on your contributions.
Since many of the rules with respect to rollover situations are rather
complex, you should check with your own tax adviser as to your ability to effect
a rollover in your particular circumstances.
- --------------------------------------------
8. ROLLOVERS FROM TRADITIONAL IRAS
- --------------------------------------------
You may rollover a distribution from a traditional IRA to a Roth IRA or
convert a traditional IRA into a Roth IRA if, in the year of the rollover or
conversion, your AGI is $100,000 or less. Such a rollover or conversion does not
count toward the one-rollover-per-year limit. You are subject to income tax (but
no penalty tax) on
-------
DS-3
<PAGE>
-----------------------
GT GLOBAL ROTH IRA
the amount that would have been included in your gross income had it been
distributed from the IRA and not rolled over or converted. Generally, this
amount is includible in your gross income in the year of the rollover or
conversion; however, for rollovers and conversions in 1998, the taxable amount
is included in your gross income ratably over the four-year period beginning
with 1998.
You may wish to establish a separate, specially designated Roth Conversion IRA
to hold only the rollovers and conversions you make in a particular year. Doing
so may make it easier to identify the funds to which subsequent distributions
from the Roth IRA are allocable. There is no limit on the number of Roth
Conversion IRAs that you may have. You should check with your own tax adviser as
to your eligibility to make a rollover from or a conversion of a traditional IRA
and the impact of doing so in your particular circumstances.
EXAMPLE: Mrs. Johnson is 50 years old and has a traditional IRA with assets of
$60,000. Mrs. Johnson's AGI is $35,000. If Mrs. Johnson were to receive a
distribution of the balance of her traditional IRA, it would all be taxable to
her in the year of distribution. If, however, Mrs. Johnson in 1998 receives a
total distribution from her traditional IRA and rolls it over into a Roth
Conversion IRA, or if she converts her traditional IRA into a Roth Conversion
IRA, she would include $15,000 in her gross income in 1998 and each of the next
three years. If, instead, Mrs. Johnson makes the rollover or conversion after
1998, she would include the entire $60,000 in her gross income for that year.
- --------------------------------------------
9. EXCESS CONTRIBUTIONS
- --------------------------------------------
Generally, an excess contribution is the amount of any contributions to your
Roth IRA (other than a proper rollover or transfer contribution) for a taxable
year that exceeds your Roth IRA contribution limit for that year. If you make an
excess contribution, you may be subject to a 6% excise tax on the amount of the
excess contribution.
The 6% excise tax is imposed with respect to the tax year for which the excess
contribution is made and for each later year until the excess amount is
eliminated. The amount of this excise tax for any year cannot exceed 6% of the
value of the account, determined as of the close of that tax year.
If you make a contribution to your Roth IRA for a taxable year which exceeds
your Roth IRA contribution limit, you may withdraw the contribution from your
Roth IRA and the earnings thereon at any time prior to the due date for filing
your Federal income tax return, including extensions, for the taxable year for
which the contribution was made. If this is done, the return of the contribution
will not be includible in your gross income as an Roth IRA distribution, and the
contribution will not be subject to the 6% excise tax on excess contributions.
However, the earnings on the contribution will be taxable income in the year for
which the contribution was made, and may possibly be subject to the 10% tax on
early distributions if you are under age 59 1/2 (see Section 11 below).
You may also eliminate an excess contribution from your Roth IRA in a
subsequent year by not contributing the maximum amount for that year and
applying the excess contribution to the subsequent year's contribution.
- --------------------------------------------
10. DISTRIBUTIONS
- --------------------------------------------
Distributions from your Roth IRA that are deemed to be attributable to your
contributions are not subject to Federal income tax in the year of distribution.
Distributions from your Roth IRA that are attributable to earnings on your
contributions are generally not subject to federal income tax provided that (i)
the distribution is received after the five-taxable-year period beginning with
the first taxable year for which you or your spouse made a contribution to a
Roth IRA (or, for distributions allocable to a rollover or conversion from a
traditional IRA, in which the rollover or conversion was made), and (ii) the
distribution is (A) made on or after the date on which you attain age 59 1/2,
(B) made to your designated beneficiary or to your estate on or after your
death, (C) attributable to your disability, or (D) used to pay certain qualified
acquisition costs with respect to a principal residence of your first home (or
the first home of certain of your family members). For this purpose,
distributions from your Roth IRA are deemed to be distributions of contributions
rather than distributions of earnings until all contributions under the Roth IRA
have been distributed. Any amounts distributed that are treated as taxable will
be taxed as ordinary income. They are not eligible for capital gains treatment
or the special five-year averaging rules that apply (for tax years beginning
prior to 2000) to lump sum distributions from qualified employer plans.
As provided in your Roth IRA Custodial Agreement you may elect to have your
Roth IRA distributed in: a single sum payment; the form of an annuity; or equal
annual installments over a specified period not to exceed your life expectancy
or the joint life and last survivor
-------
DS-4
<PAGE>
-----------------------
GT GLOBAL ROTH IRA
expectancy of you and your designated beneficiary. If you die before your Roth
IRA is completely distributed to you, the remaining balance in your Roth IRA
will be distributed to your beneficiary(ies) either in accordance with the
method of distribution in effect at your death (if on or after distribution had
begun) or as otherwise permitted (if your death occurs prior to the commencement
of distributions).
- --------------------------------------------
11. PREMATURE DISTRIBUTIONS
- --------------------------------------------
A penalty tax of 10% is imposed on taxable distributions made to you or your
beneficiaries before you attain age 59 1/2. No penalty tax will be imposed if
the distribution is (i) a return of nondeductible contributions, (ii) made on
account of your death or disability, (iii) made in substantially equal payments
over life or life expectancy as permitted in accordance with the provisions of
Section 72(t)(2) of the Code and the regulations promulgated thereunder, (iv)
contributed to another Roth IRA as a "rollover" within 60 days, or (v) less than
the amount of certain qualified higher education expenses incurred by you or
certain of your family members. In addition, the penalty tax does not apply if
the distribution is made (i) to pay for medical expenses in excess of 7.5% of
your adjusted gross income or (ii) if you are unemployed, to pay for medical
insurance premiums after you have received unemployment compensation for a
specified period. This tax is in addition to any tax that is due because you
must include the portion of the premature distribution attributable to taxable
earnings in your gross income.
- --------------------------------------------
12. TAXABILITY OF ACCOUNT
- --------------------------------------------
Your Roth IRA is exempt from tax unless you or your beneficiaries engage in a
prohibited transaction under Section 4975 of the Internal Revenue Code. Examples
of prohibited transactions include your borrowing from the Roth IRA or your
selling property to or buying property from the Roth IRA.
If you engage in a prohibited transaction, your Roth IRA will lose its
tax-exempt status as of the first day of the tax year in which the prohibited
transaction occurs. Once your Roth IRA loses its exempt status, you must include
in your income for that tax year the portion of the IRA's assets attributable to
taxable earnings. You will also be subject to the 10% penalty tax on premature
distributions.
If you use your Roth IRA or any portion thereof as security for a loan, the
portion so used will be treated as distributed to you and the amount
attributable to taxable earnings will be currently taxable and subject to the
10% tax on premature distributions.
- --------------------------------------------
13. FINANCIAL DISCLOSURES
- --------------------------------------------
Contributions to your Roth IRA will be invested in shares of a GT Global
Mutual Fund. You may receive earnings on your shares in the form of income
dividends or net realized capital gain distributions. Such earnings will be
reinvested in additional shares of a GT Global Fund. The growth in value of the
Roth IRA is neither guaranteed nor projected. The gross income received by a GT
Global Fund is reduced by the fees paid to the manager of the Fund, Chancellor
LGT Asset Management, Inc., and by expenses incurred by the Fund, such as
accounting fees, taxes, interest, trustee fees and brokerage charges. Each
Fund's prospectus contains more complete information including charges,
expenses, the risks of global investing and other matters of interest to a
prospective investor.
- --------------------------------------------
14. MISCELLANEOUS
- --------------------------------------------
You are required to file Form 5329 (Return for Individual Retirement Savings
Arrangements) for a taxable year in which you are subject to penalty taxes in
connection with your IRA.
The enclosed Roth IRA custodial account agreement has been approved as to form
for use in establishing Roth IRA custodial accounts by the Internal Revenue
Service. The Internal Revenue Service approval is a determination as to form
only and does not represent a determination of the merits of the account.
- --------------------------------------------
15. ADDITIONAL INFORMATION
- --------------------------------------------
Additional information on Individual Retirement Accounts can be obtained from
any district office of the Internal Revenue Service (IRS Publication 590).
-------
DS-5
<PAGE>
-----------------------
GT GLOBAL ROTH IRA
NOTES
- ----------------------------------------------------------
-------
DS-6
<PAGE>
[IRS FORM 5305-RA Page 1 of 2]
[CAMERA READY COPY]
DS-7
<PAGE>
[IRS FORM 5305-RA Page 2 of 2]
[CAMERA READY COPY]
See Exhibit A to Form 5305-A for additional terms applicable to your GT Global
Roth IRA. Exhibit A is incorporated in and made part of your GT Global Roth IRA
by this reference.
[CAMERA READY COPY]
DS-8
<PAGE>
-----------------------
GT GLOBAL ROTH IRA
EXHIBIT A TO FORM 5305-RA,
ARTICLE IX
- ----------------------------------------------------------
The following provisions constitute Article IX of Form 5305-RA which is used to
establish your GT Global Roth IRA.
1. The Custodian is under no duty to compel the Depositor to make any
contributions to the Account and shall have no duty to assure that such
contributions are appropriate in amount (except to the extent that no annual
contributions may exceed $2,000 or such other maximum annual level as may be
later authorized by law).
2. The amount of each contribution by the Depositor shall be applied to the
purchase of shares of GT Global Funds (hereinafter "Funds"). The Depositor
acknowledges receipt of the applicable current prospectus(es) of the Fund(s).
All dividends and capital gain distributions received on securities held in the
custodial account (the "Account") shall be reinvested in additional shares of
the Funds and credited to the Account. Shares acquired in the Account will be
held beneficially for the Depositor in the name of the Custodian or its nominee.
3. The Custodian shall deliver to the Depositor all shareholder notices and
reports, prospectuses, financial statements, proxy material and other material
as they are received from the Funds. The Custodian shall vote at all shareholder
meetings of the Funds in accordance with written instructions of the Depositor
which will be secured by the Custodian. If no written instructions are received
from the Depositor, the Depositor's shares shall not be voted, except that the
Custodian may vote present for the purpose of determining the presence of a
quorum.
4. The Custodian may resign upon at least 60 days written notice to the
Depositor and may be removed by the Depositor upon 60 days written notice to the
Custodian. Upon resignation by the Custodian, it shall transfer the assets of
the Account in such a manner as the Depositor shall designate, but in the
absence of such designation, the Custodian will use its best efforts to transfer
the assets of the Account to a successor custodian to be held under a Roth IRA
qualifying under Section 408A of the Internal Revenue Code. Upon removal of the
Custodian by action of the Depositor, the assets of the Account shall be
transferred in accordance with the Depositor's instructions.
5. By completing the Beneficiary Designation section of the Roth IRA
Application, the Depositor may designate one or more beneficiaries to receive
such benefits in the event of the Depositor's death. Should the Depositor die
without an effective designation of beneficiary, the assets of the Account shall
be distributed to the Depositor's surviving spouse, or if there is no surviving
spouse, to the Depositor's estate in a single payment, unless another method of
distribution has been elected by such spouse or estate, as applicable.
6. In the event a Depositor's contribution to the Account in any year exceeds
$2,000, such excess amount shall be deemed to be a "rollover contribution"
permitted under Article I of the Account agreement, unless the Depositor
certifies otherwise to the Custodian in a form satisfactory to it.
-------
DS-9
<PAGE>
-----------------------
GT GLOBAL ROTH IRA
NOTES
- ----------------------------------------------------------
-------
DS-10
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Funds
P.O. Box 7345, San Francisco, CA 94120-7345 ROTH IRA APPLICATION
800/223-2138
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION
TYPE OF ACCOUNT: / / CONTRIBUTORY / / ROLLOVER/CONVERSION FROM A TRADITIONAL IRA (I HAVE ATTACHED A COMPLETED IRA CONVERSION
AUTHORIZATION FORM, IF APPLICABLE.) / / ROTH IRA ROLLOVER / / TRANSFER (I HAVE ATTACHED A COMPLETED ROTH IRA TRANSFER
AUTHORIZATION.)
Name Telephone Number ( )
- ------------------------------------------------------------ ---------------------------------------------
Address --------------------------------------------------------------
- ----------------------------------------------------------- Social Security Number
Street Date of Birth
- -------------------------------------------------------------- ------------------------------------------------------
City State Zip Code
FUND SELECTION & INITIAL CONTRIBUTION
Enclosed is a check for $ ------------------ made payable to GT Global Investor Services, Inc. (as agent for the Custodian) to
be invested in the Fund(s) hereby specified. PLEASE READ THE PROSPECTUS OF SUCH FUNDS CAREFULLY BEFORE YOU INVEST. (If this is
a transfer or rollover from another IRA, please indicate Fund preference and the percentage of the contribution you wish
allocated to each Fund only. Also complete the separate Roth IRA Transfer Authorization Form or the IRA Conversion
Authorization Form, as applicable.)
</TABLE>
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER (NOT APPLICABLE TO
FLOATING RATE FUND): / / CLASS A SHARES / / CLASS B SHARES (NOT AVAILABLE FOR
THE DOLLAR FUND) / / CLASS C SHARES (NEW DIMENSION FUND ONLY) OR / / ADVISOR
CLASS SHARES. If a class share box is not checked, your investment will be
made in Class A Shares.
<TABLE>
<CAPTION>
INITIAL CONTRIBUTION INITIAL CONTRIBUTION
<S> <C> <C> <C>
07 / / GT GLOBAL $ OR % 03 / / GT GLOBAL EUROPE $ OR %
WORLDWIDE ----------------- ---------------- GROWTH FUND ----------------- ----------------
GROWTH FUND
05 / / GT GLOBAL $ OR % 13 / / GT GLOBAL LATIN $ OR %
INTERNATIONAL ----------------- ---------------- AMERICA GROWTH ----------------- ----------------
GROWTH FUND FUND
16 / / GT GLOBAL $ OR % 24 / / GT GLOBAL AMERICA $ OR %
EMERGING ----------------- ---------------- SMALL CAP GROWTH ----------------- ----------------
MARKETS FUND FUND
22 / / GT GLOBAL $ OR % 06 / / GT GLOBAL AMERICA $ OR %
CONSUMER ----------------- ---------------- MID CAP GROWTH ----------------- ----------------
PRODUCTS AND FUND
SERVICES
FUND
17 / / GT GLOBAL $ OR % 23 / / GT GLOBAL AMERICA $ OR %
FINANCIAL ----------------- ---------------- VALUE FUND ----------------- ----------------
SERVICES FUND
11 / / GT GLOBAL $ OR % 04 / / GT GLOBAL JAPAN $ OR %
HEALTH CARE ----------------- ---------------- GROWTH FUND ----------------- ----------------
FUND
19 / / GT GLOBAL $ OR % 10 / / GT GLOBAL GROWTH $ OR %
INFRASTRUCTURE ----------------- ---------------- & INCOME FUND ----------------- ----------------
FUND
21 / / GT GLOBAL $ OR % 08 / / GT GLOBAL $ OR %
NATURAL ----------------- ---------------- STRATEGIC INCOME ----------------- ----------------
RESOURCES FUND FUND
15 / / GT GLOBAL $ OR % 09 / / GT GLOBAL $ OR %
TELECOMMUNICATIONS ----------------- ---------------- GOVERNMENT INCOME ----------------- ----------------
FUND FUND
02 / / GT GLOBAL NEW $ OR % 18 / / GT GLOBAL HIGH $ OR %
PACIFIC GROWTH ----------------- ---------------- INCOME FUND ----------------- ----------------
FUND
01 / / GT GLOBAL $ OR % 25 / / GT GLOBAL NEW $ OR %
DOLLAR FUND ----------------- ---------------- DIMENSION FUND ----------------- ----------------
750 / / GT GLOBAL $ OR % 26 / / GT GLOBAL $ OR %
FLOATING RATE ----------------- ---------------- DEVELOPING ----------------- ----------------
MARKETS FUND
TOTAL INITIAL $
CONTRIBUTION: --------------------
CONTRIBUTION YEAR: --------------------
</TABLE>
NOTE: Minimum Initial Contribution -- $100 per Fund; $250 -- Floating Rate
Fund.
Maximum Annual Individual Contribution (except for rollovers and
transfers) -- $2,000.
Maximum Annual Individual and Spousal Contribution (except for rollovers
and transfers) -- $4,000 (provided no more than $2,000 is invested in
any one account).
<TABLE>
<S> <C> <C>
TELEPHONE EXCHANGE
I, either directly or through the Authorized Agent, if any, named below, hereby
authorize the Transfer Agent of the GT Global Fund, to honor any telephone, telex
or telegraphic instructions believed to be authentic for exchange between any of
the Funds distributed by GT Global, Inc. ("GT Global"). I understand and agree
that the account will be subject to the telephone exchange privilege described in
the applicable GT Global Fund's current prospectus and agree that GT Global, GT
Global Funds and the Funds' Transfer Agent, their officers and employees, will
not be responsible for the authenticity of any telephone, telex, or telegraphic
instructions nor be liable for any loss arising out of any such telephone, telex
or telegraphic instructions effected including any such loss due to negligence on
the part of such entities. The telephone exchange privilege is not available for
Floating Rate Fund.
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER OR ADVISOR) ONLY
We hereby submit this Roth IRA Application for the purchase of shares including
shares purchased under a Right of Accumulation or Letter of Intent in accordance
with the terms of our Selling Agreement with GT Global and with the
Prospectus(es) for the GT Global Fund(s). We agree to notify GT Global of any
purchases properly made under a Letter of Intent or Right of Accumulation.
</TABLE>
Broker/Dealer or Advisor Name_________________________________________________
Main Office Address___________________________________________________________
Branch Number_______ Representative's Number______ Representative's Name______
<TABLE>
<S> <C>
Branch Address ------------------------- Telephone Number------------------
For Class A, B and C shares and Floating Rate Fund:
Broker/Dealer's Authorized Signature X ----------- Title------------------------
For Advisor Class shares only:
We hereby submit this Roth IRA Application for the purchase of Advisor Class shares in accordance with the terms of our
Advisor Class Agreement with GT Global and with the Prospectus and Statement of Additional Information of each Fund
purchased.
Advisor's Authorized Signature X ----------- Title---------------------
</TABLE>
DS-11
<PAGE>
<TABLE>
<S> <C>
DESIGNATION OF BENEFICIARY(IES)
If you require more room to name additional beneficiaries, please provide the necessary information on a separate sheet,
and indicate next to each name whether beneficiary is primary or contingent.
PRIMARY BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my Roth IRA upon my death:
</TABLE>
<TABLE>
<S> <C> <C> <C>
1. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------ Date of Birth -------- Social Security Number ------------------------ Share of Account %
------
2. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------------- DOB -------- Social Security Number ------------------------ Share of Account %
------
CONTINGENT BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my Roth IRA upon my death:
1. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------------- DOB -------- Social Security Number ------------------------ Share of Account %
------
2. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------------- DOB -------- Social Security Number ------------------------ Share of Account %
------
</TABLE>
Unless otherwise indicated above, the benefit payable hereunder shall be paid
in equal shares to the Primary Beneficiaries who survive the Participant. If
no Primary Beneficiary(ies) survives the Participant, the payment shall be
made in equal shares (or as otherwise indicated above) to the Contingent
Beneficiary(ies) who survive the Participant. The Participant reserves the
right to change the above beneficiary by filing a new Beneficiary Designations
Form with the Custodian. Should no named beneficiary survive the date of
distribution, the account shall be distributed to my surviving spouse, or if
there is no surviving spouse, in a single payment to my estate. ONLY THE MOST
RECENT EXECUTED DESIGNATION OF BENEFICIARY(IES) ON FILE WITH GT GLOBAL
INVESTOR SERVICES, INC. (AS AGENT FOR THE CUSTODIAN) WILL BE HONORED.
CONSENT OF SPOUSE
I consent to the above Beneficiary Designation.
Signature of Spouse:
------------------------------------------------------------------
Date:
------------------
(Note: May be required in community property states if any person other than
or in addition to Participant's Spouse is designated as Beneficiary.)
<TABLE>
<S> <C>
REDUCED SALES CHARGES
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES ONLY
/ / I certify that I qualify for the Right of Accumulation sales charge
discount described in the prospectus and statement of additional
information of the Fund(s) purchased.
/ / I own shares of more than one GT Global Mutual Fund. Below is a schedule
showing the numbers of each of my Shareholder Accounts.
/ / The registration of some of my shares differs from that shown on this Roth
IRA Application. Below is a schedule showing the account number(s) and full
registration in each case.
STATEMENT OF INTENTION -- CLASS A SHARES ONLY
I agree to the Statement of Intention set forth in the Prospectus(es) for the
Fund(s) in which I am investing. Although I am not obligated to do so, it is my
intention to invest over a thirteen-month period in Class A shares of the GT
Global Mutual Funds, in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
LIST OF OTHER GT GLOBAL MUTUAL FUND ACCOUNTS:
____________________________ _________________________________________
____________________________ _________________________________________
____________________________ _________________________________________
Account Numbers Account Registrations
AGREEMENT AND SIGNATURE
I acknowledge receipt of the Disclosure Statement and Roth IRA Custodial
Agreement for the GT Global Roth IRA. I hereby affirm that I have received and
read and agree to the terms & conditions of the current Prospectus(es) of the
Fund(s) in which I have directed GT Global Investor Services, Inc. (as agent
for the Custodian) to invest my contribution(s). I have the authority and
legal capacity to purchase fund shares, am of legal age, and believe each
investment is suitable for me. It is my responsibility to read the prospectus
of any fund into which I exchange. I understand that all information provided
in this application applies to any new funds into which my shares may be
exchanged. I agree to the terms and provisions set forth in this Roth IRA
Application including those contained in the Telephone Exchange section, the
Disclosure Statement, the Roth IRA Custodial Agreement and the Prospectus(es).
AS REQUIRED BY THE INTERNAL REVENUE SERVICE, I CERTIFY, UNDER PENALTIES OF
PERJURY, THAT THE TAXPAYER IDENTIFICATION NUMBER GIVEN ON THE FACE OF THIS
ROTH IRA APPLICATION IS CORRECT AND THAT I AM NOT SUBJECT TO BACKUP
WITHHOLDING IN MY IRA(S). THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR
CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS
REQUIRED TO AVOID BACKUP WITHHOLDING.
Signature X_______________________________ Date ______________________________
Individual
FOR GT GLOBAL USE ONLY
ACCEPTED:
X__________________________________________________ __________________________
Signature of Custodian or its Agent Date
DS-12
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<TABLE>
<S> <C>
[LOGO]
GT Global Funds
P.O. Box 7345, San Francisco, CA 94120-7345 ROTH IRA TRANSFER AUTHORIZATION
800/223-2138
</TABLE>
Please complete a separate Transfer Authorization for each Account to be
transferred.
TO EXISTING CUSTODIAN:
Name of Existing Roth IRA Custodian________________ Telephone_(______)________
Address________________________ ______________________ ___________ ___________
Street City State Zip Code
Individual Policy or Account:______________________ in the name of ___________
Account Name Account Number Your Name
Please liquidate/transfer in kind* $________________ or ________________% of
my Roth IRA identified above and transfer those funds by a check, made payable
to:
GT Global Investor Services, Inc., for
_____________________, Roth IRA Account #_____________________________________
Investor's Name Existing GT Global Account Number,
if applicable
THIS FORM, ALONG WITH ALL CHECK(S) SHOULD BE MAILED TO: GT GLOBAL INVESTOR
SERVICES, INC. (AS AGENT FOR THE CUSTODIAN), P.O. BOX 7345, SAN FRANCISCO, CA
94120-7345.
<TABLE>
<S> <C> <C>
X
- -------------------------------------------- ---------------------------------------- --------------------------------------------
Investor's Signature Date Signature Guarantee
(if required by current Custodian)
</TABLE>
* If this Roth IRA currently holds shares of a GT Global Fund, you may request
a direct transfer of shares.
FOR GT GLOBAL USE ONLY
GT Global Investor Services, Inc. (as agent for the GT Global Roth IRA
Custodian) agrees to accept the transfer described above and upon written
receipt will apply the proceeds to investments as designated by the Investor.
X_____________________________________________________ _______________________
Signature of Custodian or its Agent Date
DS-13
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<TABLE>
<S> <C>
[LOGO] IRA CONVERSION AUTHORIZATION
GT Global Funds
P.O. Box 7345, San Francisco, CA 94120-7345
800/223-2138
TO CURRENT IRA TRUSTEE OR CUSTODIAN:
Name of Current IRA Trustee or Custodian: Telephone ( )
--------------------------------------------- -------------------------
Address: ------------------------------------- ------------------------------------- ------------------ ------------------
Street City State Zip Code
IRA Account: ---------------------------------------------------------- -------------------------------------------------
Name of IRA Owner IRA Account Number
</TABLE>
Please send my entire account balance in the IRA identified above directly to
my GT Global Roth IRA Custodian, for:
__________________________, Roth IRA Account #________________________________
Roth IRA Owner Name (GT Global Account Roth IRA #, if
known)
Please make this direct payment either in the form of a check made payable, or
by wire, to GT Global Investor Services, Inc., for the benefit of my Roth IRA.
All checks should be mailed to GT Global Investor Services, Inc. (as agent for
the Custodian), P.O. Box 7345, San Francisco, CA 94120-7345.
SIGNATURE OF DEPOSITOR
I hereby certify that my adjusted gross income for the year in which this
conversion occurs does not exceed $100,000 or, if I am married, I am not
filing a separate return for the year. I acknowledge that, due to the
complexities involved in the tax treatment of conversions of IRAs, the
Custodian has recommended that I consult with my tax advisor or the Internal
Revenue Service before completing this transaction to make certain that this
transaction qualifies as a conversion and is appropriate in my individual
circumstances. I hereby release the Custodian from any claim for damages on
account of the failure of this transaction to qualify as a valid conversion.
<TABLE>
<S> <C> <C>
X
- -------------------------------------------- -------------------- ----------------------------------------------------------------
Depositor's Signature Date Signature Guarantee (if required by current IRA)
</TABLE>
FOR GT GLOBAL USE ONLY
GT Global Investor Services, Inc. (as agent for the GT Global Roth IRA
Custodian) agrees to accept the conversion described above and upon receipt of
such funds will apply those funds to investments as designated by the
Depositor.
X__________________________________________________ __________________________
Signature of Custodian or its Agent Date
DS-15
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DS-16
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<TABLE>
<S> <C>
[LOGO]
GT Global Funds SUPPLEMENTAL APPLICATION
P.O. Box 7345, San Francisco, CA 94120-7345 FOR AUTOMATIC INVESTMENT PLAN
800/223-2138
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION
PLEASE NOTE: Automatic Investment Plan may ONLY be used for current year Roth IRA contributions.
Please supply the following information exactly as it appears on the Fund's records.
---------------
-------------
Name Account Number
------------------------
--------------------
Address Telephone Number
------------------------
--------------------
City State Zip Code Social Security Number
-----------------------------------
AUTOMATIC INVESTMENT PLAN Date of Birth
I hereby authorize the Transfer Agent of the GT Global Funds to debit my personal checking account on the designated
dates in order to purchase shares in the Fund(s) indicated at the applicable public offering price determined on that
day. Please indicate if your purchase is for (not applicable to Floating Rate Fund): / / Class A Shares, / / Class B
Shares or / / Class C Shares (New Dimension Fund only).
Fund: -------------------------- $----------- or ------% Fund:-------------------------- $----------- or ------%
Fund: -------------------------- $----------- or ------% Fund:-------------------------- $----------- or ------%
Fund: -------------------------- $----------- or ------% Fund:-------------------------- $----------- or ------%
/ / Monthly on the 25th day
/ / Quarterly beginning on the 25th day of the month you first select:
-------------- (Month)
(The request for participation in the Plan must be received by the 1st day of the month in which you wish investments to
begin.)
Amount of each debit (minimum $100) $
------------------------------------------------------------------
NOTE: A Bank Authorization Form (below) and a voided personal check must accompany the Automatic Investment Plan
Application.
</TABLE>
<TABLE>
<S> <C> <C> <C>
AGREEMENT AND SIGNATURES
IF YOU HAVE SELECTED A SPECIAL INVESTMENT OPTION, PLEASE COMPLETE THE
SECTION BELOW.
The investor(s) certifies(y) and agree(s) that the certifications,
authorizations, directions and restrictions contained herein will continue
until the Transfer Agent of the GT Global Funds receives written notice of
any change or revocation. Any change in these instructions must be in
writing with all signatures guaranteed (if applicable).
- ------------------------------------
Date
X X
- ------------------------------------ -------------------------------------
Signature Signature
- ------------------------------------ -------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
X X
- ------------------------------------ -------------------------------------
Signature Signature
- ------------------------------------ -------------------------------------
Signature Guarantee* (if applicable) Signature Guarantee* (if applicable)
*Acceptable signature guarantors: (1) a commercial bank; (2) a U.S. trust
company; (3) a member firm of a U.S. stock exchange; (4) a foreign branch
of any of the foregoing; or (5) any other eligible guarantor institution.
A notary public is NOT an acceptable guarantor. An investor with questions
concerning the GT Global Mutual Funds signature guarantee requirement
should contact the Transfer Agent.
</TABLE>
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<TABLE>
<S> <C>
[LOGO]
GT Global Funds
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
San Francisco, CA 94111-4624
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION EXISTING
SHAREHOLDER ACCOUNT NUMBER
</TABLE>
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies)
and date of trust instrument. Registration for Uniform Gifts/Transfers to
Minors accounts should be in the same name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C> <C>
--------------------------------------
Owner Social Security Number / / or Taxpayer Identification Number ("TIN") / /
- -------------------------------------- (Check applicable box)
Co-owner 1 If more than one owner, social security number or TIN should be provided for first
- -------------------------------------- owner listed. If a purchase is made under Uniform Gift/Transfer to Minors Act, social
Co-owner 2 security number of the minor must be provided.
-------------------------------------- Resident of / / U.S. / / Other (specify)------------------------------
Street Address Failure to provide TIN will result in 31% withholding on redemptions and exchanges.
( ) ( )
------------------------------------------------------------------------------------------------------------------------------
City, State, Zip Code Home Telephone Business Telephone
</TABLE>
FUND SELECTION $500 MINIMUM INITIAL INVESTMENT REQUIRED FOR EACH FUND SELECTED
FOR CLASS A AND CLASS B SHARES. CHECKS SHOULD BE MADE PAYABLE TO "GT GLOBAL
INVESTOR SERVICES, INC."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A
Shares / / Class B Shares or / / Advisor Class Shares
If a class share box is not checked, your investment will be made in Class A
shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per Fund.
<TABLE>
<S> <C> <C> <C> <C>
07 / / GT GLOBAL WORLDWIDE GROWTH FUND ---------- 03 / / GT GLOBAL EUROPE GROWTH FUND ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND ----------
16 / / GT GLOBAL EMERGING MARKETS FUND ---------- 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH ----------
FUND
26 / / GT GLOBAL DEVELOPING MARKETS FUND ---------- 06 / / GT GLOBAL AMERICA MID CAP GROWTH FUND ----------
25 / / GT GLOBAL NEW DIMENSION FUND ---------- 23 / / GT GLOBAL AMERICA VALUE FUND ----------
11 / / GT GLOBAL HEALTH CARE FUND ---------- 04 / / GT GLOBAL JAPAN GROWTH FUND ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND ---------- 10 / / GT GLOBAL GROWTH & INCOME FUND ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND ---------- 09 / / GT GLOBAL GOVERNMENT INCOME FUND ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND ---------- 08 / / GT GLOBAL STRATEGIC INCOME FUND ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND ---------- 18 / / GT GLOBAL HIGH INCOME FUND ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 01 / / GT GLOBAL DOLLAR FUND ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND ---------- Total percentage must equal 100%.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Rebalance frequency -- check one: / / Monthly / / Quarterly / / Semi annually / / Annually
</TABLE>
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains distributions and dividends will be reinvested in additional
shares of the same class unless appropriate boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in
cash / / Pay capital gain distributions and dividends in cash.
Investment will be split according to allocation.
<TABLE>
<S> <C>
AGREEMENTS & SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Funds receives written notice of any change or revocation. ANY CHANGE
IN THESE INSTRUCTIONS MUST BE SIGNED IN WRITING.
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
</TABLE>
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DS-20
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-----------------------
GT GLOBAL ROTH IRA
NOTES
- ----------------------------------------------------------
-------
DS-21
<PAGE>
-----------------------
GT GLOBAL ROTH IRA
NOTES
- ----------------------------------------------------------
January 1998 RTHQA801
-------
DS-22
<PAGE>
[LOGO]
GT GLOBAL 403(b)(7) CUSTODIAL
ACCOUNT: INFORMATION AND FORMS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE:
<S> <C>
Questions and Answers about your 403(b)(7) Custodial Account..................................................... 11
GT Global 403(b)(7) Custodial Account Agreement.................................................................. 14
Maximum Elective Deferral Worksheet.............................................................................. 24
403(b)(7) Exclusion Allowance Worksheet for Contributions Made by Salary Reduction............................... 25
Alternate Catch-up Options....................................................................................... 26
Alternative Limitations.......................................................................................... 27
Sample Salary Reduction Agreement................................................................................ 28
GT Global 403(b)(7) Custodial Account Application................................................................ 29
403(b) Transfer Authorization.................................................................................... 31
Employer 403(b)(7) Transmittal Form and Agreement................................................................ 33
Supplemental Application -- Portfolio Rebalancing Program........................................................ 35
</TABLE>
9
<PAGE>
NOTES
- --------------------------------------------------------------------------------
10
<PAGE>
QUESTIONS AND ANSWERS ABOUT YOUR
403(b)(7) CUSTODIAL ACCOUNT
- --------------------------------------------------------------------------------
Q. WHAT IS THE GT GLOBAL 403(b)(7) CUSTODIAL ACCOUNT?
A. The GT Global 403(b)(7) Custodial Account is a voluntary tax-advantaged
savings account available exclusively to employees of public schools and
certain not-for-profit organizations. This type of account is named for
Section 403(b)(7) of the Internal Revenue Code.
Section 403(b)(7) makes it possible for eligible employees to purchase
mutual fund shares within a 403(b) retirement program. Consequently, you
have much more investment flexibility than was available under previous
laws, when only annuities could be purchased under a 403(b) program. The GT
Global 403(b)(7) Custodial Account provides access to the GT Global Funds,
allowing you to invest in some of the world's best-performing equity and
bond markets.
Q. AM I ELIGIBLE TO MAKE A 403(b)(7) ACCOUNT CONTRIBUTION?
A. If you are an employee of a public school or of a not-for-profit
organization defined under section 501(c)(3) of the Internal Revenue Code,
you are probably eligible. Eligibility frequently extends to employees of
private schools, colleges and universities and certain hospitals, as well as
to individuals employed by charitable, educational, literary, scientific or
religious organizations and foundations. Consult with your employer to
verify that you are eligible.
Q. HOW DO I CONTRIBUTE TO MY 403(b)(7) ACCOUNT?
A. Contributions to your 403(b)(7) account are made by a salary reduction
agreement with your employer. Your employer forwards these contributions
directly to your 403(b)(7) account.
Q. HOW MUCH CAN I CONTRIBUTE?
A. As a general rule, you can contribute up to $10,000 or your EXCLUSION
ALLOWANCE each year, whichever is less. However, in some cases, your maximum
contribution could be higher or lower.
- The "exclusion allowance" takes into account a number of factors,
including your current salary, length of service, type of employer and
participation in other retirement plans. The Maximum Elective Deferral
Worksheet on page 23 was created to help you determine your maximum
allowable contribution.
- If you have worked for the same educational, health, welfare or religious
organization for 15 years or more, your maximum allowable contribution
could be higher than $10,000.
- Contributions made by your employer on your behalf to another 403(b)(7)
account, tax-sheltered annuity, or another salary reduction savings plan
may reduce the amount that may be contributed to the GT Global 403(b)(7)
Custodial Account and can reduce your maximum contribution below $10,000.
Q. WILL MY SALARY REDUCTION CONTRIBUTIONS REDUCE MY EARNINGS FOR SOCIAL
SECURITY PURPOSES?
A. No. Your pre-tax contributions are included as part of your salary for FICA
and FUTA taxes.
Q. ONCE I DECIDE TO PARTICIPATE, CAN I CHANGE THE AMOUNT I CONTRIBUTE?
A. Yes. You can change the amount of contributions to your account in the
current year or for the next year. Note that if your contribution is stated
as a percentage of your salary, an increase in your salary will result in
increased contributions unless you execute (and give your employer) a new
salary reduction agreement.
11
<PAGE>
Q. WHAT IF I WANT TO STOP MAKING CONTRIBUTIONS?
A. Generally, you are free to discontinue contributions at the end of any
payroll period. If you later wish to resume contributions, however, you will
need to enter into a new salary reduction agreement and give it to your
employer.
Q. CAN I TRANSFER ASSETS INTO MY GT GLOBAL 403(b)(7) CUSTODIAL ACCOUNT?
A. Yes. If you currently contribute to another 403(b)(7) account or
tax-sheltered annuity, you have the flexibility to transfer assets to your
GT Global 403(b)(7) Custodial Account. The transfer is tax-free, so none of
your retirement savings are lost to taxes. If you'd like, GT Global, Inc.
("GT Global") can arrange for a direct transfer from your existing
arrangement; all you need to do is complete the enclosed 403(b)(7) Transfer
Authorization.
Q. WHAT HAPPENS IF I LEAVE MY PRESENT EMPLOYER?
A. If your new employer is eligible to offer a 403(b)(7) arrangement, you may
be able to continue making contributions to your GT Global 403(b)(7)
Custodial Account.
Q. WHEN CAN I BEGIN MAKING WITHDRAWALS FROM MY GT 403(b)(7) CUSTODIAL ACCOUNT?
A. You may withdraw assets from your account when you:
- Retire
- Change jobs
- Reach age 59 1/2
- Become disabled
- Encounter a financial hardship*
Generally, you MUST begin withdrawing money by April 1 following the later
of the year in which you reach age 70 1/2 or the year in which you retire.
Q. HOW WILL DISTRIBUTIONS FROM MY 403(b)(7) ACCOUNT BE TAXED?
A. Distributions from your 403(b)(7) account will generally be taxed as
ordinary income in the year you receive them, unless you roll the
distribution over into an IRA or other eligible retirement plan. State
income taxes may also apply. If you are under age 59 1/2 when you receive
your distribution, you also may be subject a 10% federal tax penalty (unless
you receive the distribution as a result of becoming disabled).
Q. DO I HAVE TO TAKE MY ASSETS OUT OF THE 403(b)(7) ACCOUNT IN A SINGLE LUMP
SUM?
A. No. With the GT Global 403(b)(7) Custodial Account, you can choose to
receive your distributions as a single lump sum or in regular monthly,
quarterly or annual installments. This flexibility allows you to choose the
distribution method most appropriate for your needs.
Q. WHAT HAPPENS IF I DIE BEFORE ALL MY 403(b)(7) BENEFITS HAVE BEEN WITHDRAWN?
A. Any amount that remains in your 403(b)(7) account at the time of your death
will be paid to your designated beneficiary.
Q. CAN I TAKE A LOAN FROM MY 403(b)(7) ACCOUNT?
A. Yes. You may take a loan from your 403(b)(7) account of up to $50,000 or
one-half of your account balance, whichever is less. For more information on
loans and repayment provisions, please call a GT Global client services
representative at 1-800-223-2138.
- ------------------------
* IRS REGULATIONS SPECIFICALLY DEFINE WHAT CONSTITUTES A "FINANCIAL
HARDSHIP." HARDSHIP WITHDRAWALS MAY NOT EXCEED THE AMOUNT OF YOUR PLAN
CONTRIBUTIONS, EXCLUDING INVESTMENT EARNINGS. PLEASE CONSULT YOUR TAX
ADVISER.
12
<PAGE>
Q. HOW WILL I KEEP TRACK OF THE ASSETS IN MY GT GLOBAL 403(b)(7) CUSTODIAL
ACCOUNT?
A. With the GT Global 403(b)(7) Custodial Account, you receive account
transaction statements which include the trade date and dollar amount of
each mutual fund transaction, the share price, number of shares involved and
total number of shares you own. In addition, you will receive comprehensive
quarterly statements on your GT Global Mutual Fund investments in your
account.
Q. WHERE CAN I GET MORE INFORMATION?
A. If you need more information about the GT Global 403(b)(7) Custodial
Account, talk with your financial adviser or call GT Global directly at
1-800-223-2138.
13
<PAGE>
GT GLOBAL 403(b)(7) CUSTODIAL ACCOUNT AGREEMENT
- --------------------------------------------------------------------------------
TAX-SHELTERED INVESTMENTS FOR EMPLOYEES OF PUBLIC SCHOOLS AND COLLEGES AND
TAX-EXEMPT ORGANIZATIONS.
SECTION 1. DEFINITIONS
1.1 AGREEMENT: This instrument setting forth the terms and conditions of
this Custodial Account Agreement as set forth hereafter.
1.2 ALTERNATE PAYEE: A spouse, former spouse, child or other dependent of
a Participant who is assigned under a qualified domestic relations order (as
defined in 414(p) of the Code) a right to receive all or a portion of the
benefits payable with respect to a Participant.
1.3 APPLICATION: The written application which incorporates this Agreement
and is signed by the Employee and accepted by the Custodian and serves to
establish a Section 403(b)(7) Custodial Account for the Employee.
1.4 BENEFICIARY: A person designated in writing by a Participant to
receive a benefit under this Agreement in the event of such Participant's death.
1.5 CODE: The Internal Revenue Code of 1986, as amended, including any
regulations issued thereunder.
1.6 COMPENSATION: The Participant's wages, salaries or other remuneration
received for personal services actually rendered in the course of employment
with the Employer and any other amounts treated as compensation under Section
415 of the Code.
1.7 CUSTODIAL ACCOUNT OR ACCOUNT: The individual account(s) established
and maintained under this Agreement for the Participant pursuant to Section
403(b)(7) of the Code.
1.8 CUSTODIAN: The person named on the Application as the custodian of the
Custodial Account or any successor Custodian, and any of its duly authorized
agents.
1.9 DISABLED: With respect to a Participant, that he or she is unable to
engage in any substantial gainful activity by reason of a medically determinable
physical or medical impairment which can be expected to result in death or to be
of long-continued and indefinite duration, as defined under 72(m)(7) of the
Code.
1.10 ELECTIVE DEFERRALS: For any taxable year of an Employee, Elective
Deferrals are the sum of:
a) any salary reduction contributions under a qualified cash or
deferred arrangement as defined in Section 401(k) of the Code, to the
extent not includible in income under Section 402(a)(8) of the Code;
b) any salary reduction contributions to a simplified employee pension
plan as defined in Section 408(k) of the Code, to the extent not
includible in income under Section 402(h)(1)(B) of the Code;
c) any contributions made pursuant to a Salary Reduction Agreement
used to purchase an annuity contract or Custodial Account under
Section 403(b) of the Code;
d) any salary reduction contributions to a SIMPLE IRA as defined in
Section 408(p)(2)(A)(i) of the Code.
14
<PAGE>
1.11 EMPLOYEE: Any person regularly employed by the Employer. Neither
"leased employees" within the meaning of Section 414(n) or (o) of the Code, nor
independent contractors shall be considered to be Employees for the purposes of
this Agreement.
1.12 EMPLOYER: Any organization that is (i) described in Section 501(c)(3)
of the Code and exempt from tax under Section 501(a) of the Code, or (ii) an
educational organization described in Section 170(b)(1)(A)(ii) of the Code which
is a State, political subdivision of a State, or any agency or instrumentality
of any one or more of the foregoing.
1.13 ERISA: The Employee Retirement Income Security Act of 1974, as
amended, including any regulations thereunder.
1.14 EXCESS DEFERRAL: For any taxable year, that portion of an Employee's
Elective Deferrals that exceeds the limits of Section 402(g) of the Code.
1.15 EXCLUSION ALLOWANCE: For any taxable year, an amount equal to the
excess, if any, of:
a) the amount determined by multiplying 20 percent of the Employee's
Includible Compensation by the number of his Years of Service, over
b) the aggregate of the amounts which were contributed by the Employer
for annuity contracts or custodial accounts for the Employee and
which were excludible from the gross income of the Employee for any
prior taxable year.
1.16 FINANCIAL HARDSHIP: With respect to a Participant, a present or
pending financial need resulting from unusual costs or expenses, such as unusual
medical expenses, higher educational expenses or purchase of a residence.
Financial Hardship shall be determined in accordance with Section 403(b) of the
Code and the regulations thereunder.
1.17 INVESTMENT COMPANY: Any "Regulated Investment Company" within the
meaning of Section 851(a) of the Code that is one of the GT Global Funds.
1.18 PARTICIPANT: An individual who is, or has been, employed by the
Employer, who has been designated by the Employer as a Participant, and who
contracts in writing with the Employer for contributions hereto.
1.19 SALARY REDUCTION AGREEMENT: A binding contract executed by the
Employee and the Employer authorizing a reduction in the Employee's future
Compensation or a waiver of increasing future Compensation provided that such
amounts shall be contributed to the Employee's Custodial Account by the
Employer.
1.20 YEAR OF SERVICE: Each full tax year during which the Participant was
a full-time Employee of the Employer. A fraction of a year shall be counted for
each full tax year during which the Participant was a part-time Employee of the
Employer and for each part of a year during which the employee was a full-time
or part-time Employee of the Employer. In no case shall the Years of Service be
less than one (1).
SECTION 2. ESTABLISHING OF CUSTODIAL ACCOUNTS
The Custodian shall open and maintain a Custodial Account for each eligible
Employee who completes an Application; and the Custodian shall hold and
administer, in accordance with the terms hereof, contributions to the Custodial
Account and any gain or income from the investment thereof. The Employee shall
notify the Custodian in writing of any change in name, address, or Social
Security Number.
SECTION 3. CONTRIBUTIONS
3.1 CONTRIBUTIONS TO THE ACCOUNT: The Custodian shall accept cash
contributions from the Employer on behalf of the Participant in accordance with
the Salary Reduction Agreement between the Participant and the Employer. Each
such contribution shall be accompanied by specific written instructions from the
Employee specifying the accounts to which it is to be credited and the
investments which are to be purchased with such contribution.
15
<PAGE>
No Participant shall have Elective Deferrals made under this Agreement, or
any other plan maintained by the Employer, during any taxable year, in excess of
(i) the dollar limitation contained in Section 402(g) of the Code in effect at
the beginning of such taxable year or (ii) such Participant's Exclusion
Allowance for such taxable year.
3.2 TRANSFER AND ROLLOVER CONTRIBUTIONS:
(a) The Participant may transfer cash from another custodial account
qualified under Section 403(b)(7) of the Code and/or from an annuity
contract qualified under Section 403(b) of the Code to the Custodial
Account if the Participant certifies that the transaction meets the
requirements for a tax-free transfer under IRS Revenue Ruling 90-24
and other applicable laws or rulings of the Internal Revenue
Service, or is a rollover contribution described in Sections
403(b)(8) or 408(d)(3)(A)(iii) of the Code. Once transferred, such
assets shall be treated as a contribution on behalf of such
Participant for purposes of this Custodial Agreement and shall be
invested, distributed and otherwise dealt with as such.
(b) The Participant may cause the transfer, in cash, of all or any
portion of the balance credited to a Participant's account from this
Custodial Account directly to the custodian of another custodial
account qualified under Section 403(b)(7) of the Code or to an
insurance company designated by the Participant for the purchase, for
the benefit of the Participant, of an annuity contract qualified
under Section 403(b) of the Code if the Participant certifies that
the transaction meets the requirements for a tax-free transfer under
IRS Revenue Ruling 90-24, and any other applicable laws or rulings of
the Internal Revenue Service. Once transferred, such assets shall be
treated as a contribution on behalf of such Participant for purposes
of the successor custodial account and/or annuity contract and shall
be invested, distributed and otherwise dealt with as such.
3.3 RETURN OF EXCESS DEFERRAL: If a Participant makes an Excess Deferral
to the Custodial Account for any tax year, such Participant may give written
notice to GT Global, Inc. of the amount of the Excess Deferral no later than
March 1 following the close of the tax year. If the Participant gives such
written, timely notice to GT Global, Inc., the Custodian, at the direction of GT
Global, Inc., may distribute to the Participant, the amount of the Excess
Deferral, together with income attributable thereto, by April 15th of the
following taxable year.
3.4 LIABILITY FOR EXCESS DEFERRALS: The Custodian and GT Global, Inc. ("GT
Global") shall not have any duty to determine whether an Excess Deferral, or
contribution in excess of the limitations under Sections 403(b), 402(g) or 415
of the Code ("Excess Contribution") has been made by or on behalf of the
Participant. The Custodian and GT Global shall not be held liable by the
Participant or any other person(s), trusts or other entity for failing to
determine whether an Excess Deferral or Excess Contribution was made or for
failing to distribute an Excess Deferral absent the request of the Participant.
The Custodian and GT Global shall not be liable to the Participant or any other
person(s), trusts or entity for taxes or other penalties incurred as a result of
the Excess Deferral or Excess Contribution (including any income attributable
thereto) or as a result of a distribution of an Excess Deferral and any income
attributable thereto.
3.5 DIRECT ROLLOVERS:
(a) Notwithstanding any provision of the plan to the contrary that would
otherwise limit a Distributee's election under this Section, a
Distributee may elect, at the time and in the manner prescribed by
the Custodian, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan specified
by the Distributee in a direct rollover.
(b) Definitions:
(i) ELIGIBLE ROLLOVER DISTRIBUTIONS: An Eligible Rollover
Distribution is any distribution of all or any portion of the
balance to the credit of the Distributee, except that an Eligible
Rollover Distribution does not include any distribution that is one
of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of
the Distributee and the Distributee's designed beneficiary, or for a
specified period
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<PAGE>
of ten years or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of the Code; and
the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(ii) ELIGIBLE RETIREMENT PLAN: An Eligible Retirement Plan is
an individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section 408(b)
of the Code, a tax-sheltered annuity plan described in Section
403(b) of the Code, or a custodial account described in Section
403(b)(7) of the Code, that accepts the distributee's Eligible
Rollover Distribution. However, in the case of an Eligible Rollover
Distribution to the surviving spouse, an eligible retirement plan is
an individual retirement account or individual retirement annuity.
(iii) DISTRIBUTEE: A Distributee includes an Employee or
former Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's spouse or
former spouse who is the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the Code, are
distributees with regard to the interest of the spouse or former
spouse.
(iv) DIRECT ROLLOVER: A Direct Rollover is a payment by the
Plan to the Eligible Retirement Plan specified by the Distributee.
SECTION 4. INVESTMENT OF ACCOUNT ASSETS
4.1 INVESTMENT OF CONTRIBUTIONS: The Custodian shall direct the amount of
the contributions credited to the Employee's Account in full and fractional
shares of an Investment Company.
4.2 INVESTMENT OF GAINS AND DIVIDENDS: All dividends and capital gains
distributions on shares held in the Participant's Account shall be reinvested in
full and fractional shares of the same Investment Company, in accordance with
the participant's application or instructions set forth.
4.3 VOTING AND OTHER ACTION: All shares of an Investment Company acquired
by the Custodian pursuant to the Agreement shall be held in the name of the
Custodian for the benefit of the Employee. GT Global Investor Services, Inc.
shall cause to be delivered to the Participant all notices, prospectuses,
financial statements, proxies and proxy soliciting materials relating to shares
held in the Custodial Account. The Custodian shall, and is instructed by the
Participant, not to vote any such shares except in accordance with written
instructions received from the Participant; however, in the absence of such
written instructions, the Custodian shall, and is instructed by the Participant,
to vote "present" for the sole purpose of allowing such Shares to be counted for
establishment of a quorum.
4.4 IDENTIFICATION OF ACCOUNTS: All shares of an Investment Company
acquired by the Custodian shall be held in the name of the Custodian or its
nominee for the benefit of the Participant (or the Beneficiary after the
Participant's death). The Account will not be joined for rights of accumulation
with Accounts of other Employees of the same Employer.
SECTION 5. DISTRIBUTIONS FROM THE CUSTODIAL ACCOUNT
5.1 REQUEST FOR DISTRIBUTION: Distribution from the Custodial Account
shall be made by the Custodian in accordance with instructions from the
Participant and only to a Participant, his or her designated Beneficiary or
Alternate Payee, and no purported sale, transfer, pledge or assignment by the
Participant, his or her spouse or Beneficiary of all or any part of an interest
in the Custodial Account shall be recognized by the Custodian except as provided
in Section 3.2. The interest of a Participant, his or her spouse or Beneficiary
in the Custodial Account shall not be subject to the debts, contracts,
liabilities, engagements or torts of such person or to attachment or legal
process against such person.
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<PAGE>
5.2 LIMITATIONS ON DISTRIBUTIONS: The Custodian shall distribute, or
commence distribution of, pursuant to the Participant's written direction, the
balance credited to a Participant's Account pursuant to a Participant's
instructions and the occurrence of one or more of the following events:
(a) the Participant becomes Disabled;
(b) the Participant separates from service with the Employer;
(c) the Participant dies;
(d) the Participant attains age 59 1/2; or
(e) the Participant encounters a Financial Hardship.
5.3 TIMING OF DISTRIBUTIONS:
(a) Distribution from the Custodial Account shall commence within 30
days after the Participant notifies the Custodian of his or her
entitlement to distributions and instructs the Custodian to
distribute, unless the Participant makes a prior election to defer
distribution or the commencement of distribution to a subsequent date
which is not later than April 1st following the later of the year in
which the Participant attains age 70 1/2 or the year in which the
Participant retires, unless a later date is permitted by the Code,
the regulations issued thereunder, or other Internal Revenue Service
pronouncements. Such election shall be made by written notice filed
with the Custodian. Notwithstanding this provision, the Custodian
shall not be responsible for making any distribution until such time
as it has received proper written notification from the Participant,
his or her surviving spouse or Beneficiary of the occurrence of an
event described in Section 5.2.
(b) Governmental or Church Employees: In the case of a governmental plan
or church plan, the Required Beginning Date shall mean the April 1st
following the later of the year the Participant attains age 70 1/2 or
the year in which the Participant retires.
5.4 FORM OF DISTRIBUTION: Distribution shall be made in cash or in kind in
any one or more of the following ways:
(a) in a single payment; or
(b) in installments for a period certain not to exceed the life
expectancy of the Participant or the Participant's Beneficiary or the
joint lives and last survivor expectancies of the Participant and the
Participant's designated Beneficiary; or
(c) in a combination of (a) and (b).
5.5 DESIGNATION OF BENEFICIARY: Each Participant may, by written notice
filed with the Custodian and in a form acceptable to the Custodian, designate a
Beneficiary or Beneficiaries to receive the Participant's benefit at the
Participant's death. Such designation may be changed or revised from time to
time by written instrument filed with the Custodian. If no designation has been
made, or if no beneficiary is living at the time of a Participant's death, his
or her Beneficiary shall be: (a) his or her surviving spouse; but if the
Participant has no surviving spouse; then (b) the Participant's estate.
5.6 MINIMUM DISTRIBUTION REQUIREMENTS:
(a) IN GENERAL: All distributions required hereunder shall be
determined and made in accordance with the proposed regulations under
Section 401(a)(9) of the Code, including the minimum distribution
incidental benefit requirement of Section 1.401(a)(9)-2 of the proposed
regulations.
(b) PRE-1987 ACCOUNT BALANCE OR BIFURCATED ACCOUNT: The 403(b)
plan in effect on December 31, 1986 shall govern the required
distributions of such account balance on such date with respect to
amounts which accrued on behalf of a Participant as of December 31,
1986. If such plan no longer exists or such provision cannot be
located, the pre-1987 account balance will not be required to be
distributed until the end of the calendar year in which the Participant
attains age 75. In the absence of a direction from the Participant to
make distributions starting
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<PAGE>
on the Required Beginning Date, the Custodian will assume (and will be
fully protected) that the Participant is satisfying the minimum
distribution rules from another 403(b) account. See IRS Notice 88-38.
(c) DEATH PRIOR TO DISTRIBUTION: If the Participant dies before
he or she has started to withdraw installments from his or her Account,
the entire interest in the Participant's Account shall be distributed
within five (5) years after the death of the Participant. However, if
any portion of the Participant's interest is payable to a designated
Beneficiary (within the meaning of Section 401(a)(9)(E) of the Code),
then, at the Beneficiary's election, distributions may be made over the
life expectancy of such designated Beneficiary. Such distributions must
begin by December 31 of the calendar year following the calendar year
of the Participant's death. However, if the sole designated Beneficiary
is the surviving spouse of the Participant, distributions need not
commence until the later of December 31 of the calendar year in which
the Participant would have attained age 70 1/2, or December 31 of the
calendar year immediately following the calendar year in which
Participant died.
For purposes of this Section 5.6, payments will be calculated by
use of the return multiples specified in Section 1.72-9 of the Income
Tax Regulations. Life expectancy of a surviving spouse may be
recalculated annually. Life expectancy of any non-spouse Beneficiary
will be calculated at the time of the first payment without further
recalculation.
(d) DEATH AFTER DISTRIBUTIONS HAVE COMMENCED: If the Participant
was withdrawing his or her interest in installments over a fixed
period, the remaining installments will be continued to the Beneficiary
at least as rapidly as under the method of distribution selected prior
to death.
(e) AGE 70 1/2 DEFAULT PROVISIONS:
(1) Unless otherwise elected by the Participant (or spouse, if
applicable) by the time distributions are required to begin,
life expectancies shall not be recalculated annually. Such
election shall be irrevocable as to the Participant (or
spouse) and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
(2) If the Participant does not choose any of the distribution
methods under this Section 5.6 by such Participant's Required
Beginning Date (as defined in Section 401(a)(9) of the Code),
distribution shall be made to the Participant based on such
Participant's nonrecalculated Single Life expectancy.
(3) All requests for distributions shall be made on a pro-rata
basis among the applicable Investment Companies unless
directed otherwise by the Participant.
5.7 DISTRIBUTION UNDER A QUALIFIED DOMESTIC RELATIONS ORDER:
(a) Distributions of all or any part of a Participant's Account pursuant
to the provisions of a qualified domestic relations order (QDRO) as
defined in Section 414(p) of the Code is specifically authorized.
(b) The earliest retirement age shall be the earlier of:
(1) The earliest date benefits are payable under the Plan to the
Participant; or
(2) the later of the date the Participant attains age 50 or the date
on which the Participant could obtain a distribution from the Plan
if the Participant had separated from service.
(c) The Alternate Payee may receive a payment of benefits under this
Plan in any optional form of benefit available pursuant to Section
5.4.
(d) The Alternate Payee may receive a payment of a benefit under this
Plan prior to the earliest retirement age as defined in Section
5.7(b) if the QDRO specifically provides for such earlier payment. If
the present value of the payment exceeds $3,500, the Alternate Payee
must consent in writing to such distribution.
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<PAGE>
SECTION 6. NONFORFEITABILITY
6.1 NONFORFEITABILITY: A Participant's interest in the balance of his or
her account attributable to his/ her salary reduction contributions shall at all
times be nonforfeitable.
SECTION 7. LOANS TO PARTICIPANTS
7.1 GENERAL RULES: The following rules shall apply with respect to loans
to Participants from their 403(b) Account:
(a) Loans shall be made available to all Participants on a reasonably
equivalent basis upon written application to GT Global.
(b) Loans must be adequately secured. Although it is the intention that
loans to Participants shall be repaid, the collateral for each loan
shall be the assignment of the Participant's entire right, title, and
interest in and to one-half of his or her Account balance, evidenced
by his or her promissory note for the amount of the loan (including
interest), payable to the order of the Custodian.
(c) Each loan must bear interest at a reasonable rate determined by GT
Global taking into account interest rates being charged at the time
of the loan. There shall be no discrimination among Participants in
the matter of interest rates, but loans granted at different times
may bear different interest rates and terms if the differences are
justified by changes in the general economic condition.
(d) If a Participant fails to make a loan payment when due, the terms
and conditions set forth in the Sponsor's 403(b)(7) Loan Provisions
of GT Global shall apply.
7.2 LOAN LIMITS: No loan to any Participant can be made to the extent that
such loan when added to the outstanding balance of all other loans to the
Participant would exceed the lesser of (a) $50,000 reduced by the excess (if
any) of the highest outstanding balance of loans during the one year period
ending on the day before the loan is made, over the outstanding balance of loans
from the Plan on the date the loan is made, or (b) 1/2 the present value of the
Participant's Account.
Furthermore, any loan shall by its terms require that repayment (principal
and interest) be amortized in level payments, not less frequently than
quarterly, over a period not extending beyond five years from the date of the
loan, unless such loan is used to acquire a dwelling unit which within a
reasonable time will be used as the principal residence of the Participant.
7.3 ADMINISTRATION OF LOANS: GT Global shall prescribe any such rules and
procedures as from time to time it deems proper in order to administer the
provisions under this Section 7 and reserves the right to charge an
administrative fee for processing and maintaining such loans.
SECTION 8. THE CUSTODIAN AND GT GLOBAL
8.1 All notices, requests and other communications to the Custodian by the
Employer or any Participant (or his or her spouse or Beneficiary) shall be in
writing and in such form as the Custodian may from time to time prescribe. The
Custodian shall be entitled to rely on any such instruments believed by it to be
genuine, and shall have no obligation to determine the accuracy or propriety of
any such notice, request or other communications.
8.2 The Custodian shall have the power and authority in the administration
of the Custodial Account to do all acts, to execute and deliver all instruments
and to exercise for the benefit of the Participants and Beneficiaries any and
all powers which would be lawful were it in its own right the actual owner of
the property held, except as otherwise provided in this Agreement.
8.3 Custodian's Fees and Expenses of the Account: In consideration of its
services hereunder, the Custodian may charge a reasonable fee for its services
according to its schedule of fees as in effect from time to time. Any income
taxes or other taxes of any kind whatsoever that may be levied or assessed upon
or in respect of the Account shall be paid from the assets of the Account. Any
transfer taxes, investment fees or similar expenses incurred in connection with
the investment of the assets of the Account, and all
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<PAGE>
other administrative expenses incurred by the Custodian in the performance of
its duties including fees for legal services rendered to the Custodian shall
similarly be paid from the assets of the Custodial Account.
8.4 The Custodian may resign at any time upon at least 60 days prior notice
in writing to GT Global, Employer and Participant (unless such notice is waived)
and may be removed by GT Global at any time upon 30 days notice in writing to
the Custodian. Such resignation shall not become effective, however, until a
qualified successor Custodian is appointed by GT Global and such successor has
accepted such appointment in writing. Such successor Custodian shall be a "bank"
as defined in Section 401(f)(2) of the Code. Upon receipt by the Custodian of
written acceptance of such appointment by the successor custodian, the Custodian
shall transfer and pay over to such successor the assets of the Custodial
Account and all records pertaining thereto, reserving such sum as it may deem
advisable for payment of all its fees, compensation, costs and expenses and any
other liabilities constituting a charge on or against the assets of the
Custodial Account. The successor custodian shall thereafter be the Custodian
under this Custodial Agreement.
8.5 The Custodian and GT Global shall not be responsible in any way for the
time, amount or collection of contributions, the time, amount, purpose or
propriety of any distribution, or any other action taken at the direction of the
Employer, the Participant, or a Beneficiary.
Each Participant or his/her Spouse or Beneficiary and Employer shall at all
times fully indemnify and hold harmless the Custodian and GT Global, its
successors and assigns, from any liability arising from distributions so made or
actions taken under this Agreement or at the direction of such Employer,
Participant, or Beneficiary.
8.6 The Custodian's liability under this Agreement and matters which it
contemplates shall be limited to matters arising from the Custodian's negligence
or willful misconduct. To the extent permitted by applicable law, the Custodian
and GT Global shall be fully protected in acting upon any written order from the
Employer or Participant or any other notice, request, instruction or direction,
consent certificate or other instrument or paper believed by it to be genuine
and to have been properly executed, in refraining from acting in the absence of
proper directions, and so long as it acts in good faith, in taking or omitting
to take any other action. The Custodian and GT Global may submit any question
arising hereunder or in respect of the Account to counsel, including its own
general counsel, and shall be protected to the extent permitted by applicable
law, in acting on the advice of such counsel.
Subject to the provisions of applicable law, the Participant, his or her
designated Beneficiary or the executor or administrator or either of these shall
have the sole authority to enforce this Agreement on behalf of any and all
persons having or claiming any interest in the Account by virtue of this
Agreement. To protect the Account from expenses which might otherwise be
incurred, it has been imposed as a condition to the acquisition of any interest
in the Account, and it is hereby agreed, that subject to the provisions of
applicable law, no person other than the Participant, his or her designated
Beneficiary or personal representative, may institute or maintain any action or
proceeding against the Custodian or GT Global in the absence of a determination
of a court of competent jurisdiction to the contrary.
8.7 The Custodian may delegate the performance of any or all of its duties
and responsibilities to agents or service providers, who may be affiliates of
the Custodian, or may be GT Global or any of its affiliates.
SECTION 9. REPORTS AND RETURNS
9.1 The Custodian shall:
(a) maintain separate records of the interest of each Participant (or
his or her designated Beneficiary(ies)) in the Custodial Account
indicating (i) the amounts and dates of all contributions, (ii) the
investment of such contributions, (iii) the earnings on such
investments, (iv) the amounts and dates of all distributions and (v)
such other data as the Custodian deems useful in carrying out its
duties hereunder;
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<PAGE>
(b) send each Participant, as soon as practicable after any contribution
is made hereunder, a written confirmation containing information with
respect to the investment of such contribution, and the current
status of the Account; and
(c) mail at least once during each calendar year a statement of all
transactions in the Custodial Account during the preceding year and a
statement showing the value of the assets held in the Custodial
Account as of the end of such year.
9.2 The Custodian shall file such returns or reports with respect to the
Custodial Account as are required to be filed by it under the Code and the
Regulations thereunder, or by the Department of Labor, and the Employer and each
Participant shall provide the Custodian with such information available to them
as the Custodian may require to file such reports.
SECTION 10. AMENDMENTS AND TERMINATION
10.1 This Custodial Agreement may, with the approval of the Custodian, be
amended by GT Global by submitting a copy of the amendment to the Participant.
The Participant hereby delegates to GT Global the power to amend this Custodial
Agreement and shall be deemed to have consented to any such amendment.
Notwithstanding the above, no amendment shall be made by GT Global which shall
cause or permit: (a) any part of the assets in the Account to be diverted to
purposes other than for the exclusive benefit of the Participant or his or her
Beneficiaries; or (b) any part of such assets to revert to or become the
property of the Employer; or (c) any Participant, or his or her Beneficiary, to
be deprived of any benefit to which he or she was entitled under the Account by
reason of contributions made by the Employer prior to such amendment, unless
such amendment is necessary either to conform the Account to, or to satisfy the
condition of, any law, governmental regulation or ruling, or to permit the
Account to meet the requirements of the Code; or (d) any responsibilities of the
Custodian under the Agreement to be increased without its written consent.
10.2 This Custodial Agreement shall terminate upon the complete distribution
of the Custodial Account or in the event that a determination is made by the
Internal Revenue Service that the Custodial Account does not satisfy the
requirements of Section 401(f)(2) of the Code or that contributions thereto are
not treated under Section 403(b)(7)(A) of the Code as contributed for annuity
contracts. In event of termination as aforesaid, the balance in the Custodial
Account shall be distributed to the Participants (or their respective surviving
spouses or Beneficiaries, as the case may be) in accordance with their interests
in the Custodial Account.
SECTION 11. CONSTRUCTION AND GOVERNING LAW
11.1 The Custodial Account is established with the intention that it qualify
as a custodial account under Section 401(f)(2) of the Code and that
contributions thereto be treated under Section 403(b)(7)(A) of the Code as
amounts contributed for annuity contracts, and the provisions of this Agreement
shall be construed in accordance with such intention. This Agreement shall be
governed by the laws of the State of California, to the extent such laws are not
preempted by the laws of the United States, and if applicable the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA).
11.2 The determination that any provision of this Agreement is not
enforceable shall not affect the validity or enforceability of the remaining
provisions of this Agreement. Unenforceable provisions shall be stricken or
modified in accordance with such determination only as to such parties and this
Agreement, as modified, shall continue to bind the specific parties involved
therein and otherwise all other parties in unmodified form.
11.3 Matters relating to the Custodian will be determined in accordance with
Massachusetts Law (to the extent it is not pre-empted by federal law) and any
proceedings relating to the Custodian will be brought in state or federal courts
located in Massachusetts.
SECTION 12. ARBITRATION
12.1 The Participant agrees that all controversies between the Participant
and/or Beneficiaries and the Custodian and GT Global (including their present or
former officers, directors, employees or agents)
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concerning or arising from (i) any retirement account(s) maintained with the
Custodian, (ii) any transaction involving the Participant's Account(s), whether
or not such transaction occurred in such Account(s), or (iii) the construction,
performance, or breach of this Agreement, whether such controversy arose prior,
on, or subsequent to the date hereof, shall be determined by arbitration under
the commercial arbitration rules of the American Arbitration Association. Any
disputes on the arbitrability of a matter or the manner of arbitration shall be
determined in such arbitration. Arbitration shall be held in California.
12.2 ARBITRATION DISCLOSURES: Arbitration is final and binding on the
parties. The parties are waiving their right to seek remedies in court,
including the right (if any) to jury trial. Pre-arbitration discovery is
generally more limited than and different from court proceedings. The
arbitrators' award is not required to include factual findings or legal
reasoning, and any party's right to appeal or to seek modification of rulings by
the arbitrators is strictly limited.
SECTION 13. MISCELLANEOUS
13.1 ERISA COMPLIANCE: In the event that the Employer is deemed to be
maintaining an employee benefit plan under Title I of ERISA: (a) this Custodial
Agreement and each Custodial Account established hereunder shall be interpreted,
to the maximum extent possible, to comply with the terms of ERISA and all
rulings and regulations issued under ERISA; (b) notwithstanding the provisions
of Section 5.1 of this Custodial Agreement to the contrary, a Custodial Account
may be subject to offset pursuant to Section 206(d)(4) of ERISA; and (c) the
Employer shall be solely responsible for ensuring that such employee benefit
plan complies at all times with the requirements of Title I of ERISA.
13.2 CODE COMPLIANCE: The Employer shall be solely responsible for
ensuring that this Custodial Agreement, as implemented by the Employer, meets
the requirements of Code Section 401(a)(4) and (5) (relating to
non-discriminating requirements), Code Section 401(a)(17) (relating to
limitation on annual compensation), Code Section 401(a)(26) (relating to
participation requirements), Code Section 401(m) (relating to non-discrimination
in Employer matching or Employee contributions) and Code Section 410(b)
(relating to minimum coverage) as if the Custodial Agreement were a plan
qualified under Code Section 401(a), unless the Employer is a church described
in Code Section 403(b)(12)(B), as well as any other provisions of the Code that
may be applicable to, or to this Custodial Agreement by virtue of, contributions
to the Custodial Account not made pursuant to a Salary Reduction Agreement.
13.3 NO EMPLOYMENT CONTRACT: This Agreement shall not be construed as
creating or modifying any contract of employment between the Employer and
Employee.
13.4 EMPLOYER'S RETIREMENT PLAN: In the event contributions are being made
to the Custodial Account pursuant to any retirement plan or program sponsored by
the Employer, to the extent any provisions of this Agreement are inconsistent
with such retirement plan or program, the provisions of the Employer's
retirement plan or program shall control, provided:
(a) such provisions are not contrary to the rules and regulations under
Code Section 403(b)(7); and
(b) such provisions do not impose any additional responsibilities or
duties on the Custodian without its prior consent.
The Employer shall be responsible for the administration of any such
retirement plan or program.
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MAXIMUM ELECTIVE DEFERRAL WORKSHEET
- --------------------------------------------------------------------------------
GENERAL INFORMATION
The annual limit is $10,000 for the taxable year (adjusted from time to time
to reflect cost-of-living increases) and is a per taxpayer limit not per
employer. Therefore this limit applies to an individual taxpayer on the basis of
his or her taxable year on an aggregate basis, even if the employee participates
in plans of two unrelated employers.
Below is a worksheet for an employee to calculate his/her limit on elective
deferrals.
LIMIT ON ELECTIVE DEFERRALS WORKSHEET
Step 1 -- Total Elective Deferrals
<TABLE>
<C> <S> <C>
1. Elective Deferrals to 403(b) plans -------------------
2. Elective Deferrals to 401(k) plans (including SIMPLE
401(k) plans)
-------------------
3. Elective Deferrals to SARSEP plans
-------------------
4. Elective Deferrals to SIMPLE IRAs
-------------------
5. Total deferrals for year. Add lines 1, 2, 3 and 4.
-------------------
</TABLE>
Step 2 -- Increase in Limit for Long Service (Skip this step if you do not
have at least 15 years of service with a qualifying employer).
<TABLE>
<C> <S> <C>
6. Number of years of service with employer -------------------
7. Multiply $5,000 by line 6
-------------------
8. Total elective deferrals made for prior years
-------------------
9. Subtract line 8 from line 7
-------------------
10. Enter all increases in the limit for long service
-------------------
11. Subtract line 10 from $15,000
-------------------
12. Enter the lesser of line 9 or line 11, but not more
than $3,000
-------------------
</TABLE>
Step 3 -- Limit on Elective Deferrals
<TABLE>
<C> <S> <C>
13. Enter $10,000 plus the amount from line 12 -------------------
14. Enter elective $7,000 indexed amount ($10,000 for
1997)
-------------------
15. Subtract line 14 from line 13
-------------------
16. Enter the lesser of line 1 or line 15
-------------------
17. Add lines 14 and 16. This is the limit on elective
deferrals.
-------------------
18. Subtract line 17 from line 5, but not less than 0.
-------------------
</TABLE>
LINE 18 IS THE AMOUNT OF EXCESS ELECTIVE DEFERRALS, IF ANY. THIS AMOUNT
SHOULD BE INCLUDED IN THE EMPLOYEE'S GROSS INCOME FOR THE YEAR THE EXCESS
DEFERRALS WERE MADE, UNLESS THE EMPLOYEE WITHDRAWS IT BY APRIL 15TH OF THE
FOLLOWING YEAR.
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<PAGE>
403(b)(7) EXCLUSION ALLOWANCE
WORKSHEET FOR CONTRIBUTIONS
MADE BY SALARY REDUCTION
- --------------------------------------------------------------------------------
GENERAL
The maximum amount you may contribute by salary reduction contributions to
your 403(b)(7) Custodial Account is determined by calculations described in the
Internal Revenue Code. This worksheet (consisting of the front and back of this
page) summarizes these calculations for determining your "basic exclusion
allowance," "annual additions" and "elective deferrals".
SPECIAL RULES FOR DETERMINING YOUR MAXIMUM SALARY REDUCTION CONTRIBUTION
There are special rules in determining your maximum salary reduction
contribution if you:
- work less than full-time for your employer;
- are covered under a defined benefit plan and the actual amount of your
employer contributions are not known;
- work for a church or church organization; or
- are covered by a plan sponsored by another employer in which you have
greater than a 50% ownership.
INSTRUCTIONS
- You may calculate your maximum salary reduction contribution under
Section I.
- You may elect to have your contribution determined under certain
alternative formulas under Section II. If you have 15 or more Years of
Service with your employer, you may elect to use the alternative formula
under Section III. These alternative formulas are described on the second
page of this worksheet.
- Your contribution limitation should be calculated each year to ensure
that you do not exceed the maximum allowable amount. There are some basic
data which you will need to complete Lines 1-3 in Section I. The
remaining lines in this worksheet are calculated based on this data.
THIS IS FOR SAMPLE USE ONLY. PLEASE CONSULT WITH AN ATTORNEY OR TAX ADVISOR.
SECTION I
<TABLE>
<C> <S> <C> <C>
1. $ = Present annual salary (including any tax-deferred contributions to a
-------- 403(b), 401(k), SARSEP or SIMPLE IRA, or to a State Retirement Plan or a
cafeteria plan under Section 125 of the Code).
2. = Years of service with present employer as of the end of the current
-------- taxable year.
3. $ = Prior tax exempt contributions by employer to all plans (includes employee
-------- and employer before-tax contributions to a 403(b), State Retirement Plan,
and other Qualified Plans).
4. $ = Multiply Line (1) by Line (2).
--------
5. $ = Multiply Line (3) by 5.
--------
6. $ = Subtract Line (5) from Line (4).
--------
7. $ = Add 5 to Line (2).
--------
8. $ = Divide Line (6) by Line (7).
--------
9. $ = Multiply Line (1) by .20.
--------
10. $ 10,000 = Maximum elective deferral dollar limit.
--------
11. $ = Maximum Exclusion Allowance equals the lesser of Lines 8, 9, 10.
--------
</TABLE>
If $10,000 is the lesser, and you have 15 years of service, go to SECTION II --
Special 403(b)(7)
Catch-up Option. Otherwise, go to SECTION III -- Section 415 Catch-up Options.
25
<PAGE>
ALTERNATE CATCH-UP OPTIONS
- --------------------------------------------------------------------------------
For employees of Hospitals, Educational Institutions, Home Health Service
Agencies, Health and Welfare Agencies, or Church Organizations ONLY.
SECTION II
SPECIAL 403(b)(7) CATCH-UP OPTION
To qualify the employee must have completed 15 years of service with their
current employer.
<TABLE>
<S> <C> <C> <C>
A. $ = Years of Service X $5,000.
--------
B. $ = Line (A) minus all prior voluntary 403(b) contributions.
--------
C. $ = $15,000 minus prior catch-up amounts under this option.
--------
D. $ = Add $10,000 to Line (B).
--------
E. $ = Add $10,000 to Line (C).
--------
F. $ 12,500 = Add $10,000 and $3,000.
--------
G. $ = Line (8) amount (from SECTION I).
--------
H. $ = Multiply Line (1) (from SECTION I) by .20.
--------
I. $ = Maximum Voluntary Contribution is the lesser of lines D, E, F, G, or H.
--------
</TABLE>
SECTION III
SECTION 415 CATCH-UP OPTIONS*
These options are irrevocable. Once one section 415 option is chosen, no
other section 415 option may be used in future years.
OPTION A
This option is available only during the year of separation of service:
<TABLE>
<S> <C> <C> <C>
A. $ 10,000 = Elective deferral dollar limit.
--------
B. $ = Recalculate line 8 (from SECTION I) using only the latest 10 years of
-------- employment. Ignore service and contributions made prior to 10 years
ago.
C. $ = Maximum voluntary contribution is lesser of A or B.
--------
</TABLE>
OPTION B
This option is available during any year of service:
<TABLE>
<S> <C> <C> <C>
A. $ 10,000 = Elective deferral dollar limit.
--------
B. $ = Multiply Line (1) (from SECTION I) by .20 and then add $3,200.
--------
C. $ = Line (8) (from SECTION I) amount.
--------
D. $ = Maximum voluntary contribution is lesser of A, B, C.
--------
</TABLE>
If $10,000 is the lesser, and you have 15 years of service, go to
SECTION II -- Special 403(b)(7) Catch-Up Option.
- --------------
* THERE IS AN ADDITIONAL OPTION AVAILABLE UNDER SECTION 415 ALTERNATIVE CATCH-UP
OPTIONS. OPTION C IS AVAILABLE DURING ANY YEAR OF SERVICE AND IS DEPENDENT
UPON OTHER QUALIFIED PLAN COVERAGE. GENERALLY, OPTION C IS NOT A FAVORABLE
CALCULATION AND IS NOT INCLUDED ON THIS WORKSHEET.
26
<PAGE>
ALTERNATIVE LIMITATIONS
- --------------------------------------------------------------------------------
GENERAL INFORMATION
Employees of educational organizations, hospitals, home health service
agencies, health and welfare service agencies, church or church-related
organizations may make an election to use one of three alternative limitations.
Only one election may be made, and once made it is irrevocable. The three
alternatives are:
Year of Separation from Service Limitation -- this alternative is only
available to employees who separate from service. Basically under this rule the
employee is electing to replace the 25% limitation with the exclusion allowance,
but the $30,000 limit still applies.
Any Year Limitation -- This alternative is available to any employee, but
once selected remember the election is irrevocable. Under this alternative the
employee is electing to replace the 25% limit with the lesser of:
1. $4,000 plus 25% of the employee's includible compensation;
2. The exclusion allowance; or
3. $15,000.
Under this alternative, the $30,000 limit does not apply, since in effect it
is being replaced with the $15,000 limit.
These alternatives are included in the preceding worksheets.
Overall Limitation -- This alternative basically replaces the exclusion
allowance with the Section 415 limitation of the lesser of $30,000 or 25% of
compensation. If an employee elects to use the "overall limitation", the
employee is electing to replace the exclusion allowance with the 25%/$30,000
limitation on employer contributions.
If this alternative is elected, the employee must combine all contributions
to the 403(b) plan with contributions to the employer's qualified plans to
determine whether the limitation on employer contributions is exceeded.
Generally, the Overall Limitation alternative is not a favorable calculation.
SUMMARY OF LIMITS
<TABLE>
<CAPTION>
ADDITIONAL RULES WHICH APPLY
----------------------------------------------------
RULE USED $9500 EXCLUSION ALLOWANCE 25%/30,000
- -------------------------------------------------- ----------- ----------------------- ---------------------------
<S> <C> <C> <C>
Exclusion Allowance............................... Yes Yes Yes (ED* only)
Year of Separation from Service................... Yes Yes No
Any Year.......................................... Yes Yes Yes (ED* only + 3200)
Overall........................................... Yes No Yes (ALL)
</TABLE>
- --------------
*ED = Elective Deferrals
MAKING THE ALTERNATIVE ELECTION
No "formal" election is required. An employee makes an election to use one
of the Alternative Limitations by computing the income included on his or her
income tax return using such alternative limitation. The election, however, is
treated by the IRS as having been made only when needed to support the exclusion
"reflected" on the tax return.
Once an alternative limitation is elected, such election is irrevocable.
Therefore, if one of the alternative limitations is elected, the employee may
not elect any of the other alternative limitations to apply for any future year
with respect to any 403(b) plan for such employee with any employer.
27
<PAGE>
SAMPLE SALARY REDUCTION AGREEMENT
- --------------------------------------------------------------------------------
INSTRUCTIONS: This form is provided for use only where no appropriate form
is available from your Employer. Please give this form to your Employer for
signature. You should retain a copy of this form for your records. Please do not
return to GT Global.
1. EMPLOYEE AND EMPLOYER INFORMATION:
<TABLE>
<S> <C> <C>
Name of Employee -----------------------------------------------------------------------------
Address ----------------------------------------------------------------------------------------
City State Zip Code
------------------------------------------ ------------------ --------------
Social Security No. ------------------------------------------------------------------------------
Name of Employer -----------------------------------------------------------------------------
Employer Address ------------------------------------------------------------------------------
City State Zip Code
------------------------------------------ ------------------ --------------
</TABLE>
2. SALARY REDUCTION AGREEMENT: The Employee and Employer identified above
hereby agree as follows:
(i) The Employee hereby agrees to reduce his or her compensation from the
Employer by $ , or by %, for each regular payroll period
beginning , 19 , for purposes of having such reduced
compensation amounts contributed by the Employer as salary reduction
contributions to the GT Global 403(b)(7) Custodial Account established on behalf
of the Employee.
(ii) All such salary reduction contributions shall be promptly forwarded by
the Employer to:
GT Global Investor Services, Inc. (as agent for the Custodian)
P.O. Box 7345
San Francisco, CA 94120-7345
(iii) This Salary Reduction Agreement shall be irrevocable as to amounts
earned while the Agreement is in effect. This Salary Reduction Agreement shall
remain in effect until a new Salary Reduction Agreement is executed and
submitted to the Employer.
(iv) This Salary Reduction Agreement may be terminated at any time by either
the Employee or the Employer with respect to compensation not yet earned by the
Employee.
(v) The Employee shall be solely responsible for determining that any salary
reduction contributions pursuant to this Agreement do not exceed the exclusion
allowance limitations of Section 403(b)(2) of the Internal Revenue Code, the
annual additions limitations of Section 415(c) of the Internal Revenue Code, or
the limits on elective deferrals of Section 402(g) of the Internal Revenue Code.
3. ACCEPTANCE
<TABLE>
<S> <C>
Employee Signature: Date:
---------------------------------------------- -----------------------
Employer Authorized Signature:
-------------------------------------
Date:
- ------------------------------------------------------------------ -----------------------
(Print Name) (Title)
</TABLE>
28
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT GLOBAL FUNDS
P.O. Box 7345 403(b)(7) CUSTODIAL
SAN FRANCISCO, CA 94120-7345 ACCOUNT APPLICATION
800/223-2138
</TABLE>
<TABLE>
<S> <C>
Account Registration / / NEW ACCOUNT / / ACCOUNT REVISION (ACCOUNT NO. --------------------------------)
/ / THIS IS A TRANSFER. I HAVE ATTACHED A COMPLETED TRANSFER AUTHORIZATION.
Name Telephone Number ( )
- ------------------------------------------------------------ ---------------------------------------------
Address
- ----------------------------------------------------------- --------------------------------------------------------------
Street Social Security Number / / or Taxpayer I.D. Number / /
- -------------------------------------------------------------- (Check applicable box)
City State Zip Code If more than one owner, social security number or taxpayer
Employer name: identification number should be provided for first owner
- --------------------------------------------------- listed.
My employer's 403(b)(7) Transmittal Form and Agreement is Date of Birth
(check one): ------------------------------------------------------
/ / enclosed with this application / / on file with GT Global
Investor Services, Inc.
Fund Selection & Initial Contribution
Enclosed is a check for $ ---------------- made payable to GT Global Investor Services, Inc. (as agent for the Custodian) to
be invested in the Fund(s) hereby specified. EACH GT GLOBAL MUTUAL FUND ISSUES MULTIPLE CLASSES OF SHARES. PLEASE READ THE
PROSPECTUS OF THE APPLICABLE SHARES OF SUCH FUNDS CAREFULLY BEFORE YOU INVEST. (If this is a transfer from another 403(b)(7)
account, please indicate Fund preference and the percentage of the contribution you wish allocated to each Fund only. Also
complete the separate Transfer Authorization Form.)
</TABLE>
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER: / / CLASS A SHARES
/ / CLASS B SHARES (NOT AVAILABLE FOR THE DOLLAR FUND) / / CLASS C SHARES (NEW
DIMENSION FUND ONLY) OR / / ADVISOR CLASS SHARES. If a class share box is not
checked, your investment will be made in Class A Shares.
<TABLE>
<CAPTION>
INITIAL CONTRIBUTION INITIAL CONTRIBUTION
<S> <C> <C> <C>
25 / / GT GLOBAL NEW $ OR % 26 / / GT GLOBAL $ OR %
DIMENSION FUND ----------------- ---------------- DEVELOPING MARKETS FUND ----------------- ----------------
07 / / GT GLOBAL $ OR % 03 / / GT GLOBAL EUROPE $ OR %
WORLDWIDE GROWTH FUND ----------------- ---------------- GROWTH FUND ----------------- ----------------
05 / / GT GLOBAL $ OR % 13 / / GT GLOBAL LATIN $ OR %
INTERNATIONAL GROWTH ----------------- ---------------- AMERICA GROWTH FUND ----------------- ----------------
FUND
16 / / GT GLOBAL $ OR % 24 / / GT GLOBAL AMERICA $ OR %
EMERGING MARKETS FUND ----------------- ---------------- SMALL CAP GROWTH FUND ----------------- ----------------
22 / / GT GLOBAL $ OR % 06 / / GT GLOBAL AMERICA $ OR %
CONSUMER PRODUCTS ----------------- ---------------- MID CAP GROWTH FUND ----------------- ----------------
AND
SERVICES FUND
17 / / GT GLOBAL $ OR % 23 / / GT GLOBAL AMERICA $ OR %
FINANCIAL SERVICES FUND ----------------- ---------------- VALUE FUND ----------------- ----------------
11 / / GT GLOBAL HEALTH $ OR % 04 / / GT GLOBAL JAPAN $ OR %
CARE FUND ----------------- ---------------- GROWTH FUND ----------------- ----------------
19 / / GT GLOBAL $ OR % 10 / / GT GLOBAL GROWTH $ OR %
INFRASTRUCTURE FUND ----------------- ---------------- & INCOME FUND ----------------- ----------------
21 / / GT GLOBAL NATURAL $ OR % 08 / / GT GLOBAL $ OR %
RESOURCES FUND ----------------- ---------------- STRATEGIC INCOME FUND ----------------- ----------------
15 / / GT GLOBAL $ OR % 09 / / GT GLOBAL $ OR %
TELECOMMUNICATIONS FUND ----------------- ---------------- GOVERNMENT INCOME FUND ----------------- ----------------
02 / / GT GLOBAL NEW $ OR % 18 / / GT GLOBAL HIGH $ OR %
PACIFIC GROWTH FUND ----------------- ---------------- INCOME FUND ----------------- ----------------
01 / / GT GLOBAL DOLLAR $ OR % TOTAL INITIAL $
FUND ----------------- ---------------- CONTRIBUTION: --------------------
</TABLE>
<TABLE>
<S> <C> <C>
Telephone Exchange
I, either directly or through the Authorized Agent, if any, named below, hereby
authorize the Transfer Agent of the GT Global Mutual Fund, to honor any
telephone, telex or telegraphic instructions believed to be authentic for
exchange between any of the Funds distributed by GT Global, Inc. ("GT Global"). I
understand and agree that the account will be subject to the telephone exchange
privilege described in the applicable GT Global Fund's current prospectus and
agree that GT Global, GT Global Funds and the Funds' Transfer Agent, their
officers and employees, will not be responsible for the authenticity of any
telephone, telex, or telegraphic instructions nor be liable for any loss arising
out of any such telephone, telex or telegraphic instructions effected including
any such loss due to negligence on the part of such entities.
For Use by Authorized Agent (Broker/Dealer or Advisor) Only
We hereby submit this 403(b)(7) Custodial Account Application for the purchase of
shares including shares purchased under a Right of Accumulation or Letter of
Intent in accordance with the terms of our Selling Agreement with GT Global and
with the Prospectus(es) for the GT Global Mutual Fund(s). We agree to notify GT
Global of any purchases properly made under a Letter of Intent or Right of
Accumulation.
</TABLE>
Broker/Dealer or Advisor Name_________________________________________________
Main Office Address___________________________________________________________
Branch Number_______ Representative's Number______ Representative's Name______
<TABLE>
<S> <C>
Branch Address --------------------- Telephone Number ----------------
For Class A, B and C Shares only:
Broker/Dealer's Authorized Signature X ---------- Title ---------------------
For Advisor Class Shares only:
We hereby submit this 403(b)(7) Custodial Account Application for the purchase of Advisor Class shares in accordance with
the terms of our Advisor Class Agreement with GT Global and with the Prospectus and Statement of Additional Information of
each Fund purchased.
Advisor's Authorized Signature X --------------------- Title ---------------------
</TABLE>
29
<PAGE>
<TABLE>
<S> <C>
Designation of Beneficiary(ies)
If you require more room to name additional beneficiaries, please provide the necessary information on a separate sheet,
and indicate next to each name whether beneficiary is primary or contingent.
PRIMARY BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my 403(b)(7) Custodial Account upon my
death:
</TABLE>
<TABLE>
<S> <C> <C> <C>
1. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------ Date of Birth -------- Social Security Number ------------------------ Share of Account %
------
2. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------------- DOB -------- Social Security Number ------------------------ Share of Account %
------
CONTINGENT BENEFICIARY(IES)
I hereby designate the following person(s) to receive any interest remaining in my 403(b)(7) Custodial Account upon my death:
1. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------------- DOB -------- Social Security Number ------------------------ Share of Account %
------
2. Name --------------------------------------- Address ---------------------------------------------------------------
Relationship ------------------- DOB -------- Social Security Number ------------------------ Share of Account %
------
</TABLE>
If no Primary Beneficiary(ies) survives the Participant, the payment shall be
made in equal shares (or as otherwise indicated above) to the Contingent
Beneficiary(ies) who survive the Participant. The Participant reserves the
right to change the above beneficiary by filing a new Beneficiary Designations
Form with the Custodian. Should no named beneficiary survive the date of
distribution, the account shall be distributed to my surviving spouse, or if
there is no surviving spouse, in a single payment to my estate. ONLY THE MOST
RECENT EXECUTED DESIGNATION OF BENEFICIARY(IES) ON FILE WITH GT GLOBAL
INVESTOR SERVICES, INC. (AS AGENT FOR THE CUSTODIAN) WILL BE HONORED.
Consent of Spouse
I consent to the above Beneficiary Designation.
Signature of Spouse:
------------------------------------------------------------------
Date:
------------------
(Note: May be required in community property states if any person other than
or in addition to Participant's Spouse is designated as Beneficiary.)
<TABLE>
<S> <C>
Reduced Sales Charges
</TABLE>
RIGHT OF ACCUMULATION -- CLASS A SHARES ONLY
/ / I certify that I qualify for the Right of Accumulation sales charge
discount described in the prospectus and statement of additional
information of the Fund(s) purchased.
/ / I own shares of more than one GT Global Mutual Fund. Below is a schedule
showing the numbers of each of my Shareholder Accounts.
/ / The registration of some of my shares differs from that shown on this
403(b)(7) Application. Below is a schedule showing the account number(s)
and full registration in each case.
STATEMENT OF INTENTION -- CLASS A SHARES ONLY
I agree to the Statement of Intention set forth in the Prospectus(es) for the
Fund(s) in which I am investing. Although I am not obligated to do so, it is my
intention to invest over a thirteen-month period in Class A Shares of the GT
Global Mutual Funds, in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000
LIST OF OTHER GT GLOBAL MUTUAL FUND ACCOUNTS:
____________________________ _________________________________________
____________________________ _________________________________________
____________________________ _________________________________________
Account Numbers Account Registrations
Agreement and Signature
I acknowledge receipt of the GT Global 403(b)(7) Custodial Agreement, and this
Application incorporates such Agreement. I acknowledge receipt of the current
Prospectus(es) of the Fund(s) in which I have directed GT Global Investor
Services, Inc. (as agent for the Custodian) to invest my contribution(s). I
agree to the terms and provisions set forth in this 403(b)(7) Custodial
Account Application including those contained in the Telephone Exchange
section, the 403(b)(7) Custodial Account Agreement and the Prospectus(es). AS
REQUIRED BY THE INTERNAL REVENUE SERVICE, I CERTIFY, UNDER PENALTIES OF
PERJURY, THAT THE TAXPAYER IDENTIFICATION NUMBER GIVEN ON THE FACE OF THIS
403(B)(7) CUSTODIAL ACCOUNT APPLICATION IS CORRECT AND THAT I AM NOT SUBJECT
TO BACKUP WITHHOLDING IN MY ACCOUNT(S). THE INTERNAL REVENUE SERVICE DOES NOT
REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE
CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
Signature X_______________________________ Date ______________________________
Individual
For GT Global Use Only
ACCEPTED:
X_____________________________________________________ _______________________
Signature of Custodian or its Agent Date
30
<PAGE>
<TABLE>
<S> <C>
[LOGO] GT GLOBAL FUNDS
P.O. Box 7345 403(b) TRANSFER AUTHORIZATION
SAN FRANCISCO, CA 94120-7345
800/223-2138
</TABLE>
<TABLE>
<CAPTION>
TO EXISTING CUSTODIAN OR TRUSTEE: PLEASE RETURN THIS FORM TO GT GLOBAL
<S> <C> <C> <C>
Name: Telephone ( )
------------------------------------------------------------- ------------------------
Address: -------------------------------------------
---------------- ---------------- ----------------
(City) (State) (Zip)
Regarding the following individual policy/account:
Investor Name: -----------------------------------------------------
Policy or account number:
--------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Please liquidate $------ or ----% of my 403(b) policy/account identified above and transfer those
funds by check made payable to:
</TABLE>
GT Global Investor Services, Inc. (as agent for the Custodian)
P.O. Box 7345
San Francisco, CA 94120-7345
<TABLE>
<S> <C>
For: ------------------------------- ------------------------------------------------------------
(Investor's name) (GT Global 403(b)(7) Custodial Account number, if applicable)
</TABLE>
AGE 70 1/2 RESTRICTIONS
(Complete this section if the participant will be age 70 1/2 or older in the
transfer year. Complete multiple forms if necessary.)
The following transfer restrictions apply to this transaction:
1. REQUIRED MINIMUM DISTRIBUTION. I authorize the present Custodian or
Trustee named above to:
(select one option)
/ / distribute my required minimum distributions to me prior to making
the requested transfer.
/ / segregate and retain minimum distribution amount. Distribute on
, 19 .
2. REQUIRED ELECTIONS. (Complete only if participant has reached his/her
required beginning date, i.e., April 1 following the later of the year in
which the participant attained age 70 1/2 or the year in which the
Participant retired.)
a. The participant's oldest primary beneficiary with respect to the
transferring qualified plan is
<TABLE>
<S> <C>
Name: -------------------------------------- Birthdate:------------------------ Relationship:
------------------------
</TABLE>
b. The participant's life expectancy / / was / / was not being
recalculated.
c. The life expectancy of the participant's spouse beneficiary / / was
/ / was not being recalculated.
/ / Not applicable.
I am aware that the election indicated above became irrevocable as of my
required beginning date and will apply to the Custodial Account with the new
Custodian indicated below.
I certify that this transaction meets the requirements for a tax-free transfer
under IRS Revenue Ruling 90-24 and other applicable laws or rulings of the
Internal Revenue Service.
<TABLE>
<S> <C>
Signed: --------------------------------- --------------------------------------------------------------
Signature guarantee (if required by current Custodian or
(Investor's signature) (Date) Trustee):
</TABLE>
- --------------------------------------------------------------------------------
FOR GT GLOBAL USE ONLY
- ------------------------------------------------------------------------
GT Global Investor Services, Inc. (as agent for the GT Global 403(b)(7)
Account Custodian) agrees to accept the transfer described above and upon
written receipt will apply the proceeds to investments as designated by the
Investor.
------------------------------------------------------------------------------
(Signature of Custodian or its Agent) (Date)
31
<PAGE>
403(b) TRANSFER AUTHORIZATION: INSTRUCTIONS
This form can be used to transfer assets from another 403(b) custodian or
tax-sheltered annuity contract directly to a GT Global 403(b)(7) Custodial
Account.
/ / To transfer assets into a new GT Global 403(b)(7) Custodial Account,
complete the 403(b)(7) Custodial Account Application and submit it
with this form.
/ / To transfer assets into an existing GT Global 403(b)(7) Custodial
Account, you need only complete and submit this form with the number
of the existing 403(b)(7) Custodial Account indicated in the space
provided.
If you have any questions, please call GT Global Investor Services, Inc. at
1-800-223-2138.
32
<PAGE>
<TABLE>
<S> <C>
[LOGO] GT GLOBAL FUNDS
P.O. Box 7345 EMPLOYER 403(b)(7) TRANSMITTAL
SAN FRANCISCO, CA 94120-7345 FORM AND AGREEMENT
800/223-2138
</TABLE>
- ------------------------------------------------------
EMPLOYER INFORMATION
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------
Name of Employer
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City/State/Zip
- --------------------------------------------------------------------------------
Name of Employer Contact Person
( )
- --------------------------------------------------------------------------------
Daytime Telephone
_ _ - _ _ _ _ _ _ _
Employer Tax Identification Number
<TABLE>
<S> <C>
Total Number of Eligible Employees -------------- as of --------------
(Date)
</TABLE>
(Please include all employees eligible to participate in your plan, regardless
of actual participation.)
<TABLE>
<S> <C>
Normal Retirement Age: ---------
</TABLE>
- --------------------------------------------------------------------------------
ACCOUNT CONTRIBUTION SCHEDULE
- --------------------------------------------------------------------------------
Indicate the name and full mailing address of the person who is to receive the
Account Contribution Schedule:
- --------------------------------------------------------------------------------
Name of Organization
- --------------------------------------------------------------------------------
Name of Individual
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City/State/Zip
( )
- --------------------------------------------------------------------------------
Daytime Telephone
- --------------------------------------------------------------------------------
METHOD OF PAYMENT
- --------------------------------------------------------------------------------
I, the Employer, shall pay the amounts representing the portion of each
Employee's salary, reduced pursuant to a binding and irrevocable Salary
Reduction Agreement between the Employee and Employer, for contribution to a GT
Global 403(b)(7) Custodial Account, as follows: (check one)
/ / CHECK: By a single check accompanied by a GT Global 403(b)(7) Account
Contribution Schedule showing the amount allocable to each Employee's
Custodial Account.
/ / WIRE: By a single wire preceded by a GT Global 403(b)(7) Account
Contribution Schedule showing the amount allocable to each Employee's
Custodial Account.
33
<PAGE>
- --------------------------------------------------------------------------------
FREQUENCY OF PAYMENT
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Beginning on ------------------- I, the Employer, will transmit Custodial Account contributions:
(Date)
</TABLE>
/ / Weekly, on the 1st, 8th, 15th and 22nd of each month; or
/ / Twice Each Month, on the [1st and 15th] or [8th and 22nd] days of the month
(select one); or
/ / Monthly, on the [1st/8th/15th/22nd] day of the month (select one); or
/ / Quarterly, on the 15th day of January, April, July and October.
- --------------------------------------------------------------------------------
EMPLOYER AGREEMENT
- --------------------------------------------------------------------------------
The Employer hereby accepts the GT Global 403(b)(7) Custodial Account Agreement
and agrees to be bound by its terms.
- --------------------------------------------------------------------------------
Employer's Name (please print)
- --------------------------------------------------------------------------------
By: (Signature of person signing on behalf of Employer) Title Date
<TABLE>
<S> <C>
Accepted: ----------------------------, Custodian
By: ---------------------------- GT Global Investor Services, Inc. ----------------------------
Date
</TABLE>
<TABLE>
<S> <C>
FOR OFFICE USE ONLY
Date Received ------------------
By -----------------------------
Plan ID ------------------------
</TABLE>
34
<PAGE>
<TABLE>
<S> <C>
[LOGO]
GT Global Funds
Fifty California Street SUPPLEMENTAL APPLICATION
27th Floor PORTFOLIO REBALANCING PROGRAM
San Francisco, CA 94111-4624
</TABLE>
<TABLE>
<S> <C>
ACCOUNT REGISTRATION EXISTING
SHAREHOLDER ACCOUNT NUMBER
</TABLE>
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies)
and date of trust instrument. Registration for Uniform Gifts/Transfers to
Minors accounts should be in the same name of one custodian and one minor and
include the state under which the custodianship is created.
<TABLE>
<S> <C> <C> <C> <C>
--------------------------------------
Owner Social Security Number / / or Taxpayer Identification Number ("TIN") / /
- -------------------------------------- (Check applicable box)
Co-owner 1 If more than one owner, social security number or TIN should be provided for first
- -------------------------------------- owner listed. If a purchase is made under Uniform Gift/Transfer to Minors Act, social
Co-owner 2 security number of the minor must be provided.
-------------------------------------- Resident of / / U.S. / / Other (specify)------------------------------
Street Address Failure to provide TIN will result in 31% withholding on redemptions and exchanges.
( ) ( )
------------------------------------------------------------------------------------------------------------------------------
City, State, Zip Code Home Telephone Business Telephone
</TABLE>
FUND SELECTION $500 MINIMUM INITIAL INVESTMENT REQUIRED FOR EACH FUND SELECTED
FOR CLASS A AND CLASS B SHARES.
CHECKS SHOULD BE MADE PAYABLE TO "GT GLOBAL INVESTOR
SERVICES, INC."
TO PURCHASE THE FUNDS LISTED BELOW PLEASE SELECT EITHER / / Class A
Shares / / Class B Shares or / / Advisor Class Shares
If a class share box is not checked, your investment will be made in Class A
shares. Minimum 2 funds; Maximum 10 funds; Minimum 5% allocation per Fund.
<TABLE>
<S> <C> <C> <C> <C>
07 / / GT GLOBAL WORLDWIDE GROWTH FUND ---------- 03 / / GT GLOBAL EUROPE GROWTH FUND ----------
05 / / GT GLOBAL INTERNATIONAL GROWTH FUND ---------- 13 / / GT GLOBAL LATIN AMERICA GROWTH FUND ----------
16 / / GT GLOBAL EMERGING MARKETS FUND ---------- 24 / / GT GLOBAL AMERICA SMALL CAP GROWTH ----------
FUND
26 / / GT GLOBAL DEVELOPING MARKETS FUND ---------- 06 / / GT GLOBAL AMERICA MID CAP GROWTH FUND ----------
25 / / GT GLOBAL NEW DIMENSION FUND ---------- 23 / / GT GLOBAL AMERICA VALUE FUND ----------
11 / / GT GLOBAL HEALTH CARE FUND ---------- 04 / / GT GLOBAL JAPAN GROWTH FUND ----------
15 / / GT GLOBAL TELECOMMUNICATIONS FUND ---------- 10 / / GT GLOBAL GROWTH & INCOME FUND ----------
19 / / GT GLOBAL INFRASTRUCTURE FUND ---------- 09 / / GT GLOBAL GOVERNMENT INCOME FUND ----------
17 / / GT GLOBAL FINANCIAL SERVICES FUND ---------- 08 / / GT GLOBAL STRATEGIC INCOME FUND ----------
21 / / GT GLOBAL NATURAL RESOURCES FUND ---------- 18 / / GT GLOBAL HIGH INCOME FUND ----------
22 / / GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ---------- 01 / / GT GLOBAL DOLLAR FUND ----------
02 / / GT GLOBAL NEW PACIFIC GROWTH FUND ---------- Total percentage must equal 100%.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Rebalance frequency -- check one: / / Monthly / / Quarterly / / Semi annually / / Annually
</TABLE>
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains distributions and dividends will be reinvested in additional
shares of the same class unless appropriate boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in
cash / / Pay capital gain distributions and dividends in cash.
Investment will be split according to allocation.
<TABLE>
<S> <C>
AGREEMENTS & SIGNATURES
The investor(s) certifies(y) and agree(s) that the certifications, authorizations, directions and restrictions contained herein
will continue until the Transfer Agent of the GT Global Mutual Funds receives written notice of any change or revocation. ANY
CHANGE IN THESE INSTRUCTIONS MUST BE SIGNED IN WRITING.
- ------------------------------------------------------------
Date
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
X X
- ----------------------------------------------- -----------------------------------------------
Signature Signature
</TABLE>
35
<PAGE>
NOTES
- --------------------------------------------------------------------------------
January 1998 403DC712010M
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