<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 1, 1998
FILE NOS. 33-52036
811-7164
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 17 /X/
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 19 /X/
------------------------
GT GLOBAL VARIABLE INVESTMENT TRUST
(AS SUCCESSOR TO G.T. GLOBAL VARIABLE INVESTMENT TRUST)
(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> <C>
MICHAEL A. SILVER, ESQ. SAMUEL D. SIRKO, ESQ. ARTHUR J. BROWN, ESQ.
INVESCO (NY), INC. A I M ADVISORS, INC. R. DARRELL MOUNTS, ESQ.
50 CALIFORNIA STREET, 11 GREENWAY PLAZA, KIRKPATRICK & LOCKHART LLP
27TH FLOOR SUITE 100 1800 MASSACHUSETTS AVENUE, N.W.,
SAN FRANCISCO, CA 94111 HOUSTON, TEXAS 77046 (713) 2ND FLOOR
(NAME AND ADDRESS OF AGENT 626-1919 WASHINGTON, D.C. 20036
FOR SERVICE) (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.
/X/ ON JUNE 6, 1998 PURSUANT TO PARAGRAPH (b) OF RULE 485 OR SUCH OTHER
DATE AS IT MAY BE DECLARED EFFECTIVE BY THE SECURITIES AND EXCHANGE
COMMISSION.
/ / 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1) OF RULE 485.
/ / ON PURSUANT TO PARAGRAPH (a)(1) OF RULE 485.
/ / 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(2) OF RULE 485.
/ / ON PURSUANT TO PARAGRAPH (a)(2) OF RULE 485.
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 414 UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT")
BY THIS AMENDMENT TO THE REGISTRATION STATEMENT ON FORM N-1A OF G.T. GLOBAL
VARIABLE INVESTMENT TRUST, A MASSACHUSETTS BUSINESS TRUST, THE REGISTRANT HEREBY
ADOPTS THE REGISTRATION STATEMENT OF SUCH TRUST UNDER THE SECURITIES ACT AND
NOTIFICATION OF REGISTRATION AND REGISTRATION STATEMENT OF SUCH TRUST UNDER THE
INVESTMENT COMPANY ACT OF 1940.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL VARIABLE INVESTMENT TRUST
CONTENTS OF POST-EFFECTIVE AMENDMENT
THIS POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT OF GT GLOBAL
VARIABLE INVESTMENT TRUST 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 Pages
-- GT Global Variable Investment Trust (a Delaware business trust)
-- G.T. Global Variable Investment Trust (a Massachusetts business trust)
Exhibits
</TABLE>
<PAGE>
GT GLOBAL VARIABLE INVESTMENT TRUST
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>
GT GLOBAL VARIABLE INVESTMENT TRUST
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A
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>
GT GLOBAL VARIABLE INVESTMENT FUNDS
PROSPECTUS -- JUNE 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 Funds are managed by A I M Advisors, Inc. ("AIM") and are sub-advised and
sub-administered by INVESCO (NY), Inc. (the "Sub-adviser"). AIM and the
Sub-adviser and their worldwide asset management affiliates provide investment
management and/or administrative services to institutional, corporate and
individual clients around the world. AIM and the Sub-adviser are both indirect
wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are
an independent investment management group that has a significant presence in
the institutional and retail segment of the investment management industry in
North America and Europe, and a growing presence in Asia.
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.
See "Investment Objectives and Policies" and "Risk Factors."
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 June
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) 347-4246. 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.................................................. 38
How to Invest............................................................................. 39
Calculation of Net Asset Value............................................................ 40
Dividends, Other Distributions and Federal Income Taxation................................ 40
Management................................................................................ 42
Other Information......................................................................... 48
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
GENERAL INFORMATION
- --------------------------------------------------------------------------------
Each Fund is organized as a separate series of either GT Global Variable
Investment Series or GT 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 GT 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 GT 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.
GT GLOBAL VARIABLE INVESTMENT SERIES
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31,
------------------------------------------
1997 1996 1995
------------ ------------ ------------
JULY 5, 1994
(COMMENCEMENT
OF
OPERATIONS)
TO
DEC. 31, 1994
-------------
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.............. $ 11.91 $ 11.01 $ 11.25 $ 12.00
------------ ------------ ------------ -------------
Income from investment operations
Net investment income........................... 0.15* 0.05* 0.09* 0.06**
Net gains or losses on securities (both realized
and unrealized)................................ 0.68 0.89 (0.22) (0.76)
------------ ------------ ------------ -------------
Total from investment operations.................. 0.83 0.94 (0.13) (0.70)
------------ ------------ ------------ -------------
Less distributions
From net investment income...................... (0.02) -- (0.09) (0.05)
From net realized gain on investments........... -- (0.04) (0.02) --
In excess of net investment income.............. -- -- -- --
Return of capital............................... -- -- -- --
------------ ------------ ------------ -------------
Total distributions........................... (0.02) (0.04) (0.11) (0.05)
------------ ------------ ------------ -------------
Net asset value, end of period.................... $ 12.72 $ 11.91 $ 11.01 $ 11.25
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Total returns +(b)................................ 6.93% 8.52% (1.14)% (5.81)%
Ratios/supplemental data
Net assets, end of period (in 000's)............ $ 5,929 $ 4,782 $ 3,663 $ 2,229
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Sub-adviser and
expense reductions (a)....................... 1.22% 0.48% 0.93% 3.33%
Without reimbursement by the Sub-adviser and
expense reductions (a)....................... 0.05% (0.86)% (1.35)% (2.56)%
Without expenses assumed by the Sub-adviser
(a).......................................... --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Sub-adviser and
expense reductions (a)....................... 1.14% 1.15% 1.25% 0.69%
Without reimbursement by the Sub-adviser and
expense reductions (a)....................... 2.31% 2.49% 3.53% 6.58%
Without expenses assumed by the Sub-adviser
(a).......................................... --% --% --% --%
Portfolio turnover (a).......................... 112% 92% 107% 17%
Average commission rate per share paid on
portfolio transactions......................... $0.0225 $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 Sub-adviser of International Fund operating
expenses for the fiscal years ended 1997, 1996 and 1995, of $0.06, $0.14 and
$0.22, respectively.
** Includes reimbursement by the Sub-adviser of International Fund operating
expenses of $0.11.
(a) Annualized for periods of less than one year.
(b) Not annualized for periods of less than one year.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S AVERAGE
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AMOUNT OF
YEAR OUTSTANDING OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED AT END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----- ---------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
International Fund............ 1997 $0 $0 438,679 $0.0000
</TABLE>
Prospectus Page 4
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
GT GLOBAL VARIABLE INVESTMENT SERIES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1997
----------------------------------------------
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.............. $ 18.02 $ 21.34 $19.71 $ 1.00
-------- -------- ------- -------
Income from investment operations
Net investment income........................... 0.26*** 0.05*** (0.07 ) 0.05***
Net gains or losses on securities (both realized
and unrealized)................................ (7.61) 3.10 2.88 --
-------- -------- ------- -------
Total from investment operations.................. (7.35) 3.15 2.81 0.05
-------- -------- ------- -------
Less distributions
From net investment income...................... (0.10) (0.06) (0.09 ) (0.05)
From net realized gain on investments........... (0.07) (1.91) (0.75 ) --
In excess of net investment income.............. -- -- -- --
Return of capital............................... -- -- -- --
-------- -------- ------- -------
Total distributions........................... (0.17) (1.97) (0.84 ) (0.05)
-------- -------- ------- -------
Net asset value, end of period.................... $ 10.50 $ 22.52 $21.68 $ 1.00
-------- -------- ------- -------
-------- -------- ------- -------
Total returns +(b)................................ (41.11)% 15.15% 14.88% 4.96%
Ratios/supplemental data
Net assets, end of period (in 000's)............ $ 16,490 $27,410 $43,977 $26,964
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Sub-adviser and
expense reductions (a)....................... 1.50% 0.22% (0.35)% 4.77%
Without reimbursement by the Sub-adviser and
expense reductions (a)....................... 1.16% 0.01% (0.42)% 4.73%
Without expenses assumed by the Sub-adviser
(a).......................................... --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Sub-adviser and
expense reductions (a)....................... 1.09% 1.20% 0.91% 0.75%
Without reimbursement by the Sub-adviser and
expense reductions (a)....................... 1.43% 1.41% 0.98% 0.79%
Without expenses assumed by the Sub-adviser
(a).......................................... --% --% --% --%
Portfolio turnover (a).......................... 93% 117% 210% N/A
Average commission rate per share paid on
portfolio transactions......................... $ 0.0064 $0.0626 $0.0552 N/A
<CAPTION>
YEAR ENDED DEC. 31, 1996
-----------------------------------------------
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.............. $ 13.92 $ 16.52 $19.46 $ 1.00
-------- -------- ------- -------
Income from investment operations
Net investment income........................... 0.13** 0.05** 0.12 ** 0.05**
Net gains or losses on securities (both realized
and unrealized)................................ 4.16 4.93 3.18 0.00
-------- -------- ------- -------
Total from investment operations.................. 4.29 4.98 3.30 0.05
-------- -------- ------- -------
Less distributions
From net investment income...................... (0.19) (0.16) (0.30 ) (0.05)
From net realized gain on investments........... -- -- (2.75 ) --
In excess of net investment income.............. -- -- -- --
Return of capital............................... -- -- -- --
-------- -------- ------- -------
Total distributions........................... (0.19) (0.16) (3.05 ) (0.05)
-------- -------- ------- -------
Net asset value, end of period.................... $ 18.02 $ 21.34 $19.71 $ 1.00
-------- -------- ------- -------
-------- -------- ------- -------
Total returns +(b)................................ 30.97% 30.25% 18.55% 4.75%
Ratios/supplemental data
Net assets, end of period (in 000's)............ $32,670 $24,537 $41,647 $19,794
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Sub-adviser and
expense reductions (a)....................... 0.88% 0.36% 0.52% 4.67%
Without reimbursement by the Sub-adviser and
expense reductions (a)....................... 0.60% 0.09% 0.46% 4.57%
Without expenses assumed by the Sub-adviser
(a).......................................... --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Sub-adviser and
expense reductions (a)....................... 1.12% 1.20% 0.95% 0.75%
Without reimbursement by the Sub-adviser and
expense reductions (a)....................... 1.40% 1.47% 1.01% 0.85%
Without expenses assumed by the Sub-adviser
(a).......................................... --% --% --% --%
Portfolio turnover (a).......................... 70% 56% 248% N/A
Average commission rate per share paid on
portfolio transactions......................... $0.0071 $0.0313 $0.0531 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 Sub-adviser 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 Sub-adviser 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.
*** Includes reimbursements by the Sub-adviser of New Pacific Fund, Europe Fund
and Money Market Fund operating expenses for the fiscal year ended December
31, 1997 of $0.02, $0.02 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
GT GLOBAL VARIABLE INVESTMENT SERIES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1995
------------------------------------------
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....................... $ 14.01 $ 15.22 $ 15.81 $ 1.00
----------- -------- -------- --------
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 --
----------- -------- -------- --------
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................ -- -- (0.29 ) --
In excess of net investment
income..................... -- -- -- --
Return of capital........... -- -- -- --
----------- -------- -------- --------
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
Sub-adviser and expense
reductions (a)........... 1.27% 1.12% 1.66% 5.15%
Without reimbursement by
the Sub-adviser and
expense reductions (a)... 1.74% 0.60% 1.60% 4.85%
Without expenses assumed
by the Sub-adviser (a)... --% --% --% --%
Ratio of expenses to average
net assets:
With reimbursement by the
Sub-adviser and expense
reductions (a)........... 1.14% 1.20% 1.00% 0.75%
Without reimbursement by
the Sub-adviser and
expense reductions (a)... 1.61% 1.72% 1.06% 1.05%
Without expenses assumed
by the Sub-adviser (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 Sub-adviser 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 Sub-adviser 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
GT GLOBAL VARIABLE INVESTMENT SERIES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DEC. 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 --
----------- -------- ------- -------
Total from investment operations........ (2.00) (0.09) 2.56 0.03
----------- -------- ------- -------
Less distributions
From net investment income............ (0.06) -- (0.50 ) (0.03)
From net realized gain on
investments.......................... -- (0.02) -- --
In excess of net investment income.... -- -- -- --
Return of capital..................... -- -- -- --
----------- -------- ------- -------
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
Sub-adviser and expense reductions
(a)................................ 0.83% 1.48% 1.83% 3.70%
Without reimbursement by the
Sub-adviser and expense reductions
(a)................................ 0.48% 1.07% 0.76% 3.64%
Without expenses assumed by the Sub-
adviser (a)........................ --% --% --% --%
Ratio of expenses to average net
assets:
With reimbursement by the
Sub-adviser and expense reductions
(a)................................ 1.25% 1.25% 0.98% 0.75%
Without reimbursement by the
Sub-adviser and expense reductions
(a)................................ 1.60% 1.66% 2.05% 0.81%
Without expenses assumed by the Sub-
adviser (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>
FEB. 10, 1993
(COMMENCEMENT OF OPERATIONS)
TO DEC. 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 --
----------- -------- ------- ------
Total from investment operations........ 4.07 3.33 1.75 0.03
----------- -------- ------- ------
Less distributions
From net investment income............ -- -- -- (0.03 )
From net realized gain on
investments.......................... -- -- -- --
In excess of net investment income.... -- -- -- --
Return of capital..................... -- -- -- --
----------- -------- ------- ------
Total distributions..................... -- -- -- (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
Sub-adviser and expense reductions
(a)................................ 0.9% 1.1% 14.1% 2.9%
Without reimbursement by the
Sub-adviser and expense reductions
(a)................................ 0.3% 0.4% 12.8% 2.1%
Without expenses assumed by the Sub-
adviser (a)........................ (2.0)% (2.8)% 7.6% (2.6)%
Ratio of expenses to average net
assets:
With reimbursement by the
Sub-adviser and expense reductions
(a)................................ 0.6% 0.7% 0.0% 0.2%
Without reimbursement by the
Sub-adviser and expense reductions
(a)................................ 1.3% 1.4% 1.3% 1.0%
Without expenses assumed by the Sub-
adviser (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 Sub-adviser 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 Sub-adviser 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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S AVERAGE
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AMOUNT OF
YEAR OUTSTANDING OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED AT END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----------- ---------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
New Pacific Fund.................. 1997 $ 0 $ 157,386 1,731,796 $ 0.0909
Europe Fund....................... 1997 0 253,348 1,255,414 0.2018
America Fund...................... 1997 0 91,718 2,058,932 0.0445
Money Market Fund................. 1997 0 0 22,500,758 0.0000
Europe Fund....................... 1996 239,000 655 1,035,444 0.0006
</TABLE>
Prospectus Page 7
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
GT GLOBAL VARIABLE INVESTMENT TRUST
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1997 YEAR ENDED DEC. 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.... $ 16.47 $ 20.98 $ 14.26 $ 13.27 $ 13.88 $ 10.88
-------------- --------- ------------ -------------- --------- ------------
Income from investment operations
Net investment income................. 0.12** (0.03)** 0.15** 0.11* (0.06)* 0.11*
Net gains or losses on securities
(both realized and unrealized)....... 0.74 0.18 (1.89) 3.19 7.16 3.27
-------------- --------- ------------ -------------- --------- ------------
Total from investment operations........ 0.86 0.15 (1.74) 3.30 7.10 3.38
-------------- --------- ------------ -------------- --------- ------------
Less distributions
From net investment income............ (0.10) -- (0.06) (0.03) -- --
From net realized gain on
investments.......................... (0.88) (0.93) (0.89) (0.07) -- --
In excess of net realized gain on
investments.......................... -- -- -- -- -- --
Return of capital..................... -- -- -- -- -- --
-------------- --------- ------------ -------------- --------- ------------
Total distributions..................... (0.98) (0.93) (0.95) (0.10) -- --
-------------- --------- ------------ -------------- --------- ------------
Net asset value, end of period.......... $ 16.35 $ 20.20 $ 11.57 $ 16.47 $ 20.98 $ 14.26
-------------- --------- ------------ -------------- --------- ------------
-------------- --------- ------------ -------------- --------- ------------
Total returns +(b)...................... 5.00% 1.29% (13.76)% 24.88% 51.15% 31.07%
Ratios/supplemental data
Net assets, end of period (in
000's)............................... $ 8,745 $16,709 $16,509 $ 6,054 $16,308 $17,604
Ratio of net investment income to
average net assets:
With reimbursement by the
Sub-adviser and expense reductions
(a)................................ 0.99% (0.16)% 1.05% 1.35% (0.60)% 0.89%
Without reimbursement by the Sub-
adviser and expense reductions
(a)................................ 0.68% (0.38)% 0.78% 0.03% (1.30)% 0.39%
Without expenses assumed by the Sub-
adviser (a)........................ --% --% --% --% --% --%
Ratio of expenses to average net
assets:
With reimbursement by the
Sub-adviser and expense reductions
(a)................................ 1.18% 1.20% 1.22% 1.21% 1.19% 1.18%
Without reimbursement by the Sub-
adviser and expense reductions
(a)................................ 1.49% 1.42% 1.49% 2.53% 1.89% 1.68%
Without expenses assumed by the Sub-
adviser (a)........................ --% --% --% --% --% --%
Portfolio turnover (a)................ 46% 315% 212% 76% 199% 216%
Average commission rate per share paid
on portfolio transactions............ $0.0077 $0.0123 $0.0013 $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 Sub-adviser of Infrastructure Fund, Natural
Resources Fund and Emerging Markets Fund operating expenses for the fiscal
year ended December 31, 1996 of $0.19, $0.11 and $0.05, respectively.
** Includes reimbursement by the Sub-adviser of Infrastructure Fund, Natural
Resources Fund and Emerging Markets Fund operating expenses for the fiscal
year ended December 31, 1997 of $0.04, $0.03 and $0.03, respectively.
(a) Annualized for periods of less than one year.
(b) Not annualized.
Prospectus Page 8
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
GT GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
NATURAL EMERGING
INFRASTRUCTURE RESOURCES EMERGING MARKETS
FUND FUND MARKETS FUND FUND
-------------- --------- ------------ ---------------
GT GLOBAL
VARIABLE
------------
JULY 5, 1994
JAN. 31, 1995 (COMMENCEMENT
(COMMENCEMENT YEAR ENDED OF OPERATIONS)
OF OPERATIONS) TO DEC. 31, TO
DEC. 31, 1995 1995 DEC. 31, 1994
-------------------------- ------------ ---------------
<S> <C> <C> <C> <C>
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 net realized gain on
investments.......................... -- -- -- --
In excess of net realized gain on
investments.......................... -- (0.05) -- (0.06)
Return of capital..................... -- -- (0.02) --
------- --------- ------------ -------
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
Sub-adviser and expense reductions
(a)................................ 1.24% 10.87% 1.55% 4.10%
Without reimbursement by the
Sub-adviser and expense
reductions (a)..................... (6.11)% 2.94% 0.51% (0.20)%
Without expenses assumed by the
Sub-adviser (a).................... --% --% --% --%
Ratio of expenses to average net
assets:
With reimbursement by the
Sub-adviser and expense reductions
(a)................................ 1.22% 1.14% 1.18% 0.00%
Without reimbursement by the
Sub-adviser and expense
reductions (a)..................... 8.57% 9.07% 2.22% 4.30%
Without expenses assumed by the
Sub-adviser (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 Sub-adviser of Emerging Markets Fund operating
expenses of $0.07.
** Includes reimbursement by the Sub-adviser of Emerging Markets Fund operating
expenses for the fiscal year ended December 31, 1995 of $0.09.
*** Includes reimbursement by the Sub-adviser 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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S AVERAGE
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AMOUNT OF
YEAR OUTSTANDING OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED AT END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Infrastructure Fund............... 1997 $ 0 $ 0 490,778 $ 0.0000
Natural Resources Fund............ 1997 0 71,425 879,531 0.0812
Emerging Markets Fund............. 1997 0 151,740 1,452,279 0.1045
</TABLE>
Prospectus Page 9
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
GT GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DEC. 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............ $ 14.80 $ 16.51 $ 13.38 $ 11.43 $ 11.41 $ 18.14
----------- ----------- ----------- ------------- ------------- -------------
Income from investment operations
Net investment income......................... 0.24** 0.41** 1.00** 0.82** 0.63** (0.02)
Net gains or losses on securities (both
realized and unrealized)..................... 1.91 2.23 (0.07) (0.34) 0.29 2.59
----------- ----------- ----------- ------------- ------------- -------------
Total from investment operations................ 2.15 2.64 0.93 0.48 0.92 2.57
----------- ----------- ----------- ------------- ------------- -------------
Less distributions
From net investment income.................... -- (0.51) (0.92) (0.74) (0.54) --
From net realized gain on investments......... -- (0.04) -- -- (0.09) (2.31)
In excess of net investment income............ -- -- -- -- -- --
Return of capital............................. -- -- -- -- -- --
----------- ----------- ----------- ------------- ------------- -------------
Total distributions............................. -- (0.55) (0.92) (0.74) (0.63) (2.31)
----------- ----------- ----------- ------------- ------------- -------------
Net asset value, end of period.................. $ 16.95 $ 18.60 $ 13.39 $ 11.17 $ 11.70 $ 18.40
----------- ----------- ----------- ------------- ------------- -------------
----------- ----------- ----------- ------------- ------------- -------------
Total returns +(b).............................. 14.53% 16.22% 7.14% 4.37% 8.30% 14.56%
Ratios/supplemental data
Net assets, end of period (in 000's).......... $ 28,786 $ 50,356 $ 28,497 $ 8,251 $ 7,373 $ 68,186
Ratio of net investment income to average net
assets:
With reimbursement by the Sub-adviser and
expense reductions (a)..................... 1.36% 2.86% 7.20% 6.33% 5.54% (0.10)%
Without reimbursement by the Sub-adviser and
expense reductions (a)..................... 1.21% 2.72% 7.03% 5.74% 4.92% (0.15)%
Without expenses assumed by the Sub-adviser
(a)........................................ --% --% --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Sub-adviser and
expense reductions (a)..................... 1.25% 1.13% 0.90% 0.95% 1.00% 1.11%
Without reimbursement by the Sub-adviser and
expense reductions (a)..................... 1.40% 1.27% 1.07% 1.54% 1.62% 1.16%
Without expenses assumed by the Sub-adviser
(a)........................................ --% --% --% --% --% --%
Portfolio turnover (a)........................ 141% 60% 185% 235% 143% 91%
Average commission rate per share paid on
portfolio transactions....................... $ 0.0004 $ 0.0141 N/A N/A N/A $ 0.0092
</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 Sub-adviser 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.
** Includes reimbursement by the Sub-adviser of operating expenses for the
fiscal year ended December 31, 1997 for the Latin America Fund, the Growth &
Income Fund, the Strategic Income Fund, the Global Government Income Fund
and the U.S. Government Income Fund of $0.02, $0.00, $0.01, $0.06 and $0.06,
respectively.
(a) Annualized for periods of less than one year.
(b) Not annualized.
Prospectus Page 10
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
GT GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DEC. 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 on investments......... -- (0.05) (0.08) -- -- (1.97)
In excess of net investment income............ (0.01) -- -- -- -- --
Return of capital............................. -- -- -- -- -- --
----------- ----------- ----------- ------------- ------------- -------------
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 $ 63,258
Ratio of net investment income to average net
assets:
With reimbursement by the Sub-adviser and
expense reductions (a)..................... 1.94% 3.58% 7.74% 6.32% 5.24% (0.26)%
Without reimbursement by the Sub-adviser and
expense reductions (a)..................... 1.69% 3.48% 7.59% 5.80% 4.49% (0.31)%
Without expenses assumed by the Sub-adviser
(a)........................................ --% --% --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Sub-adviser and
expense reductions (a)..................... 1.17% 1.20% 0.99% 0.95% 1.00% 1.12%
Without reimbursement by the Sub-adviser and
expense reductions (a)..................... 1.42% 1.30% 1.14% 1.47% 1.75% 1.17%
Without expenses assumed by the Sub-adviser
(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 Sub-adviser 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
GT GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DEC. 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 net realized gain on investments......... (2.00) -- -- -- -- (0.36)
In excess of net investment income............ -- -- -- -- -- --
Return of capital............................. -- -- -- -- -- --
--------- ----------- ----------- ------------- ------------ -------------
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 Sub-adviser and
expense reductions (a)..................... 4.43% 3.87% 9.59% 7.03% 5.43% 0.16%
Without reimbursement by the Sub-adviser and
expense reductions (a)..................... 3.92% 3.66% 9.35% 6.37% 3.87% 0.10%
Without expenses assumed by the Sub-adviser
(a)........................................ --% --% --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Sub-adviser and
expense reductions (a)..................... 1.18% 1.23% 1.00% 1.00% 1.00% 1.20%
Without reimbursement by the Sub-adviser and
expense reductions (a)..................... 1.69% 1.44% 1.24% 1.66% 2.56% 1.26%
Without expenses assumed by the Sub-adviser
(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 Sub-adviser 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
GT GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DEC. 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............... 1.60 (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 net realized gain on investments........ (0.07) -- (0.45) -- (0.06) --
In excess of net investment income........... -- -- -- -- -- --
Return of capital............................ -- -- (0.05) (0.09) -- --
----------- ----------- ----------- ------------- ------------- -------------
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 Sub-adviser and
expense reductions (a).................... 0.82% 3.69% 7.58% 6.89% 5.53% 0.31%
Without reimbursement by the Sub-adviser
and expense reductions (a)................ 0.49% 3.45% 7.43% 6.21% 1.29% 0.07%
Without expenses assumed by the Sub-adviser
(a)....................................... --% --% --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Sub-adviser and
expense reductions (a).................... 1.25% 1.25% 1.00% 1.00% 0.38% 1.25%
Without reimbursement by the Sub-adviser
and expense reductions (a)................ 1.58% 1.49% 1.15% 1.68% 4.63% 1.49%
Without expenses assumed by the Sub-adviser
(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 Sub-adviser 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
GT GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
OCT. 18, 1993
FEB. 10, 1993 (COMMENCEMENT
(COMMENCEMENT OF OPERATIONS) TO OF OPERATIONS) TO
DEC. 31, 1993 DEC. 31, 1993
------------------------------------------------------------------- -----------------
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........ $ 12.00 $ 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................ -- (0.28) (0.61) (0.56) (0.53) --
From net realized gain on investments..... -- (0.05) -- -- -- --
In excess of net investment income........ -- -- -- -- -- --
----------- ----------- ----------- ------------- ------------- -------
Total distributions......................... -- (0.33) (0.61) (0.56) (0.53) --
----------- ----------- ----------- ------------- ------------- -------
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 Sub-adviser
and expense reductions *(a)............ 1.0% 3.2% 6.6% 6.1% 5.3% 2.5%
Without reimbursement by the Sub-adviser
and expense reductions (a)............. 0.4% 2.7% 6.3% 5.5% 3.4% 2.3%
Without expenses assumed by the Sub-
adviser (a)............................ (2.5)% 1.1% 5.2% 2.4% (6.9)% 1.6%
Ratio of expenses to average net assets:
With reimbursement by the Sub-adviser
and expense reductions *(a)............ 0.7% 0.6% 0.5% 0.5% 0.0% 0.9%
Without reimbursement by the Sub-adviser
and expense reductions (a)............. 1.3% 1.2% 0.9% 1.1% 1.9% 1.1%
Without expenses assumed by the Sub-
adviser (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 Sub-adviser 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.
------------------------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S AVERAGE
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AMOUNT OF
YEAR OUTSTANDING OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED AT END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Latin America Fund................ 1997 $ 0 $ 158,488 1,733,114 $ 0.0914
Growth & Income Fund.............. 1997 0 26,175 2,409,575 0.0109
Strategic Income Fund............. 1997 0 69,819 2,214,986 0.0315
Global Government Income Fund..... 1997 0 83,438 839,189 0.0994
U.S Government Income Fund........ 1997 0 537 504,546 0.0011
Telecommunications Fund........... 1997 0 0 3,647,990 0.0000
</TABLE>
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 Sub-
adviser'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 Sub-adviser 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
Sub-adviser to be of equivalent quality. See "Risk Factors."
In managing the New Pacific Fund, the Europe Fund and the International Fund,
the Sub-adviser seeks to identify those countries and industries where economic
and political factors, including currency movements, are likely to produce
above-average growth rates. The Sub-adviser further attempts to
Prospectus Page 15
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
identify those companies in such countries and industries that are best
positioned and managed to take advantage of these economic and political
factors. The Sub-adviser 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 Sub-adviser 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 Sub-adviser tracks individual companies
and categorizes them into industry groups. Purchases and sales of individual
securities are based on the ratings established by the Sub-adviser 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 Sub-adviser, 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 Sub-adviser, 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
Sub-adviser 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 computer systems; and other products and services
which, in the Sub-adviser's judgment, constitute services significant to the
development of a country's infrastructure.
Prospectus Page 16
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
The Sub-adviser believes that a country's infrastructure is one key to the
long-term success of that country's economy. The Sub-adviser believes that
adequate energy, transportation, water and communications systems are essential
elements for long-term economic growth. The Sub-adviser 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 Sub-adviser 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 Sub-adviser's view, deregulation of
telecommunications and electric and gas utilities in many countries is promoting
significant changes in these industries.
The Sub-adviser 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
Sub-adviser, 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 Sub-adviser, 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 Sub-adviser's
opinion, may perform well during periods of rising inflation. In analyzing such
companies for possible investment by the Natural Resources Fund, the Sub-adviser
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
steel) and service companies that sell to these producers and refiners; and
other products and services which, in the Sub-adviser's opinion, are significant
to the ownership and development of natural resources and other basic
commodities.
Prospectus Page 17
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
The Sub-adviser 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
Sub-adviser 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 Sub-adviser 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 Sub-adviser believes
these changes are likely to create investment opportunities that benefit from
new sources of supply and/or from changes in commodities prices.
The Sub-adviser 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 Sub-adviser 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 Sub-adviser, 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 Sub-adviser 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.
The Sub-adviser 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.
Prospectus Page 18
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
For these reasons, the Sub-adviser 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 Sub-adviser uses its financial
expertise in markets located throughout the world in attempting to identify
those countries and telecommunications companies then providing the greatest
potential for long-term capital appreciation. In this fashion, the Sub-adviser
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 Sub-adviser
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 Sub-adviser 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 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 depository shares. For purposes of the
Prospectus Page 19
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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
Sub-adviser 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
Sub-adviser 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 Sub-adviser 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 Sub-adviser 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
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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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
Sub-adviser, 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 Sub-adviser
believes have strongly developing economies and in which the markets are
becoming more sophisticated. In selecting investments, the Sub-adviser seeks to
identify those countries and industries where economic and political factors,
including currency movements, are likely to produce above-average growth rates.
The Sub-adviser 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 Sub-adviser 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 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 Sub-adviser 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 Sub-adviser 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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 Sub-adviser 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 Sub-adviser'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 of foreign issuers as
well as domestic issuers). 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 Sub-adviser 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 Sub-adviser 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. 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
Sub-adviser may invest in debt securities of emerging market issuers
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 or by foreign governments. 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
Sub-adviser 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 Sub-adviser 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
Sub-adviser 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 of U.S. or foreign issuers rated at least investment
grade by Moody's or S&P, or if unrated, determined by the Sub-adviser 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 Sub-adviser 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 Sub-adviser 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
Prospectus Page 23
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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.
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 Sub-adviser 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 Sub-adviser 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 Sub-adviser 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 Sub-adviser 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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 Sub-adviser 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 Sub-adviser 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 Sub-adviser 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 Sub-adviser 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 least A-1 by S&P or Prime-1 by Moody's, or, if not rated,
determined to be of equivalent quality by the Sub-adviser, 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 Sub-adviser 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 Sub-adviser'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 Sub-adviser also may seek to improve the Money Market Fund's income
by purchasing or selling securities in order to take
Prospectus Page 25
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GT GLOBAL VARIABLE INVESTMENT FUNDS
advantage of yield disparities that regularly occur in the market.
OTHER INVESTMENT INFORMATION
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-adviser 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. For a description of money
market instruments in which the Funds may invest, see "Temporary Defensive
Strategies" in the Investment Objectives and Policies section of the Statement
of Additional Information.
BRADY BONDS. The Latin America Fund, the Global Government Income 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, Russia, 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, the Global Government Income 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 Sub-adviser 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 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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 Sub-adviser 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 Sub-adviser believes that such borrowings will
benefit the Strategic Income Fund, after taking into account considerations such
as the costs of the borrowing and the likely investment returns on the
securities purchased with the borrowed monies.
Borrowing for investment purposes is known as leveraging, which is a speculative
practice. Such borrowing by the Strategic Income Fund 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.
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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. Each Fund may invest in
the securities of other investment companies within the limits of the 1940 Act.
The Funds may be able to invest in certain countries solely or primarily through
governmentally authorized investment vehicles or companies. Each 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 Sub-adviser.
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
Sub-adviser, 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 Sub-adviser. The Sub-adviser has agreed to waive its fees 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, the Fund will
segregate cash or liquid securities equal to the value of the when-issued or
forward commitment securities with its custodian and will mark to market daily
such assets. 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.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 Sub-adviser to present
minimal credit risks in accordance with guidelines approved by the Companies'
Boards of Trustees. The Sub-adviser 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, the Global Government Income
Fund, and the U.S. Government Income Fund may invest in certain zero coupon
securities that are "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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Fund's investment policies or restrictions.
Certain of the Funds are authorized to engage in Short Sales, although they
currently have no intention of doing so, and certain Funds may purchase American
Depository Receipts, American Depository Shares, Global Depository Receipts and
European Depository Receipts. See "Short Sales" and "Depository Receipts,"
respectively, in the Investment Objectives and Policies section of the Statement
of Additional Information.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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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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. Moreover, recent currency devaluations in some Pacific region
countries have resulted in high interest rate levels and sharp reductions in
economic activity and have diminished prospects for short-term growth in
corporate earnings. Certain countries, such as
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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. 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 Sub-adviser.
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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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 89.11% of its total net
assets invested in debt securities that received a rating from Moody's and 2.98%
of its total net assets invested in debt securities that were not so rated. In
addition, the Strategic Income Fund had 7.91% 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--42.44%, Aa--9.62%,
A--1.04%, Baa--3.37%, Ba--18.37%, B--12.27%, Caa--0.00%, Ca--0.00%, C--0.00%.
Included under the unrated category are securities composing 2.98% of the
Strategic Income Fund's total net assets which, while unrated, have been
determined by the Sub-adviser to be of comparable quality to securities in the
following rating categories: Ba--0.96%, B--2.02%. 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
Sub-adviser
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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.
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.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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.
Foreign mortgage-backed securities markets are substantially smaller than U.S.
markets, but have been established in several countries, including Germany,
Denmark, Sweden, Canada, and Australia, and may be developed elsewhere. Foreign
mortgage-backed securities generally are structured similar to domestic
mortgage-backed securities, and they normally present substantially similar
investment risks as well as the other risks normally associated with foreign
securities.
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 Sub-adviser 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 securities often sell at a price
lower than similar securities that are not illiquid.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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
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 Sub-adviser, 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
Sub-adviser 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 Sub-adviser'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
Prospectus Page 38
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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.
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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."
Prospectus Page 39
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GT GLOBAL VARIABLE INVESTMENT FUNDS
CALCULATION OF NET ASSET VALUE
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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
Sub-adviser deems it appropriate, prices obtained from a bond pricing service
will be used. Short-term debt investments are amortized to maturity based on
their cost, adjusted for foreign exchange translation and market fluctuations,
provided such valuations represent fair value. When market quotations for
futures and options positions held by a Fund are readily available, those
positions are valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under
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.
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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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 net 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 Subchapter M of 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.
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. Each Company's Board of Trustees
has approved all significant agreements between the Company and persons or
companies furnishing services to the Funds, including the investment advisory
and administrative services agreement with AIM, the investment sub-advisory and
sub-administration agreement with the Sub-adviser, the custody agreement with
State Street Bank and Trust Company and the transfer agency agreement with GT
Global Investor Services, Inc., an affiliate of the Sub-adviser. The day-to-day
operations of each Fund are delegated to the officers of the respective Company,
subject always to the objective and policies of the applicable Fund and to the
general supervision of the respective Company's Board of Trustees. See "Trustees
and Executive Officers" in the Statement of Additional Information for
information on the Trustees of the Funds.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-adviser as each Fund's investment managers and administrators 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 AIM 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 AIM 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 AIM an investment
management and administration fee at the annualized rate of 1.00% of its average
daily net assets. Out of its aggregate fees payable by a Fund, AIM pays the
Sub-adviser sub-advisory and sub-administration fees equal to 40% of the
aggregate fees AIM receives from each Fund. All fees are computed daily and paid
monthly. These rates are higher than those paid by most mutual funds.
The Sub-adviser also serves as each Fund's pricing and accounting agent. For
these services the Sub-adviser receives a fee at an annual rate derived by
applying 0.03% to the first $5 billion of assets of the Funds and other
investment company portfolios which are sub-advised by the Sub-adviser and 0.02%
to the assets in excess of $5 billion and allocating the result according to
each Fund's average daily net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment adviser to each Fund pursuant to a master investment advisory
agreement, dated as of May 29, 1998 (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its subsidiaries, manages or advises
approximately 90 investment company portfolios encompassing a broad range of
investment objectives. The Sub-adviser, INVESCO (NY), Inc., 50 California
Street, 27th Floor, San Francisco, California 94111, and 1166 Avenue of the
Americas, New York, New York 10036, serves as the sub-adviser to each Fund
pursuant to an investment sub-advisory agreement dated as of May 29, 1998. Prior
to May 29, 1998, the Sub-adviser was known as Chancellor LGT Asset Management,
Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the former indirect
parent organization of the Sub-adviser, consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included the Sub-adviser and certain other affiliates. As a
result of this transaction, the Sub-adviser is now an indirect wholly owned
subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-adviser and its worldwide
asset management affiliates provided investment management and/or administrative
services to institutional, corporate and individual clients around the world
since 1969.
AIM and the Sub-adviser and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-adviser are both
indirect wholly owned subsidiaries of AMVESCAP
Prospectus Page 42
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
PLC. AMVESCAP PLC and its subsidiaries are an independent investment management
group that has a significant presence in the institutional and retail segment of
the investment management industry in North America and Europe, and a growing
presence in Asia.
In addition to the investment resources of their Houston, San Francisco and New
York offices, AIM and the Sub-adviser draw upon the expertise, personnel, data
and systems of other offices, including investment offices in Atlanta, Boston,
Dallas, Denver, Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong,
London, Singapore, Sydney, Tokyo and Toronto. In managing the Funds, the
Sub-adviser employs a team approach, taking advantage of its investment
resources around the world.
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) and
Hong Kong 1997 Portfolio Manager for the Sub-adviser and INVESCO GT Asset
Management Asia Ltd. (Hong Kong), an affiliate of the Sub-adviser,
since 1992. Prior thereto, Mr. Eadon-Clarke was an Associate
Director at HSBC Asset Management in Hong Kong from 1984 to 1992
and a Senior Fund Manager for Colonial Mutual Life (London) from
1980 to 1984.
</TABLE>
EUROPE FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Nicholas S. Train Portfolio Manager since Head of Investments for the United Kingdom and Europe for the
London 1998 Sub-adviser and INVESCO GT Asset Management PLC (London) ("INVESCO
GT Asset Management"), an affiliate of the Sub-adviser, since 1996.
Prior thereto, Mr. Train was a Portfolio Manager for the
Sub-adviser and GT Asset Management from 1984 to 1996.
Nicholas J. Ford Portfolio Manager since Portfolio Manager for the Sub-adviser since February 1998 and
London 1998 Portfolio Manager for INVESCO GT Asset Management since 1996.
Director of Equities for Lehman Brothers Global Asset Management
PLC (London) from 1994 to 1996. Portfolio Manager and Head of
European Equities for Hill Samuel Investment Management PLC
(London) from 1990 to 1994.
</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 Head of Global Emerging Market Equities for the Sub- adviser and
London 1997 INVESCO GT Asset Management, an affiliate of the Sub-adviser, since
January 1997. Director of International Equities at Hermes
Investment Management from 1992 to 1997. Portfolio Manager, Head of
Overseas Equities at Provident Mutual from 1982 to 1992.
David Manuel Portfolio Manager since Portfolio Manager for the Sub-adviser and INVESCO GT Asset
London 1997 Management since November 1997. Investment Analyst and Portfolio
Manager for Abbey Life Investment Services Ltd. (London) from 1987
to 1997, and Head of Latin American Equities from 1994 to 1997.
</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 See description above.
London 1997
Hugh Hunter Portfolio Manager since Portfolio Manager for the Sub-adviser and INVESCO GT Asset
London 1997 Management since June 1997. Head of Quantitative Emerging Strategy
at Baring Asset Management (London) ("Baring") from 1992 to 1997.
Quantitative Analyst at Baring from 1987 to 1992.
Aziz Minhas Portfolio Manager since Portfolio Manager for the Sub-adviser and INVESCO GT Asset
London 1998 Management since December 1997. Investment Analyst and Senior
Investment Analyst with Abu Dhabi Investment Authority (London)
from 1990 to 1997.
Darren Read Portfolio Manager since Portfolio Manager for the Sub-adviser and INVESCO GT Asset
London 1997 Management since May 1997. Senior Investment Analyst at Hermes from
1995 to 1997. Chartered Accountant in the Financial Markets
Division of Arthur Andersen from 1991 to 1995.
Christine Rowley Portfolio Manager since Portfolio Manager for the Sub-adviser, INVESCO GT Asset Management
London 1997 and INVESCO GT Asset Management Asia Ltd. (Hong Kong), an affiliate
of the Sub-adviser, since 1992. Analyst with the Bank of England
from 1989 to 1990.
Mark Thorogood Portfolio Manager since Portfolio Manager for the Sub-adviser and INVESCO GT Asset
London 1997 Management since May 1997. Proprietary Trader for ING-Barings (Hong
Kong) from 1994 to 1997. Analyst and Portfolio Manager for
Provident Mutual from 1987 to 1994.
</TABLE>
AMERICA FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Brent W. Clum Portfolio Manager since Senior Equity Research Analyst for the Sub-adviser since 1995.
New York 1997 Employed by Chancellor Capital Management, Inc. ("Chancellor
Capital"), a predecessor of the Sub-adviser, from 1995 to October
1996. Vice President and Analyst at T. Rowe Price from 1990 to
1995. Chartered Financial Analyst and 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 Sub-adviser since September 1997. Senior
San Francisco 1997 Equity Research Analyst for the Sub-adviser from October 1996 to
September 1997. Employed by Chancellor Capital from 1995 to October
1996. Equity Research Analyst and Co-Portfolio Manager for Franklin
Resources, Inc. (San Mateo, CA) from 1988 to 1995.
</TABLE>
Prospectus Page 44
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 Portfolio Manager for the Sub-adviser since 1994. Analyst for the
San Francisco Fund inception in 1995 Sub-adviser 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 Sub-adviser since 1993. Investment Analyst
San Francisco Fund inception in 1993 for the Sub-adviser from 1991 to 1993.
</TABLE>
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Paul Griffiths Portfolio Manager since Head of Global Fixed Income for the Sub-adviser and INVESCO GT Asset
London 1995 Management since June 1997, and Portfolio Manager from 1994 to
1997. Global Bond Fund Manager for Lazard Investors from 1993 to
1994. Global Bond Fund Manager for Sanwa International PLC from
1991 to 1993.
Nicholas S. Train Portfolio Manager since See description above.
London Fund inception in 1993
</TABLE>
STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
David B. Hughes Portfolio Manager since Head of Global Fixed Income, North America, for the Sub- adviser
New York 1998 since January 1998. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-adviser from October
1996 to December 1997. Employed by Chancellor Capital from July
1995 to October 1996. Assistant Vice President of Fiduciary Trust
Company International from 1994 to 1995. Assistant Treasurer at the
Bankers Trust Company from 1991 to 1994.
Craig Munro Portfolio Manager since Portfolio Manager for the Sub-adviser since August 1997. Vice
New York 1998 President and Senior Analyst in the Emerging Markets Group of the
Global Fixed Income Division of Merrill Lynch Asset Management from
1993 to August 1997.
Cheng-Hock Lau Portfolio Manager since Chief Investment Officer for Global Fixed Income for the Sub-adviser
New York 1996 since October 1996. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-adviser from July
1995 to October 1996. Employed by Chancellor Capital from 1995 to
October 1996. Senior Vice President and Senior Portfolio Manager
for Fiduciary Trust Company International from 1993 to 1995. Vice
President at Bankers Trust Company from 1991 to 1993.
</TABLE>
Prospectus Page 45
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
INTERNATIONAL FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Roger Yates Portfolio Manager since Global Chief Investment Officer for the Sub-adviser and INVESCO GT
London 1996 Asset Management since October 1997. International Chief Investment
Officer for the Sub-adviser and INVESCO GT Asset Management from
September 1996 to October 1997. Chief Investment Officer and
Portfolio Manager for Europe and the United Kingdom for the
Sub-adviser from 1994 to 1996. Investment Manager for Morgan
Grenfell Asset Management from 1988 to 1994.
Michael Lindsell Portfolio Manager since Head of Investment Strategy for Global Equities for the Sub-adviser
London 1997 since 1996. Chief Investment Officer for Japan for INVESCO GT Asset
Management Asia Ltd. (Hong Kong) and Portfolio Manager for the
Sub-adviser from 1992 to 1996. Director of Warburg Asset Management
(Tokyo) prior thereto.
</TABLE>
U.S. 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 See description above.
New York 1998
Edward J. O'Hara Portfolio Manager since Senior Portfolio Manager for the Sub-adviser in the High Grade Fixed
New York 1998 Income Group since August 1995. Manager for Ark Asset Management,
Inc., formerly Lehman Management Company, Inc., from 1983 to 1989,
and Senior Manager from 1989 to August 1995.
</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 See description above.
New York 1996
David B. Hughes Portfolio Manager since Head of Global Fixed Income, North America, for the Sub- adviser
New York 1998 since January 1998. Senior Portfolio Manager for
Global/International Fixed Income for the Sub-adviser from October
1996 to December 1997. Employed by Chancellor Capital from July
1995 to October 1996. Assistant Vice President of Fiduciary Trust
Company International from 1994 to 1995. Assistant Treasurer at the
Bankers Trust Company from 1991 to 1994.
</TABLE>
MONEY MARKET FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Cheng-Hock Lau Portfolio Manager since See description above.
New York 1998
Heide Koch Portfolio Manager since Portfolio Manager for the Sub-adviser since October 1996. Employed
New York 1997 by Chancellor Capital from 1991 to October 1996.
</TABLE>
Prospectus Page 46
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
In placing orders for the Funds' securities transactions, the Sub-adviser seeks
to obtain the best net results. Brokerage transactions for the Funds may be
executed through affiliates of AIM or the Sub-adviser. 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 AIM
or the Sub-adviser and other agents.
AIM 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, AIM 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, AIM 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.
From time to time, the Sub-adviser 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 47
<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, (a) the aggregate amount
of such holdings does not exceed 50% of the value of its total assets and (b) 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 was organized as a Delaware business
trust on May 7, 1998. Prior to May 29, 1998, each Company was organized as a
Massachusetts business trust. Each Company 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.
Pursuant to each Company's Agreement and 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
Prospectus Page 48
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
Fund only, has a par value equal to $0.01 per share, represents an equal
proportionate interest in the Fund with other shares of the Fund and is entitled
to such dividends and other distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared at the
discretion of the Board of Trustees.
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.
Because the Funds use a combined Prospectus, it is possible that a Fund might
become liable for a misstatement about another Fund contained in the Prospectus.
The Boards of Trustees have considered this factor in approving the use of a
single, combined prospectus.
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
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
Prospectus Page 49
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the Funds, AIM, the
Transfer Agent and the Sub-adviser rely on internal computer systems as well as
external computer systems provided by third parties. Some of these systems were
not originally designed to distinguish between the year 1900 and the year 2000.
This inability, if not corrected, could adversely affect the services AIM, the
Transfer Agent and the Sub-adviser and others provide the Funds and their
shareholders.
To address this important issue, AIM, the Transfer Agent and the Sub-adviser
have undertaken a comprehensive Year 2000 Compliance Project (the "Project").
The Project consists of four phases: (i) inventorying every software and
hardware system in use at AIM, the Transfer Agent and the Sub-adviser, as well
as remote, third-party systems on which AIM, the Transfer Agent and the
Sub-adviser rely; (ii) identifying those systems that may not function properly
after December 31, 1999; (iii) correcting or replacing those systems that have
been so identified; and (iv) testing the processing of Fund data in all systems.
Phase (i) has been completed; phase (ii) is substantially completed; phase (iii)
has commenced; and phase (iv) is expected to commence during the third quarter
of 1998. The Project is scheduled to be completed by December 31, 1998.
Following completion of the Project, AIM and the Sub-adviser will review any
systems subsequently acquired to confirm that they are year 2000 compliant.
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 AIM and the
Sub-adviser, 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 Sub-adviser 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 50
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
NOTES
- --------------------------------------------------------------------------------
<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
June 1, 1998
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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 GT Global Variable Investment
Series ("Investment Series") or GT 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 June 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").
A I M Advisors, Inc. ("AIM") serves as the investment manager of and
administrator for, and INVESCO (NY), Inc. (the "Sub-adviser") serves as the
investment sub-adviser and sub-administrator for the Funds. The Funds' Transfer
Agent is GT Global Investor Services, Inc. ("GT Services" or the "Transfer
Agent").
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TABLE OF CONTENTS
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Investment Objectives and Policies....................................................................................... 2
Options, Futures and Currency Strategies................................................................................. 11
Risk Factors............................................................................................................. 20
Investment Limitations................................................................................................... 26
Execution of Portfolio Transactions...................................................................................... 37
Trustees and Executive Officers.......................................................................................... 41
Management............................................................................................................... 43
Valuation of Fund Shares................................................................................................. 47
Information Relating to Sales and Redemptions............................................................................ 48
Taxes.................................................................................................................... 49
Additional Information................................................................................................... 51
Investment Results....................................................................................................... 52
Description of Debt Ratings.............................................................................................. 60
Appendix................................................................................................................. 62
Financial Statements..................................................................................................... 63
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Statement of Additional Information Page 1
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GT GLOBAL VARIABLE INVESTMENT FUNDS
INVESTMENT OBJECTIVES
AND POLICIES
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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
Sub-adviser 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 Sub-adviser
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 Sub-adviser 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 Sub-adviser 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 Sub-adviser will
consider, among other things, data analysis, and classification of
Statement of Additional Information Page 2
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GT GLOBAL VARIABLE INVESTMENT FUNDS
countries 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
Sub-adviser 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 Sub-adviser 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
Sub-adviser 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 Sub-adviser 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 Sub-adviser 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 Sub-adviser 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 Sub-adviser 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 Sub-adviser 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 Sub-adviser 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 Sub-adviser 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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
National Mortgage Association ("GNMA"), Fannie Mae, or the Federal Home Loan
Mortgage Corporation ("Freddie 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 Sub-adviser 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.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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
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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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, 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 Sub-adviser'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
Sub-adviser 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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
holders. With sponsored facilities, the issuer of the deposited securities
generally will bear some of the costs relating to the facility (such as dividend
payment fees of the depository), although ADR holders continue to bear certain
other costs (such as deposit and withdrawal fees). Under the terms of most
sponsored arrangements, depositories agree to distribute notices of shareholder
meetings and voting instructions, and to provide shareholder communications and
other information to the ADR holders at the request of the issuer of the
deposited securities. The 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 Sub-adviser to be of good standing and
will not be made unless, in the judgment of the Sub-adviser, 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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GT GLOBAL VARIABLE INVESTMENT FUNDS
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, i.e.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding 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 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 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 may make short sales of securities, although they have no current
intention of doing so. However, Growth & Income Fund, pursuant to a
non-fundamental limitation, may not sell securities short, except to the extent
the Fund contemporaneously owns or has the right to acquire at no additional
cost securities identical to those sold short. 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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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 Sub-adviser believes that the price of a security may
decline, causing a decline in the value of a security owned by the Fund or a
security convertible into or exchangeable for such security. In such case, any
future losses in the Fund's long position should be reduced by a gain in the
short position. Conversely, any gain in the long position should be reduced by a
loss in the short position. The extent to which such gains or losses in the long
position are reduced will depend upon the amount of the securities sold short
relative to the amount of the securities the Fund owns, either directly or
indirectly, and, in the case where the Fund owns convertible securities, changes
in the investment values or conversion premiums of such securities. There will
be certain additional transaction costs associated with short sales "against the
box," but the 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 Sub-adviser to be of comparable quality. Obligations rated A-3 and P-3
are considered by S&P and Moody's, respectively, to have an acceptable capacity
for timely repayment. However, these securities may be more vulnerable to
adverse effects of changes in circumstances than obligations carrying higher
designations.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
OPTIONS, FUTURES AND CURRENCY
STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon the
Sub-adviser'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 Sub-adviser 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 Sub-adviser 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 Sub-adviser, 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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GT GLOBAL VARIABLE INVESTMENT FUNDS
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
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 Sub-adviser 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 Sub-adviser
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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GT GLOBAL VARIABLE INVESTMENT FUNDS
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a 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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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 Sub-adviser 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 Sub-adviser 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 Sub-adviser might roll over the futures and forward currency contract
positions before taking delivery in order to continue the Fund's investment
position, or the Sub-adviser 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 Sub-adviser 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 Sub-adviser 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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
obligations over its entitlements with respect to each swap, will be accrued on
a daily basis, and an amount of cash or liquid securities having an aggregate
net asset value at least equal to the accrued excess, will be maintained in an
account by a custodian that satisfies the 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 Sub-adviser 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
Sub-adviser. 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
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National Association of Securities Dealers, Inc. An insufficient number of
qualified institutional buyers interested in 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 Sub-adviser, in accordance with
procedures approved by that Board. The Sub-adviser 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
Sub-adviser monitors the liquidity of securities held by each Fund and
periodically reports such determination to the Companies' Boards of Trustees. If
the liquidity percentage restriction of a Fund is satisfied at the time of
investment, a later increase in the percentage of illiquid securities held by
the Fund resulting from a change in market value or assets will not constitute a
violation of that restriction. If as a result of a change in market value or
assets, the percentage of illiquid securities held by the Fund increases above
the applicable limit, the Sub-adviser will take appropriate steps to bring the
aggregate amount of illiquid assets back within the prescribed limitations as
soon as reasonably practicable, taking into account the effect of any
disposition on the Fund.
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
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deemed to reflect accurately the financial situation of the issuer, the
Sub-adviser will take appropriate steps to evaluate the proposed investment,
which may include on-site inspection of the issuer, interviews with its
management and consultations with accountants, bankers and other specialists.
There is substantially less publicly available information about foreign
companies than there are reports and ratings published about U.S. companies and
the U.S. government. In addition, where public information is available, it may
be less reliable than such information regarding U.S. issuers. Issuers of
securities in foreign jurisdictions are generally not subject to the same degree
of regulation as are U.S. issuers with respect to such matters as restrictions
on market manipulation, insider trading rules, shareholder proxy requirements
and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because each 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
Sub-adviser will consider such difficulties when determining the allocation of
each Fund's assets, although the Sub-adviser 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.
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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 Sub-adviser believes that this deregulation should improve
the prospects for economic growth in many Western European countries. Among
other things, the deregulation could enable companies domiciled in one country
to avail themselves of lower labor costs existing in other countries. In
addition, this deregulation could benefit companies domiciled in one country by
opening additional markets for their goods and services in other countries.
Since, however, it is not clear what the exact form or effect of these Common
Market reforms will be on business in Western Europe, it is impossible to
predict the long-term impact of the implementation of these programs on the
securities owned by a 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
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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 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.
Starting in mid-1997, some Pacific region countries began to experience currency
devaluations that resulted in high interest rate levels and sharp reductions in
economic activity. While the currency crisis diminished prospects for short-term
corporate earnings growth, the Sub-adviser believes that high interest rate
levels may force governments and corporations to restructure the financial
sector in a manner that may facilitate a return to high levels of long-term
economic activity.
China recently assumed sovereignty over Hong Kong in 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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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.
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.
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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) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(2) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments;
(3) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(6) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities; or
(7) Purchase securities of any only issuer if, as a result, more than 5%
of the Fund's total assets would be invested in securities of that issuer or
the Fund would own or hold more than 10% of the outstanding voting
securities of that issuer, except that up to 25% of the Fund's total assets
may be invested without regard to this limitation, and except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or to securities issued by
other investment companies.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
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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;
(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;
(4) Purchase securities on margin, provided that the Fund may obtain
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 its use of financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments; or
(5) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
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) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(2) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes; or
Statement of Additional Information Page 27
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(6) Purchase securities of any only issuer if, as a result, more than 5%
of the Fund's total assets would be invested in securities of that issuer or
the Fund would own or hold more than 10% of the outstanding voting
securities of that issuer, except that up to 25% of the Fund's total assets
may be invested without regard to this limitation, and except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or to securities issued by
other investment companies.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
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;
(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;
(7) Purchase securities on margin, provided that the Fund may obtain
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 its use of financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments; or
(8) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
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) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(3) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments;
(4) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(5) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(6) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes; or
(7) Purchase securities of any only issuer if, as a result, more than 5%
of the Fund's total assets would be invested in securities of that issuer or
the Fund would own or hold more than 10% of the outstanding voting
securities of that issuer, except that up to 25% of the Fund's total assets
may be invested without regard to this limitation, and except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or to securities issued by
other investment companies.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
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;
(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;
(6) Purchase securities on margin, provided that the Fund may obtain
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 its use of financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments; or
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
EMERGING MARKETS FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(3) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments;
(4) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(5) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(6) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes; or
(7) Purchase securities of any only issuer if, as a result, more than 5%
of the Fund's total assets would be invested in securities of that issuer or
the Fund would own or hold more than 10% of the outstanding voting
securities of that issuer, except that up to 25% of the Fund's total assets
may be invested without regard to this limitation, and except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or to securities issued by
other investment companies.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
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;
(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;
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(5) Purchase securities on margin, provided that the Fund may obtain
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 its use of financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments; or
(6) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
LATIN AMERICA FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes; or
(6) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
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;
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(5) Purchase securities on margin, provided that the Fund may obtain
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 its use of financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments;
(6) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities; or
(7) Borrow money except for temporary or emergency purposes. While
borrowings exceed 5% of the Fund's total assets, the Fund will not make any
additional investments.
GROWTH & INCOME FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes; or
(6) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
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;
(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
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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;
(4) Purchase securities on margin, provided that the Fund may obtain
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 its use of financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments;
(5) Purchase securities for which there is no readily available market,
or enter into repurchase agreements or purchase time deposits maturing in
more than seven days, or purchase OTC options or hold assets set aside to
cover OTC options written by the Fund, if immediately after and as a result,
the value of such securities would exceed, in the aggregate, 15% of the
Fund's net assets;
(6) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities; or
(7) Borrow money except for temporary or emergency purposes. While
borrowings exceed 5% of the Fund's total assets, the Fund will not make any
additional investments.
STRATEGIC INCOME FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes; or
(6) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
NONFUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Invest more than 15% of its net assets in illiquid securities;
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(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;
(3) Purchase securities on margin, provided that the Fund may obtain
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 its use of financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments;
(4) 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;
or
(5) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
GLOBAL GOVERNMENT INCOME FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments; or
(6) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
NONFUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund will 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) Purchase securities on margin, provided that the Fund may obtain
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 its use of financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments;
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(3) 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;
(4) Purchase securities for which there is no readily available market,
or enter into repurchase agreements or purchase time deposits maturing in
more than seven days, or purchase OTC options or hold assets set aside to
cover OTC options written by the Fund, if immediately after and as a result,
the value of such securities would exceed, in the aggregate, 15% of the
Fund's net assets;
(5) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities; or
(6) Borrow money except for temporary or emergency purposes. While
borrowings exceed 5% of the Fund's total assets, the Fund will not make any
additional investments.
U.S. GOVERNMENT INCOME FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(2) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes;
(6) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments; or
(7) Purchase securities of any only issuer if, as a result, more than 5%
of the Fund's total assets would be invested in securities of that issuer or
the Fund would own or hold more than 10% of the outstanding voting
securities of that issuer, except that up to 25% of the Fund's total assets
may be invested without regard to this limitation, and except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or to securities issued by
other investment companies.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
NONFUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Invest in companies for the purpose of exercising control or
management;
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(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;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for bona fide hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into;
(5) Purchase securities on margin, provided that the Fund may obtain
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 its use of financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments; or
(6) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
MONEY MARKET FUND
FUNDAMENTAL INVESTMENT LIMITATIONS.
The Fund may not:
(1) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes;
(2) Engage in the business of underwriting securities of other issuers,
except to the extent that the Fund might be considered an underwriter under
the federal securities laws in connection with its disposition of portfolio
securities;
(3) Purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner;
(4) Make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this limitation, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances
or similar instruments will not be considered the making of a loan;
(5) Purchase any security if, as a result of that purchase, 25% or more
of the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(6) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments; or
(7) Purchase securities of any only issuer if, as a result, more than 5%
of the Fund's total assets would be invested in securities of that issuer or
the Fund would own or hold more than 10% of the outstanding voting
securities of that issuer, except that up to 25% of the Fund's total assets
may be invested without regard to this limitation, and except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or to securities issued by
other investment companies.
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
NONFUNDAMENTAL INVESTMENT LIMITATIONS
The Fund may not:
(1) Invest more than 10% of its net assets in illiquid securities;
(2) Purchase securities on margin, provided that the Fund may obtain
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 its use of financial options and futures, forward and spot
currency contracts, swap transactions and other financial contracts or
derivative instruments; or
(3) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
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.
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
Sub-adviser 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 Sub-adviser 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 Sub-adviser 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 Sub-adviser may select brokers
on the basis of the research and brokerage services they provide to the
Sub-adviser 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
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
from such brokers are in addition to, and not in lieu of, the services required
to be performed by the Sub-adviser 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 Sub-adviser determines in good faith that such
commission is reasonable in terms either of that particular transaction or the
overall responsibility of the Sub-adviser 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 Sub-adviser 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 Sub-adviser 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
Sub-adviser 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 Sub-adviser may consider a
broker/dealer's sale of the shares of the Funds, and the other funds for which
AIM or the Sub-adviser serves as investment manager or administrator in
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,
GDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs, GDRs 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 AIM and
the Sub-adviser. 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, 1997, the Variable Telecommunications
Fund paid GT Bank in Liechtenstein (Deutschland) GmbH, an "affiliated" broker as
defined in the 1940 Act, aggregate brokerage commissions of $1,565 for
transmissions involving purchases and sales of portfolio securities, which
represented 1% of the total brokerage commissions paid by the Variable
Telecommunications Fund and 0% of the aggregate dollar amount of transactions
involving payment of commissions by the Variable Telecommunications Fund.
For the fiscal year ended December 31, 1996, the Growth & Income Fund paid GT
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 GT 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.
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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>
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>
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
GT GLOBAL
<S> <C>
Variable America Fund.................................................................................................. $ 154,355
Variable Europe Fund................................................................................................... 110,624
Variable New Pacific Fund.............................................................................................. 198,849
Variable International Fund............................................................................................ 23,556
Money Market Fund...................................................................................................... 0
Variable Growth & Income Fund.......................................................................................... 42,783
Variable Strategic Income Fund......................................................................................... 423
Variable Global Government Income Fund................................................................................. 155
Variable U.S. Government Income Fund................................................................................... 80
Variable Latin America Fund............................................................................................ 223,878
Variable Telecommunications Fund....................................................................................... 123,863
Variable Emerging Markets Fund......................................................................................... 220,448
Variable Infrastructure Fund........................................................................................... 14,298
Variable Natural Resources Fund........................................................................................ 156,581
</TABLE>
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, 1997 and 1996, were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------------
GT GLOBAL VARIABLE 1997 1996
- -------------------------------------------------- ------------ ------------
<S> <C> <C>
America Fund...................................... 210% 248%
Europe Fund....................................... 117% 56%
New Pacific Fund.................................. 93% 70%
International Fund................................ 112% 92%
Money Market Fund................................. N/A N/A
Growth & Income Fund.............................. 60% 57%
Strategic Income Fund............................. 185% 210%
Global Government Income Fund..................... 235% 235%
U.S. Government Income Fund....................... 143% 49%
Latin America Fund................................ 141% 102%
Telecommunications Fund........................... 91% 77%
Emerging Markets Fund............................. 212% 216%
Infrastructure Fund............................... 46% 76%
Natural Resources Fund............................ 315% 199%
</TABLE>
Statement of Additional Information Page 40
<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. ("GT Global") since 1995; Director, GT Global
Trustee, Chairman of the Board and since 1991; Senior Vice President and Director of Sales and Marketing, GT Global from May
President 1992 to 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 GT
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 trustee of each of the other investment companies
registered under the Investment Company Act of 1940, as amended (the "1940 Act"), that is
sub-advised or sub-administered by the Sub-adviser.
C. Derek Anderson, 57 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, PremiumWear, Inc.
Suite 400 (formerly Munsingwear, Inc.) (a casual apparel company) and Director, "R" Homes, Inc. and
San Francisco, CA 94104 various other companies, Mr. Anderson is also a trustee of each of the other investment
companies registered under the 1940 Act that is sub-advised or sub-administered by the
Sub-adviser.
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 is also a
Two Embarcadero Center trustee of each of the other investment companies registered under the 1940 Act that is
Suite 2400 sub-advised or sub- administered by the Sub-adviser.
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 is also a trustee of each of the other investment companies registered under the 1940 Act
that is sub-advised or sub-administered by the Sub-adviser.
Ruth H. Quigley, 63 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 is also a
1055 California Street trustee of each of the other investment companies registered under the 1940 Act that is
San Francisco, CA 94108 sub-advised or sub-administered by the Sub-adviser.
John J. Arthur+, 53 Director, Senior Vice President and Treasurer, A I M Advisors, Inc.; Vice President and
Vice President Treasurer, A I M Management Group Inc., A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc. and Fund Management Company.
</TABLE>
<TABLE>
<S> <C>
Kenneth W. Chancey, 52 Senior Vice President -- Mutual Fund Accounting, the Sub-adviser since
Vice President and 1997; Vice President -- Mutual Fund Accounting, the Sub-adviser from
Principal Accounting Officer 1992 to 1997.
50 California Street
San Francisco, CA 94111
</TABLE>
- --------------
* Mr. Guilfoyle is an "interested person" of the Companies as defined by the
1940 Act due to his affiliation with the Sub-adviser.
+ Mr. Arthur and Ms. Relihan are married to each other.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH EACH
COMPANY AND THE FUNDS AND PRINCIPAL OCCUPATIONS AND BUSINESS
ADDRESS EXPERIENCE FOR PAST 5 YEARS
- -------------------------------- ------------------------------------------------------------------------
<S> <C> <C>
Melville B. Cox, 54 Vice President and Chief Compliance Officer, A I M Advisors, Inc., A I M Capital
Vice President Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management
Company.
Gary T. Crum, 50 Director and President, A I M Capital Management, Inc.; Director and Senior Vice
Vice President President, A I M Management Group Inc. and A I M Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC.
Robert H. Graham, 51 Director, President and Chief Executive Officer, A I M Management Group Inc.; Director and
Vice President President, A I M Advisors, Inc.; Director and Senior Vice President, A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management
Company; Director, AMVESCAP PLC; Chairman of the Board of Directors and President, INVESCO
Holdings Canada Inc.; and Director, AIM Funds Group Canada Inc. and INVESCO G.P. Canada
Inc.
Helge K. Lee, 52 Chief Legal and Compliance Officer -- North America, the Sub-adviser since October 1997;
Vice President and Secretary Executive Vice President of the Asset Management Division of Liechtenstein Global Trust
50 California Street since October 1996; Senior Vice President, General Counsel and Secretary of LGT Asset
San Francisco, CA 94111 Management, Inc., Chancellor LGT Asset Management, Inc., GT Global, GT Global Investor
Services, Inc. and G.T. Insurance from May 1994 to October 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.
Carol F. Relihan+, 43 Director, Senior Vice President, General Counsel and Secretary, A I M Advisors, Inc.; Vice
Vice President President, General Counsel and Secretary, A I M Management Group Inc.; Director, Vice
President and General Counsel, Fund Management Company; Vice President and General
Counsel, A I M Fund Services, Inc.; and Vice President, A I M Capital Management, Inc. and
A I M Distributors, Inc.
Dana R. Sutton, 39 Vice President and Fund Controller, A I M Advisors, Inc.; and Assistant Vice President and
Vice President and Assistant Treasurer Assistant Treasurer, Fund Management Company.
</TABLE>
------------------------
The Board of Trustees 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 Companies and
their Funds and recommending firms to serve as independent auditors of the
Companies. Each of the Trustees and Officers of each Company is also a Trustee
and Officer of AIM Investment Funds, Inc., AIM Investment Portfolios, Inc., AIM
Floating Rate Fund, AIM Series Trust, AIM Growth Series, AIM 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 AIM and sub-advised or sub-administered by
the Sub-adviser or an affiliate thereof. Each Trustee and Officer serves in
total as a Trustee and Officer, respectively, of 12 registered investment
companies and 47 series managed or administered by AIM and sub-advised or
sub-administered by the Sub-adviser or an affiliate thereof. Each Trustee who is
not a director, officer or employee of the Sub-adviser or any affiliated company
is paid aggregate fees of $5,000 a year, plus $300 per Fund for each meeting of
the Board attended and reimbursed travel and other expenses incurred in
connection with attendance at such meetings. Other Trustees and Officers receive
no compensation or expense reimbursements from the Companies. 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 Sub-adviser or any
affiliated company, received from Investment Series and Investment Trust
aggregate Trustees' fees and expenses of $2,000 and $2,000; $2,000 and $2,000;
$3,000 and $3,000; and $3,000 and $3,000, respectively. 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 Sub-adviser or any
other affiliated company, received total compensation of $103,654, $106,556,
$89,700 and $98,038, respectively, from the investment companies managed or
administered by AIM and sub-advised or sub-administered by the Sub-adviser for
which he or she serves as a Trustee. Fees and expenses disbursed to the Trustees
contained no accrued or payable pension, or retirement benefits. As of May 7,
1998, the Officers and Trustees and their families as a group owned in the
aggregate beneficially or of record less than 1% of the outstanding shares of
each Fund or of all the Companies' series in the aggregate.
- --------------
+ Mr. Arthur and Ms. Relihan are married to each other.
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
AIM 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 AIM.
The Sub-adviser serves as each Fund's sub-adviser and sub-administrator under a
Sub-advisory and Sub-administration Agreement between AIM and the Sub-adviser
("Portfolio Management Sub-contract," and together with the Management
Contracts, the "Portfolio Management Contracts"). As investment managers, AIM
and the Sub-adviser make all investment decisions for each Fund and administer
each Fund's affairs. As administrators, AIM and the Sub-adviser, among other
things, furnish the services and pay the compensation and travel expenses of
persons who perform the executive, administrative, clerical and bookkeeping
functions of the Company, and provide suitable office space, and necessary small
office equipment and utilities.
Each Portfolio 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 Portfolio Management Contract or
"interested persons" of any such party (as defined in the 1940 Act), cast in
person at a meeting called for the purpose of voting on such approval. Either
the Fund or each of AIM or the Sub-adviser may terminate a Portfolio Management
Contract without penalty upon sixty (60) days' written notice to the other
party. Each Portfolio 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 AND
ADMINISTRATION 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 43
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-------------------------------
INVESTMENT
MANAGEMENT AND
ADMINISTRATION REIMBURSEMENT
GT GLOBAL FEES AMOUNT
- -------------------------------------------------------------------------------------------------- -------------- ---------------
<S> <C> <C>
Variable America Fund............................................................................. $ 290,233 $ 3,077
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 AND
ADMINISTRATION REIMBURSEMENT
GT GLOBAL FEES AMOUNT
- -------------------------------------------------------------------------------------------------- -------------- ---------------
<S> <C> <C>
Variable America Fund............................................................................. $ 305,132 $ --
Variable Europe Fund.............................................................................. 279,058 27,622
Variable New Pacific Fund......................................................................... 276,947 39,729
Variable International Fund....................................................................... 56,606 60,092
Money Market Fund................................................................................. 108,454 8,673
Variable Strategic Income Fund.................................................................... 224,634 16,129
Variable Global Government Income Fund............................................................ 70,010 43,130
Variable U.S. Government Income Fund.............................................................. 42,280 34,816
Variable Latin America Fund....................................................................... 298,692 33,765
Variable Emerging Markets Fund.................................................................... 207,464 38,322
Variable Growth & Income Fund..................................................................... 421,575 5,189
Variable Telecommunications Fund.................................................................. 691,109 --
Variable Infrastructure Fund...................................................................... 84,074 19,594
Variable Natural Resources Fund................................................................... 182,720 26,931
</TABLE>
Statement of Additional Information Page 44
<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................................................................................. $ 91,538 $ 0
Variable Europe Fund.................................................................................. 114,912 0
Variable New Pacific Fund............................................................................. 119,626 0
Variable International Fund........................................................................... 74,346 3,486
Money Market Fund..................................................................................... 62,885 0
Variable Strategic Income Fund........................................................................ 96,221 0
Variable Global Government Income Fund................................................................ 73,484 0
Variable U.S. Government Income Fund.................................................................. 48,943 0
Variable Latin America Fund........................................................................... 118,583 0
Variable Emerging Markets Fund........................................................................ 106,583 0
Variable Growth & Income Fund......................................................................... 112,816 0
Variable Telecommunications Fund...................................................................... 113,907 0
Variable Infrastructure Fund.......................................................................... 40,755 0
Variable Natural Resources Fund....................................................................... 77,556 0
<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 45
<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 Sub-adviser 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.................... $7,516 $6,725 $2,523
Variable Global Government Income Fund............ 2,342 2,707 1,197
Variable U.S. Government Income Fund.............. 1,448 1,305 567
Variable Latin America Fund....................... 7,491 5,629 2,080
Variable Growth & Income Fund..................... 10,587 7,952 3,066
Variable Telecommunications Fund.................. 17,340 14,996 5,248
Variable Emerging Markets Fund.................... 5,281 3,728 884
Variable Infrastructure Fund...................... 2,161 877 124
Variable Natural Resources Fund................... 4,696 1,878 109
Variable America Fund............................. 10,211 9,687 4,066
Variable New Pacific Fund......................... 6,939 7,289 2,215
Variable Europe Fund.............................. 7,002 4,997 1,673
Money Market Fund................................. 5,575 3,883 1,633
Variable International Fund....................... 1,421 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 46
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
VALUATION OF FUND 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,
Martin Luther King Day, President's Day, Good Friday, Memorial Day, Independence
Day, 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, GDRs 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 Sub-adviser 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 Sub-adviser 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 Sub-adviser,
under the supervision of the relevant Company's Board of
Statement of Additional Information Page 47
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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.
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."
AIM Distributors 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 48
<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 49
<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 50
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
AIM was organized in 1976, and along with its subsidiaries, manages or advises
approximately 90 investment company portfolios encompassing a broad range of
investment objectives. AIM is a direct, wholly owned subsidiary of A I M
Management Group Inc. ("AIM Management"), a holding company that has been
engaged in the financial services business since 1976. AIM is the sole
shareholder of the Funds' principal underwriter, AIM Distributors. AIM
Management is an indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire
Square, London, EC2M 4YR, England. AMVESCAP PLC and its subsidiaries are an
independent investment management group that has a significant presence in the
institutional and retail segment of the investment management industry in North
America and Europe, and a growing presence in Asia.
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.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of each Company enjoy the same limitations
of liability extended to shareholders of private, for-profit corporations. There
is a remote possibility, however, that under certain circumstances shareholders
of each Company may be held personally liable for each Company's obligations.
However, each Company's Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Company and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Company or a trustee. Each Company's Agreement and
Declaration of Trust provides for indemnification from the Company property for
all losses and expenses of any shareholder held personally liable for the
Company's obligations. Thus, the risk of a shareholder incurring financial loss
on account of such liability is limited to circumstances in which each Company
itself would be unable to meet its obligations and where the other party was
held not to be bound by the disclaimer.
Statement of Additional Information Page 51
<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................................................. 14.88%
- -- From inception on February 10, 1993 to December 31, 1997..................... 18.87%
Variable Europe Fund
- -- Year ended December 31, 1997................................................. 15.15%
- -- From inception on February 10, 1993 to December 31, 1997..................... 16.26%
Variable New Pacific Fund
- -- Year ended December 31, 1997................................................. (41.11)%
- -- From inception on February 10, 1993 to December 31, 1997..................... (2.08)%
Variable Growth & Income Fund
- -- Year ended December 31, 1997................................................. 16.22%
- -- From inception on February 10, 1993 to December 31, 1997..................... 12.60%
Variable Strategic Income Fund
- -- Year ended December 31, 1997................................................. 7.14%
- -- From inception on February 10, 1993 to December 31, 1997..................... 10.74%
Variable Global Government Income Fund
- -- Year ended December 31, 1997................................................. 4.37%
- -- From inception on February 10, 1993 to December 31, 1997..................... 5.19%
Variable U.S. Government Income Fund
- -- Year ended December 31, 1997................................................. 8.30%
- -- From inception on February 10, 1993 to December 31, 1997..................... 4.95%
Variable Latin America Fund
- -- Year ended December 31, 1997................................................. 14.53%
- -- From inception on February 10, 1993 to December 31, 1997..................... 11.62%
Money Market Fund
- -- Year ended December 31, 1997................................................. 4.96%
- -- From inception on February 10, 1993 to December 31, 1997..................... 4.29%
Variable Telecommunications Fund
- -- Year ended December 31, 1997................................................. 14.56%
- -- From inception on October 18, 1993 to December 31, 1997...................... 17.55%
</TABLE>
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<S> <C>
Variable Emerging Markets Fund
- -- Year ended December 31, 1997................................................. (13.76)%
- -- From inception on July 5, 1994 to December 31, 1997.......................... 1.31%
Variable International Fund
- -- Year ended December 31, 1997................................................. 6.93%
- -- From inception on July 5, 1994 to December 31, 1997.......................... 2.25%
Variable Infrastructure Fund
- -- Year ended December 31, 1997................................................. 5.00%
- -- From inception on January 31, 1995 to December 31, 1997...................... 13.59%
Variable Natural Resources Fund
- -- Year ended December 31, 1997................................................. 1.29%
- -- From inception on January 31, 1995 to December 31, 1997...................... 23.97%
</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..................... 132.76%
Variable Europe Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... 108.86%
Variable New Pacific Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... (9.78)%
Variable Growth & Income Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... 78.60%
Variable Strategic Income Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... 64.62%
Variable Global Government Income Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... 28.05%
Variable U.S. Government Income Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... 26.66%
Variable Latin America Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... 71.10%
Money Market Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... 22.82%
Variable Telecommunications Fund
- -- From inception on October 18, 1993 to December 31, 1997...................... 97.31%
</TABLE>
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<S> <C>
Variable Emerging Markets Fund
- -- From inception on July 5, 1994 to December 31, 1997.......................... 4.64%
Variable International Fund
- -- From inception on July 5, 1994 to December 31, 1997.......................... 8.06%
Variable Infrastructure Fund
- -- From inception on January 31, 1995 to December 31, 1997...................... 45.00%
Variable Natural Resources Fund
- -- From inception on January 31, 1995 to December 31, 1997...................... 87.10%
</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 4.91% and
effective yield was 5.03%. 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:.................................................. $ 1.000941213
</TABLE>
- ------------------
* Value includes additional shares acquired with dividends paid on the
original shares.
<TABLE>
<S> <C>
Calculation:
Ending account value:.............................................................. $ 1.000941213
Less beginning account value:...................................................... $ 1.000000000
Net change in account value:....................................................... $ .000941213
Seven-day yield = $.000941213 X 365/7 = 4.91%
Effective yield** = [1 + .000941213] 365/7 - 1 = 5.03%
</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 54
<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 AIM Distributors. 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.
AIM Distributors 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 Sub-adviser, as each Fund's investment sub-adviser, 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 AIM Distributors 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 55
<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. The maximum rates paid on some savings deposits are currently 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, AIM Distributors 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.
A portion of the performance figures for each market includes the positive or
negative effects of the currency exchange rates effective at December 31 of each
year between the U.S. dollar and currency of the foreign market (E.G., Japanese
Yen, German Deutschemark and Hong Kong Dollar). A foreign currency that has
strengthened or weakened against the U.S. dollar will positively or negatively
affect the reported returns, as the case may be.
AIM Distributors 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
Statement of Additional Information Page 56
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 AIM Distributors may refer to the number of
shareholders in the Fund or the aggregate number shareholders in all Funds or
the dollar amount Fund assets under management in advertising materials.
AIM Distributors 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. AIM Distributors 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, AIM Distributors 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
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.
Statement of Additional Information Page 57
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
Each Fund may describe in its sales material and advertisements how an investor
may invest in the Fund 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.
AIM Distributors 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 AIM Distributors
will quote information regarding industries, individual countries, regions,
world stock exchanges, and economic and demographic statistics from sources AIM
Distributors 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 Sub-adviser.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
Statement of Additional Information Page 58
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
From time to time, AIM Distributors 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, AIM Distributors 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 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 Sub-adviser 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.
In advertising and sales materials, AIM Distributors may make reference to or
discuss its products, services and accomplishments. Among these accomplishments
are that in 1983 the Sub-adviser 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 GT 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
Sub-adviser 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
Sub-adviser provide any assurance that the GT Global Variable Investment Funds'
investment objectives will be achieved.
ECONOMIC DEVELOPMENT IN EMERGING MARKETS
The Sub-adviser has identified six phases to track the progress of developing
economies.
In addition, the Sub-adviser focuses on the transitions between each phase:
BETWEEN PHASES 1 & 2, STABILIZATION: Developing nations recognize the need
for economic reform and launch initiatives to stabilize their economies. Typical
measures might include initiating monetary reforms to contain inflation,
controlling government spending, and addressing external trade imbalances.
BETWEEN PHASES 2 & 3, RENOVATION: Economic development gathers momentum as
the governments of developing nations take further steps to increase
productivity and external competitiveness. Typical reforms include easing market
regulations, privatizing state-owned industries, lowering trade barriers and
reforming the national tax structure.
BETWEEN PHASES 3 & 4, NEW CONSTRUCTION: As economic reforms take hold,
infrastructure improvements are needed to facilitate and support long-term
growth. The construction and upgrading of highways and airports, communications
and utility systems generally require financing in the form of public debt.
Similarly, as the private sector develops, bolstered by new privatizations,
corporate debt securities typically are issued to finance business expansion.
EMERGING MARKET TRADING VOLUME
The annual trading volume of debt securities from developing economies according
to Salomon Brothers, Inc. has grown from $90 billion in 1990 to $150 billion in
1991 to $400 billion in 1992 and was estimated to be $1,200 billion at the end
of 1993 and $1.5 trillion at the end of 1994, respectively.
Statement of Additional Information Page 59
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the first
four categories:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risk appear somewhat
larger than the Aaa securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa -- Bonds which are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a 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.
Statement of Additional Information Page 60
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc. ("S&P"),
rates the securities debt of various entities in categories ranging from "AAA"
to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.
A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.
BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.
B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.
D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such 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 AIM Distributors 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 AIM
Distributors 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 Sub-adviser 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 AIM Distributors 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 AIM Distributors 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 the
fiscal year then ended appear on the following pages.
Statement of Additional Information Page 63
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of the GT Global Variable Investment
Trust comprising the following Funds: GT Global Variable Strategic Income Fund,
GT Global Variable Global Government Income Fund, GT Global Variable U.S.
Government Income Fund, GT Global Variable Latin America Fund, GT Global
Variable Growth & Income Fund, GT Global Variable Telecommunications Fund, GT
Global Variable Emerging Markets Fund, GT Global Variable Infrastructure Fund,
GT Global Variable Natural Resources Fund, and the GT Global Variable Investment
Series comprising the following Funds: GT Global Variable America Fund, GT
Global Variable New Pacific Fund, GT Global Variable Europe Fund, GT Global
Money Market Fund, and GT Global Variable International Fund (collectively, "the
Funds"):
We have audited the accompanying statements of assets and liabilities of the
Funds, including the portfolios of investments, as of December 31, 1997, the
related statements of operations for the year then ended, the related statements
of changes in net assets for each of the two years in the period then ended and
financial highlights for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial positions of
the Funds as of December 31, 1997, the results of their operations for the year
then ended, the related changes in their net assets for each of the two years in
the period then ended and financial highlights for each of periods indicated
therein, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
F1
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (67.0%)
Argentina (2.7%)
Republic of Argentina:
Government Bond, 9.75% due 9/19/27 ................... USD 301,000 $ 289,261 1.0
Global Bond, 11% due 10/9/06 ......................... USD 228,000 244,245 0.9
Global Bond, 11.375% due 1/30/17 ..................... USD 200,000 219,250 0.8
Australia (2.2%)
Commonwealth of Australia, 7.5% due 9/15/09 ............ AUD 850,000 616,866 2.2
Brazil (2.9%)
Republic of Brazil:
C Bond, 4.5% (5% at 4/98) due 4/15/14 (Combined rate
at year end is 8%, including "payment-in-kind"
bonds)[.] ++ ........................................ USD 696,699 547,779 1.9
Par Z-L Bond, 5.25% (5.50% at 4/98) due 4/15/24++ .... USD 376,000 272,600 1.0
Bulgaria (2.0%)
Republic of Bulgaria:
Interest Arrears Bond, 6.5625% due 7/28/11 - Euro+ ... USD 442,000 324,318 1.1
Front Loaded Interest Reduction Bond Series A, 2.25%
(2.5% at 7/98) due 7/28/12++ ........................ USD 428,000 260,813 0.9
Canada (1.7%)
Canadian Government, 8.75% due 12/1/05 ................. CAD 586,000 492,325 1.7
Colombia (0.5%)
Republic of Colombia, 8.7% due 2/15/16 ................. USD 154,000 150,150 0.5
Costa Rica (0.3%)
Banco Central de Costa Rica, Principal Bond Series A,
6.25% due 5/21/10 ..................................... USD 100,000 86,000 0.3
Ecuador (1.0%)
Ecuador, Past Due Interest Bond, 6.6875% due 2/27/15 -
144A[.] + {.} ......................................... USD 426,488 279,350 1.0
France (1.5%)
French O.A.T., 7.25% due 4/25/06 ....................... FRF 2,200,000 415,436 1.5
Germany (7.9%)
Deutschland Republic:
6% due 1/5/06 ........................................ DEM 2,380,000 1,388,830 4.9
6.25% due 1/4/24 ..................................... DEM 500,000 292,105 1.0
Treuhandanstalt, 7.125% due 1/29/03 .................... DEM 946,000 578,488 2.0
Italy (4.3%)
Italian Buoni Poliennali del Tesoro (BTPS), 9.5% due
2/1/99 ................................................ ITL 1,260,000,000 744,740 2.6
Italian Government, 7.25% due 11/1/26 .................. ITL 750,000,000 493,778 1.7
Mexico (3.6%)
United Mexican States:
Global Bond, 11.375% due 9/15/16+/+ .................. USD 363,000 417,904 1.5
Global Bond, 11.5% due 5/15/26+/+ .................... USD 335,000 397,813 1.4
Global Bond, 9.875% due 1/15/07+/+ ................... USD 200,000 209,250 0.7
Netherlands (1.4%)
Netherlands Government Bond, 5.75% due 2/15/07 ......... NLG 800,000 407,656 1.4
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
New Zealand (1.6%)
New Zealand Government, 8% due 4/15/04 ................. NZD 750,000 $ 452,733 1.6
Nigeria (1.2%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20+/+ ........................................... USD 500,000 350,000 1.2
Panama (3.3%)
Republic of Panama:
Interest Reduction Bond, 3.75% (4% at 7/98) due
7/17/14++ {.} ....................................... USD 959,000 737,231 2.6
7.875% due 2/13/02 - 144A{.} ......................... USD 200,000 194,000 0.7
Peru (0.7%)
Republic of Peru, Past Due Interest Bond, 4% (4.5% at
3/99)
due 3/7/17 - Euro++ ................................... USD 312,000 205,335 0.7
Russia (4.3%)
Russia Principal Loans Floating Rate Note, 6.72% due
12/15/20 .............................................. USD 1,007,208 623,839 2.2
Russia Interest Notes Floating Rate Note, 6.72% due
12/15/15 .............................................. USD 448,392 317,237 1.1
Russian Ministry of Finance:
3% due 5/14/11 - GDR - 144A{.} ....................... USD 390,000 176,475 0.6
3% due 5/14/06 - GDR - 144A{.} ....................... USD 229,000 128,956 0.4
South Africa (3.3%)
Republic of South Africa, 13% due 8/31/10 .............. ZAR 4,800,000 940,016 3.3
Spain (1.9%)
Government of Spain, 10.5% due 10/30/03 ................ ESP 65,000,000 536,944 1.9
Sweden (0.7%)
Swedish Government, 8% due 8/15/07 ..................... SEK 1,300,000 187,248 0.7
United Kingdom (5.4%)
United Kingdom Conversion, 9.5% due 4/18/05 ............ GBP 430,000 829,639 2.9
United Kingdom Treasury, 7.5% due 12/7/06 .............. GBP 400,000 706,076 2.5
United States (10.9%)
United States Treasury:
6.875% due 8/15/25{j} ................................ USD 1,025,000 1,142,855 4.0
5.875% due 9/30/02{j} ................................ USD 896,000 901,320 3.2
6.50% due 10/15/06 ................................... USD 700,000 732,990 2.6
Federal National Mortgage Association, 7.25% due
6/20/02 ............................................... NZD 550,000 312,591 1.1
Uruguay (0.7%)
Banco Central del Uruguay, Par Bond Series B, 6.75% due
2/19/21+/ + ........................................... USD 250,000 212,500 0.7
Venezuela (1.0%)
Republic of Venezuela, 9.25% due 9/15/27+/+ ............ USD 315,000 282,555 1.0
-----------
Total Government & Government Agency Obligations (cost
$18,862,843) .............................................. 19,099,497
-----------
Corporate Bonds (12.3%)
Argentina (0.5%)
Industrias Metallurgicas Pescarmona S.A. (IMPSA), 9.5%
due 5/31/02 - 144A{.} ................................. USD 100,000 96,875 0.3
Acindar Industrial Argentina, 11.25% due 2/15/04 ....... USD 49,000 48,265 0.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Corporate Bonds (Continued)
Brazil (1.4%)
Banco Do Brasil (Cayman), 9.375% due 6/15/07 ........... USD 354,000 $ 306,210 1.1
Comtel Brasileira Ltd. "A", 10.75% due 9/26/04 -
144A{.} ............................................... USD 100,000 97,120 0.3
Canada (0.2%)
Trench Electric & Trench, Inc., 10.25% due 12/15/07 -
144A{.} ............................................... USD 55,000 55,963 0.2
China (0.9%)
Panda Global Energy Co., 12.5% due 4/15/04{.} .......... USD 198,000 180,180 0.6
Greater Beijing First, 9.5% due 6/15/07 - 144A{.} ...... USD 100,000 80,000 0.3
Dominican Republic (0.3%)
Tricom S.A., 11.375% due 9/1/04 - 144A{.} .............. USD 89,000 87,199 0.3
Ecuador (0.4%)
Pacalta Resources Ltd., 10.75% due 6/15/04 - 144A{.} ... USD 106,000 102,820 0.4
Hong Kong (0.6%)
GS Superhighway Holdings, 9.875% due 8/15/04 -
144A{.} ............................................... USD 100,000 89,000 0.3
Road King Infrastructure, 9.5% due 7/15/07 - 144A{.} ... USD 100,000 83,000 0.3
India (0.4%)
Tata Electric Co., 8.5% due 8/19/17 - 144A{.} .......... USD 149,000 122,627 0.4
Indonesia (0.7%)
DGS International Finance Co., 10% due 6/1/07 -
144A{.} ............................................... USD 177,000 142,485 0.5
Pratama Datakom Asia BV, 12.75% due 7/15/05 -
144A{.} ............................................... USD 76,000 45,600 0.2
Jamaica (0.4%)
Mechala Group Jamaica:
12.75% due 12/30/99 - Series B ....................... USD 95,000 90,250 0.3
12.75% due 12/30/99 - Reg S{c} ....................... USD 44,000 41,800 0.1
Mexico (2.2%)
Petroleos Mexicanos:
9.5% due 9/15/27 - 144A{.} ........................... USD 286,000 285,285 1.0
8.85% due 9/15/07 - 144A{.} .......................... USD 143,000 141,391 0.5
Fideicomiso Petacalco Trust:
10.16% due 12/23/09 - Reg S{c} ....................... USD 100,000 102,500 0.4
10.16% due 12/23/09 - 144A{.} ........................ USD 78,000 79,950 0.3
Russia (0.7%)
Lukinter Finance BV Convertible, 3.5% due 5/6/02 -
144A{.} ............................................... USD 94,000 135,595 0.5
Mosenergo Finance BV, 8.375% due 10/9/02 - 144A{.} ..... USD 67,000 57,620 0.2
South Africa (0.1%)
Eskom, 11% due 6/1/08 .................................. ZAR 188,000 32,594 0.1
United States (3.5%)
Globalstar LP Capital, 11.375% due 2/15/04 ............. USD 150,000 150,750 0.5
Chase Manhattan Corp., 6.25% due 1/15/06 ............... USD 152,000 149,912 0.5
General Motors Acceptance Corp., 6.625% due 10/15/05 ... USD 143,000 145,004 0.5
Riddell Sports, Inc., 10.5% due 7/15/07 ................ USD 135,000 140,063 0.5
Trump Atlantic Association Funding, Inc., 11.25% due
5/1/06 ................................................ USD 135,000 131,288 0.5
ACME Metal, Inc., 10.875% due 12/15/07 - 144A{.} ....... USD 100,000 98,750 0.3
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Corporate Bonds (Continued)
Chancellor Media Corp., 8.125% due 12/15/07 -
144A{.} ............................................... USD 75,000 $ 73,313 0.3
Penn National Gaming, Inc., 10.625% due 12/15/04 -
144A{.} ............................................... USD 55,000 57,475 0.2
Delco Remy International, Inc., 8.625% due 12/15/07 .... USD 40,000 40,811 0.1
Pillowtex Corp., 9% due 12/15/07 - 144A{.} ............. USD 25,000 25,625 0.1
-----------
Total Corporate Bonds (cost $3,659,189) .................... 3,517,320
-----------
Mortgage Backed (8.2%)
Denmark (1.0%)
Realkredit Danmark, 6% due 10/1/26 ..................... DKK 1,963,000 278,121 1.0
United States (7.2%)
Government National Mortgage Association TBA Pass Thru
Pool, 6.5% due 1/15/28[::] ............................ USD 1,300,000 1,287,000 4.5
Federal National Mortgage Association Pool #313439, 7%
due 3/1/04 ............................................ USD 751,475 762,278 2.7
-----------
Total Mortgage Backed (cost $2,302,342) .................... 2,327,399
----------- -----
TOTAL FIXED INCOME INVESTMENTS (cost $24,824,374) .......... 24,944,216 87.5
----------- -----
<CAPTION>
UNDERLYING VALUE % OF NET
OPTIONS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Federal Republic of Brazil Debt Conversion Bond, Call
Option, strike 82.25, expires 1/12/98 (cost $36,864) .... USD 2,048,000 -- --
----------- -----
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
<CAPTION>
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Commercial Paper - Discounted (4.4%)
United States (4.4%)
Ford Motor Credit Corp., effective yield 5.80%, due
1/22/98
(cost $1,245,785) ..................................... USD 1,250,000 1,245,785 4.4
----------- -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------ ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of
5.80%, collateralized by $2,530,000 U.S. Treasury Notes,
7.875% due 11/15/07 (market value of collateral is
$2,776,675, including accrued interest).
(cost $2,721,000) ...................................... $ 2,721,000 9.5
----------- -----
TOTAL INVESTMENTS (cost $28,828,023) * .................... 28,911,001 101.4
Other Assets and Liabilities ............................... (414,309) (1.4)
----------- -----
NET ASSETS ................................................. $28,496,692 100.0
----------- -----
----------- -----
</TABLE>
- --------------
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
++ The coupon rate shown on step-up or pay-up coupon bond represents
the rate at period end.
[.] Each unit represents 3 "B" shares and 1 "C" share.
+ The coupon rate shown on floating rate note represents the rate at
period end.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
{j} All or part of the Fund's holdings in this security is segregated
as collateral for when-issued securities. See Note 1 to the
Financial Statements.
[::] Purchased on a forward commitment basis.
* For Federal income tax purposes, cost is $28,874,506 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 921,540
Unrealized depreciation: (885,045)
-------------
Net unrealized appreciation: $ 36,495
-------------
-------------
</TABLE>
Abbreviation:
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE UNREALIZED
(U.S. CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C>
British Pounds.......................... 1,331,887 0.62123 2/5/98 $ 19,981
British Pounds.......................... 653,687 0.60397 2/5/98 (8,593)
Deutsche Marks.......................... 1,603,656 1.81000 2/5/98 13,656
Deutsche Marks.......................... 1,578,855 1.77087 2/5/98 (21,145)
Deutsche Marks.......................... 745,780 1.74950 2/5/98 (19,220)
Deutsche Marks.......................... 445,785 1.70250 2/5/98 (24,112)
Deutsche Marks.......................... 325,089 1.82070 2/5/98 4,663
Deutsche Marks.......................... 175,930 1.77285 2/5/98 (2,157)
Italian Liras........................... 480,917 1697.67998 2/5/98 (20,061)
Italian Liras........................... 50,891 1766.50009 2/5/98 (58)
Netherland Guilders..................... 405,446 1.97453 2/5/98 (9,843)
Spanish Pesetas......................... 538,929 148.86800 2/5/98 (11,894)
------------ ------------
Total Contracts to Buy (Payable
amount $8,415,635)................. 8,336,852 (78,783)
------------ ------------
THE VALUE OF CONTRACTS TO BUY AS PERCENTAGE OF NET ASSETS IS 29.26%.
CONTRACTS TO SELL:
- ----------------------------------------
Australian Dollars...................... 567,324 1.41533 2/5/98 47,375
Canadian Dollars........................ 17,520 1.39800 2/5/98 362
British Pounds.......................... 1,331,887 0.59613 2/5/98 35,276
British Pounds.......................... 915,161 0.62274 2/5/98 (15,913)
Deutsche Marks.......................... 2,612,370 1.71600 2/5/98 119,638
Deutsche Marks.......................... 1,326,553 1.72000 2/5/98 57,525
Deutsche Marks.......................... 947,313 1.71800 2/5/98 42,230
Deutsche Marks.......................... 443,891 1.77023 2/5/98 6,109
Deutsche Marks.......................... 51,305 1.71600 2/5/98 2,350
Italian Liras........................... 531,807 1696.15001 2/5/98 22,684
Netherland Guilders..................... 405,446 1.93000 2/5/98 19,425
New Zealand Dollars..................... 768,156 1.60256 2/5/98 58,644
South African Rand...................... 687,183 5.04500 1/30/98 (19,274)
Spanish Pesetas......................... 538,929 145.00000 2/5/98 26,588
------------ ------------
Total Contracts to Sell (Receivable
amount $11,547,864)................ 11,144,845 403,019
------------ ------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 39.11%.
Total Open Forward Foreign Currency
Contracts, Net..................... $ 324,236
------------
------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (56.5%)
Australia (4.8%)
Commonwealth of Australia, 7.5% due 9/15/09 ............... AUD 540,000 $ 391,891 4.8
Canada (1.9%)
Canadian Government, 7.25% due 6/1/07 ..................... CAD 205,000 160,508 1.9
Germany (4.9%)
Deutschland Republic:
7.5% due 11/11/04 ....................................... DEM 350,000 220,995 2.7
6% due 1/5/06 ........................................... DEM 305,000 177,980 2.2
Italy (12.3%)
Italian Buoni Poliennali del Tesoro (BTPS):
7.75% due 9/15/01 ....................................... ITL 730,000,000 450,676 5.5
9% due 11/1/23 .......................................... ITL 370,000,000 289,219 3.5
7.25% due 11/1/26 ....................................... ITL 410,000,000 269,932 3.3
New Zealand (1.9%)
New Zealand Government, 8% due 4/15/04 .................... NZD 260,000 156,948 1.9
Spain (2.5%)
Spain Government, 10.5% due 10/30/03 ...................... ESP 25,000,000 206,517 2.5
Sweden (2.8%)
Swedish Government, 8% due 8/15/07 ........................ SEK 1,600,000 230,459 2.8
United Kingdom (7.0%)
United Kingdom Treasury Conversion, 9.5% due 4/18/05 ...... GBP 260,000 501,642 6.1
United Kingdom Treasury, 7.25% due 12/7/07 ................ GBP 40,000 70,341 0.9
United States (17.2%)
United States Treasury:
8% due 11/15/21 ......................................... USD 550,000 685,824 8.3
6.375% due 8/15/27 ...................................... USD 230,000 242,735 2.9
6.625% due 5/15/07 ...................................... USD 50,000 52,953 0.6
Federal National Mortgage Association:
7.25% due 6/20/02 ....................................... NZD 550,000 312,591 3.8
6.375% due 8/15/07 ...................................... AUD 200,000 132,013 1.6
Uruguay (1.2%)
Republic of Uruguay, 7.875% due 7/15/27 - 144A{.} ......... USD 100,000 98,500 1.2
----------
Total Government & Government Agency Obligations (cost
$4,661,639) .................................................. 4,651,724
----------
Corporate Bonds (17.4%)
Germany (1.9%)
Commerzbank O/S Financial, 8.5% due 5/13/02 ............... NZD 160,000 94,359 1.1
Kredit Fuer Wiederaufbau International Finance, 7.25% due
7/16/07 .................................................. AUD 100,000 68,897 0.8
New Zealand (3.5%)
Transpower Finance Ltd., 8% due 3/15/02 ................... NZD 500,000 290,052 3.5
South Africa (4.7%)
Eskom, 11% due 6/1/08 ..................................... ZAR 1,500,000 260,059 3.2
Transnet Ltd., 7.5% due 4/1/08 ............................ ZAR 860,000 116,071 1.4
Development Bank of South Africa, due 12/31/27 ............ ZAR 2,000,000 11,565 0.1
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Corporate Bonds (Continued)
Tunisia (2.9%)
Banque Centrais de Tunisie, 8.25% due 9/19/27 ............. USD 250,000 $ 241,250 2.9
United Kingdom (4.4%)
SBC Jersey, 8.75% due 6/20/05 ............................. GBP 200,000 359,297 4.4
----------
Total Corporate Bonds (cost $1,527,587) ....................... 1,441,550
----------
Mortgage Backed (13.5%)
Denmark (5.4%)
Realkredit Bank, 7% due 10/1/29 ........................... DKK 3,093,000 447,049 5.4
United States (8.1%)
Government National Mortgage Association:
Pool #462363, 7% due 11/15/27 ........................... USD 271,976 274,228 3.3
Pool #780515, 9.5% due 12/15/21 ......................... USD 123,991 134,879 1.6
Salomon Brothers Mortgage Securities VII Series 1997 - HUD1
Class AWAC, 6.0867% due 12/25/30 ......................... USD 176,549 179,409 2.2
Federal Home Loan Mortgage Association Pool #E62449, 8.5%
due 3/1/10 ............................................... USD 75,886 80,911 1.0
----------
Total Mortgage Backed (cost $1,108,067) ....................... 1,116,476
---------- -----
TOTAL FIXED INCOME INVESTMENTS (cost $7,297,293) .............. 7,209,750 87.4
---------- -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- --------------------------------------------------------------- ---------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998 for an effective yield of 5.80%
collateralized by $55,000 U.S. Treasury Notes, 7.875% due
11/15/07 (market value of collateral is $60,363, including
accrued interest). (cost $55,000) ......................... 55,000 0.6
---------- -----
TOTAL INVESTMENTS (cost $7,352,293) * ........................ 7,264,750 88.0
Other Assets and Liabilities .................................. 986,277 12.0
---------- -----
NET ASSETS .................................................... $8,251,027 100.0
---------- -----
---------- -----
</TABLE>
- --------------
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
* For Federal income tax purposes, cost is $7,358,003 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 166,538
Unrealized depreciation: (259,791)
-------------
Net unrealized depreciation: $ (93,253)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE UNREALIZED
(U.S. CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- ------------ ----------- -------- ------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 144,127 1.47347 2/5/98 $ (5,873)
British Pounds.......................... 2,614,746 0.63411 2/5/98 91,531
British Pounds.......................... 571,976 0.62087 2/5/98 8,248
British Pounds.......................... 170,286 0.59265 2/5/98 (5,537)
British Pounds.......................... 85,352 0.60391 2/5/98 (1,131)
Danish Kroner........................... 83,513 6.68900 2/5/98 (1,854)
Deutsche Marks.......................... 2,976,582 1.86050 2/5/98 105,453
Deutsche Marks.......................... 2,771,562 1.84900 2/5/98 81,562
Deutsche Marks.......................... 443,759 1.76970 2/5/98 (6,241)
Deutsche Marks.......................... 424,071 1.74950 2/5/98 (10,929)
Deutsche Marks.......................... 278,616 1.82590 2/5/98 4,778
Deutsche Marks.......................... 267,738 1.85468 2/5/98 8,674
Deutsche Marks.......................... 195,009 1.74980 2/5/98 (4,991)
Deutsche Marks.......................... 194,173 1.74230 2/5/98 (5,827)
Deutsche Marks.......................... 74,874 1.77285 2/5/98 (918)
Italian Liras........................... 691,697 1,747.52000 2/5/98 (8,303)
Italian Liras........................... 441,505 1,732.32000 2/5/98 (9,220)
Italian Liras........................... 244,196 1,699.54001 2/5/98 (9,908)
Italian Liras........................... 98,473 1,741.50000 2/5/98 (1,527)
New Zealand Dollars..................... 115,948 1.61031 2/5/98 (8,252)
Swedish Kronor.......................... 82,314 7.49385 2/5/98 (4,777)
Swedish Kronor.......................... 35,618 7.42040 2/5/98 (2,440)
------------ ------------
Total Contracts to Buy (Payable
amount $12,793,617)................ 13,006,135 212,518
------------ ------------
THE VALUE OF CONTRACTS TO BUY AS PERCENTAGE OF NET ASSETS IS 157.63%.
CONTRACTS TO SELL:
- ----------------------------------------
Australian Dollars...................... 499,578 1.41533 2/5/98 41,718
Australian Dollars...................... 95,492 1.46439 2/5/98 4,508
British Pounds.......................... 3,186,722 0.59613 2/5/98 84,403
British Pounds.......................... 255,638 0.60165 2/5/98 4,362
Canadian Dollars........................ 156,013 1.39136 2/5/98 3,987
Danish Kroner........................... 186,301 6.52300 2/5/98 8,981
Deutsche Marks.......................... 5,081,816 1.71600 2/5/98 232,730
Deutsche Marks.......................... 1,593,962 1.71600 2/5/98 72,998
Deutsche Marks.......................... 569,978 1.71800 2/5/98 25,409
Deutsche Marks.......................... 412,351 1.79459 2/5/98 18,266
Deutsche Marks.......................... 145,096 1.73592 2/5/98 4,904
Italian Liras........................... 1,102,631 1,696.15000 2/5/98 47,032
Italian Liras........................... 295,581 1,696.90000 2/5/98 12,472
Italian Liras........................... 213,888 1,697.70003 2/5/98 8,919
New Zealand Dollars..................... 1,001,792 1.60256 2/5/98 76,481
South African Rand...................... 262,054 4.97100 1/16/98 (5,567)
Swedish Kronor.......................... 117,932 7.47700 2/5/98 7,126
------------ ------------
Total Contracts to Sell (Receivable
amount $15,825,554)................ 15,176,825 648,729
------------ ------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 183.94%.
Total Open Forward Foreign Currency
Contracts, Net..................... $ 861,247
------------
------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (52.5%)
United States Treasury:
5.625% due 2/15/06{z} ..................................... USD 1,000,000 $ 988,945 13.4
7.625% due 2/15/25 ........................................ USD 600,000 728,039 9.9
5.75% due 8/15/03 ......................................... USD 650,000 650,660 8.8
5.25% due 1/31/01 ......................................... USD 350,000 345,748 4.7
5.875% due 2/15/04 ........................................ USD 100,000 100,871 1.4
Tennessee Valley Authority Series A, 6.375% due 6/15/05 ..... USD 400,000 407,000 5.5
Student Loan Marketing Assoc., 7.5% due 3/8/00 .............. USD 350,000 361,430 4.9
Federal Home Loan Bank, 6.79% due 2/5/02 .................... USD 100,000 100,229 1.4
Federal National Mortgage Association, 6.8% due 1/10/03 ..... USD 90,000 93,318 1.3
Financial Assistance Corp., 9.375% due 7/21/03 .............. USD 75,000 86,993 1.2
----------
Total Government & Government Agency Obligations (cost
$3,752,658) .................................................. 3,863,233
----------
Mortgage Backed (24.7%)
Federal National Mortgage Association:
TBA Pass Thru, 7% due 1/25/28[::] ....................... USD 500,000 503,750 6.8
Pool #398668, 6.5% due 9/1/27 ........................... USD 348,825 344,518 4.7
Pool #363939, 7% due 3/1/04 ............................. USD 188,994 191,711 2.6
Pool #356801, 6% due 12/1/08 ............................ USD 130,034 128,210 1.7
Government National Mortgage Association:
Pool # 780523, 7.5% due 3/15/08 ......................... USD 282,707 290,923 3.9
TBA Pass Thru Pool, 7% due 1/15/28[::] .................. USD 150,000 151,266 2.1
Federal Home Loan Mortgage Corp. Series 1462 PL due
7/15/21 .................................................. USD 155,000 157,664 2.1
Salomon Brothers Mortgage Securities VII Series 1997 -
HUD1 Class AWAC, 6.0867% due 12/25/30 .................... USD 57,378 58,308 0.8
----------
Total Mortgage Backed (cost $1,814,243) ....................... 1,826,350
----------
Supranational Bonds (7.5%)
International Bank of Reconstruction & Development, 5.25%
due 9/16/03 .............................................. USD 350,000 341,469 4.6
Asian Development Bank, 8% due 4/30/01 .................... USD 200,000 212,074 2.9
----------
Total Supranational Bonds (cost $524,815) ..................... 553,543
---------- -----
TOTAL FIXED INCOME INVESTMENTS (cost $6,091,716) .............. 6,243,126 84.7
---------- -----
<CAPTION>
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Commercial Paper - Discounted (8.8%)
United States (8.8%)
Ford Motor Credit Corp., effective yield 5.77%, due
1/14/98 .................................................. USD 250,000 249,480 3.4
General Electric Co., effective yield 5.82%, due
1/14/98 .................................................. USD 250,000 249,476 3.4
Associates Corp., effective yield 5.77%, due 1/22/98 ...... USD 150,000 149,497 2.0
----------
Total Commercial Paper - Discounted (cost $648,453) ........... 648,453
---------- -----
TOTAL SHORT-TERM INVESTMENTS (cost $648,453) .................. 648,453 8.8
---------- -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- --------------------------------------------------------------- ---------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $960,000 U.S. Treasury Notes, 7.875% due
11/15/07 (market value of collateral is $1,053,600,
including accrued interest). (cost $1,031,000) ............ $1,031,000 14.0
---------- -----
TOTAL INVESTMENTS (cost $7,771,169) * ........................ 7,922,579 107.5
Other Assets and Liabilities .................................. (549,943) (7.5)
---------- -----
NET ASSETS .................................................... $7,372,636 100.0
---------- -----
---------- -----
</TABLE>
- --------------
{z} All or part of the Fund's holdings in this security is segregated
as collateral for when issued securities. See Note 1 to the
Financial Statements.
[::] Purchased on a forward commitment basis.
* For Federal income tax purposes, cost is $7,779,279 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 151,843
Unrealized depreciation: (8,543)
-------------
Net unrealized appreciation: $ 143,300
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (29.1%)
Telecomunicacoes Brasileiras S.A. (Telebras): .............. BRZL -- -- 10.6
TELEPHONE NETWORKS
ADR{\/} .................................................. -- 18,270 $ 2,127,315 --
Common ................................................... -- 9,005,510 915,883 --
Telefonos de Mexico, S.A. de C.V. "L" - ADR{\/} ............ MEX 14,500 812,906 2.8
TELEPHONE NETWORKS
Companhia de Saneamento Basico do Estado de Sao Paulo -
SABESP .................................................... BRZL 2,780,000 660,125 2.3
BUSINESS & PUBLIC SERVICES
Nortel Inversora S.A. - ADR{\/} ............................ ARG 19,700 502,350 1.7
TELEPHONE - REGIONAL/LOCAL
Telefonica del Peru S.A. - ADR{\/} ......................... PERU 21,600 502,200 1.7
TELEPHONE NETWORKS
Cia de Telecomunicaciones de Chile S.A. - ADR{\/} .......... CHLE 15,000 448,125 1.6
TELEPHONE NETWORKS
Telecomunicacoes de Sao Paulo S.A. (TELESP): ............... BRZL -- -- 1.4
TELEPHONE NETWORKS
Preferred ................................................ -- 1,009,176 268,563 --
Common-/- ................................................ -- 693,000 157,720 --
Telecomunicacoes do Rio de Janeiro S.A. (TELERJ)
Preferred ................................................. BRZL 3,705,228 385,131 1.3
TELEPHONE NETWORKS
Controladora Comercial Mexicana, S.A. de C.V.: ............. MEX -- -- 1.2
RETAILERS-FOOD
UBC[.] ................................................... -- 240,000 312,940 --
GDR{\/} .................................................. -- 1,100 28,531 --
Compania Anonima Nacional Telefonos de Venezuela (CANTV) -
ADR{\/} ................................................... VENZ 7,900 328,838 1.1
TELEPHONE NETWORKS
Grupo Televisa, S.A. de C.V. - GDR-/- {\/} ................. MEX 7,400 286,288 1.0
BROADCASTING & PUBLISHING
Santa Isabel S.A. - ADR{\/} ................................ CHLE 16,000 280,000 1.0
RETAILERS-FOOD
Telefonica de Argentina S.A. - ADR{\/} ..................... ARG 7,100 264,475 0.9
TELEPHONE NETWORKS
Cifra, S.A. de C.V. "V" .................................... MEX 46,825 115,495 0.4
RETAILERS-OTHER
Supermercados Unimarc S.A. - ADR (Chile)-/- {\/} ........... CHLE 2,700 33,244 0.1
RETAILERS-FOOD
-----------
8,430,129
-----------
Energy (24.4%)
Centrais Eletricas Brasileiras S.A. (Eletrobras): .......... BRZL -- -- 4.6
ELECTRICAL & GAS UTILITIES
Common-/- ................................................ -- 13,980,830 695,283 --
Preferred "B" ............................................ -- 12,480,000 637,419 --
Petroleo Brasileiro S.A. (Petrobras) Preferred ............. BRZL 4,287,000 1,002,605 3.5
OIL
Light - Servicos de Electricidade S.A. ..................... BRZL 1,555,800 648,222 2.3
ELECTRICAL & GAS UTILITIES
C.A. La Electricidad de Caracas ............................ VENZ 539,185 647,493 2.3
ELECTRICAL & GAS UTILITIES
Companhia Energetica de Minas Gerais (CEMIG) - ADR{\/} ..... BRZL 13,100 563,300 2.0
ELECTRICAL & GAS UTILITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy (Continued)
YPF S.A. - ADR{\/} ......................................... ARG 13,000 $ 444,438 1.5
OIL
Enersis S.A. - ADR{\/} ..................................... CHLE 14,800 429,200 1.5
ELECTRICAL & GAS UTILITIES
Harken Energy Corp.-/- ..................................... US 55,900 391,300 1.4
OIL
Empresa Nacional de Electricidad S.A. - ADR{\/} ............ CHLE 21,700 383,819 1.3
ELECTRICAL & GAS UTILITIES
Chilgener S.A. - ADR{\/} ................................... CHLE 13,564 332,318 1.2
ELECTRICAL & GAS UTILITIES
Light - Participacoes S.A. ................................. BRZL 935,500 280,818 1.0
ELECTRICAL & GAS UTILITIES
Perez Companc S.A. "B" ..................................... ARG 32,249 230,304 0.8
OIL
Companhia Brasileira de Petroleo Ipiranga S.A. Preferred ... BRZL 14,594,000 222,310 0.8
OIL
Compania Paulista de Forca e Luz ........................... BRZL 430,000 56,640 0.2
ELECTRICAL & GAS UTILITIES
-----------
6,965,469
-----------
Finance (12.7%)
Unibanco Units-/- .......................................... BRZL 10,522,500 716,586 2.5
BANKS-MONEY CENTER
Administradora de Fondos de Pensiones Provida S.A. -
ADR{\/} ................................................... CHLE 33,100 564,768 2.0
INVESTMENT MANAGEMENT
Banco Rio de La Plata S.A. - ADR-/- {\/} ................... ARG 28,800 403,200 1.4
BANKS-MONEY CENTER
Grupo Financiero Banorte "B"-/- ............................ MEX 201,000 350,280 1.2
BANKS-MONEY CENTER
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} ................................................... PAN 7,713 319,125 1.1
OTHER FINANCIAL
Banco de A. Edwards - ADR{\/} .............................. CHLE 17,300 294,100 1.0
BANKS-MONEY CENTER
Banco Frances del Rio de la Plata S.A. - ADR{\/} ........... ARG 10,400 284,700 1.0
BANKS-MONEY CENTER
Banco BHIF - ADR{\/} ....................................... CHLE 13,400 214,400 0.7
BANKS-MONEY CENTER
Credicorp Ltd. - ADR{\/} ................................... PERU 11,900 214,200 0.7
BANKS-MONEY CENTER
Banco Provincial S.A. ...................................... VENZ 68,160 125,551 0.4
BANKS-MONEY CENTER
Inversiones y Representaciones S.A. (IRSA) - GDR{\/} ....... ARG 3,217 121,040 0.4
REAL ESTATE
Banco Wiese - ADR{\/} ...................................... PERU 11,900 59,500 0.2
BANKS-MONEY CENTER
ARA, S.A. de C.V.-/- ....................................... MEX 4,600 22,350 0.1
REAL ESTATE
-----------
3,689,800
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F14
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (12.6%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................. MEX 225,500 $ 1,104,022 3.8
PAPER/PACKAGING
Apasco, S.A. de C.V. ....................................... MEX 101,900 707,288 2.5
CEMENT
Companhia Vale do Rio Doce Preferred ....................... BRZL 22,300 448,598 1.6
METALS - STEEL
Grupo Mexico S.A. "L" ...................................... MEX 121,800 384,965 1.3
METALS - NON-FERROUS
Sociedad Quimica y Minera de Chile S.A. - ADR{\/} .......... CHLE 8,400 369,600 1.3
CHEMICALS
Industrias Penoles S.A. (CP) ............................... MEX 68,200 308,540 1.1
METALS - NON-FERROUS
Siderca S.A. ............................................... ARG 54,500 151,540 0.5
METALS - STEEL
Venezolana de Cementos, S.A.C.A.: .......................... VENZ -- -- 0.3
CEMENT
"A" ...................................................... -- 30,344 49,088 --
"B" ...................................................... -- 14,129 22,660 --
Corcemar S.A. .............................................. ARG 11,570 56,010 0.2
CEMENT
Angel Estrada S.A.-/- ...................................... ARG 4,029 11,485 --
PAPER/PACKAGING
Siderar S.A.I.C. "A" ....................................... ARG 1,900 8,077 --
METALS - STEEL
-----------
3,621,873
-----------
Multi-Industry/Miscellaneous (9.4%)
Grupo Carso, S.A. de C.V. "A1" ............................. MEX 118,000 789,787 2.7
MULTI-INDUSTRY
Alfa, S.A. de C.V. "A" ..................................... MEX 99,600 675,275 2.3
CONGLOMERATE
Sanluis Corporacion, S.A. de C.V. .......................... MEX 52,700 433,070 1.5
CONGLOMERATE
Desc, S.A. de C.V. - ADR{\/} ............................... MEX 8,100 303,750 1.1
CONGLOMERATE
Itausa Investimentos Itau S.A. Preferred ................... BRZL 316,075 246,403 0.9
MULTI-INDUSTRY
Empresas La Moderna, S.A. de C.V. "A"-/- ................... MEX 30,300 164,870 0.6
MULTI-INDUSTRY
Commercial Del Plata-/- .................................... ARG 62,000 97,980 0.3
CONGLOMERATE
-----------
2,711,135
-----------
Consumer Non-Durables (7.8%)
Fomento Economico Mexicano, S.A. de C.V. "B" ............... MEX 106,300 849,820 3.0
BEVERAGES - ALCOHOLIC
Grupo Industrial Maseca, S.A. de C.V. "B" .................. MEX 349,000 360,766 1.3
FOOD
Compania Cervecerias Unidas S.A. - ADR{\/} ................. CHLE 11,500 337,813 1.2
BEVERAGES - ALCOHOLIC
</TABLE>
The accompanying notes are an integral part of the financial statements.
F15
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Vina Concha Y Toro S.A. - ADR{\/} .......................... CHLE 11,500 $ 290,375 1.0
BEVERAGES - ALCOHOLIC
Companhia Cervejaria Brahma Preferred ...................... BRZL 416,000 279,570 1.0
BEVERAGES - ALCOHOLIC
Mavesa S.A. - ADR{\/} ...................................... VENZ 4,480 28,560 0.1
FOOD
Embotelladora Andina S.A. - ADR{\/} ........................ CHLE 1,200 24,975 0.1
BEVERAGES - NON-ALCOHOLIC
Sudamtex de Venezuela "B" - ADR{\/} ........................ VENZ 2,100 18,900 0.1
TEXTILES & APPAREL
Cerveceria Backus & Johnston S.A. "T" ...................... PERU 5,419 4,975 --
BEVERAGES - ALCOHOLIC
-----------
2,195,754
-----------
Consumer Durables (0.5%)
Brasmotor S.A. Preferred ................................... BRZL 1,567,800 154,532 0.5
APPLIANCES & HOUSEHOLD
----------- -----
TOTAL EQUITY INVESTMENTS (cost $27,501,963) .................. 27,768,692 96.5
----------- -----
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Corporate Bonds (0.0%)
Brazil (0.0%)
Companhia Vale do Rio Doce - Non Convertible (cost $0) ... BRL 20,000 -- --
----------- -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $900,000 U.S. Treasury Notes, 5.75% due
12/31/98 (market value of collateral is $900,844, including
accrued interest). (cost $881,000) ....................... 881,000 3.0
----------- -----
TOTAL INVESTMENTS (cost $28,382,963) * ...................... 28,649,692 99.5
Other Assets and Liabilities ................................. 136,525 0.5
----------- -----
NET ASSETS ................................................... $28,786,217 100.0
----------- -----
----------- -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
[.] Each unit represents 3 "B" shares and 1 "C" share.
* For Federal income tax purposes, cost is $28,399,188 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,687,612
Unrealized depreciation: (2,437,108)
-------------
Net unrealized appreciation: $ 250,504
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F16
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS
{D}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Argentina (ARG/ARS) .................. 8.7 8.7
Brazil (BRZL/BRL) .................... 36.5 36.5
Chile (CHLE/CLP) ..................... 14.0 14.0
Mexico (MEX/MXN) ..................... 27.9 27.9
Panama (PAN/PND) ..................... 1.1 1.1
Peru (PERU/PES) ...................... 2.6 2.6
United States (US/USD) ............... 1.4 3.5 4.9
Venezuela (VENZ/VEB) ................. 4.3 4.3
------ ----- -----
Total ............................... 96.5 3.5 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $28,786,217.
The accompanying notes are an integral part of the financial statements.
F17
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Finance (28.1%)
Schweizerischer Bankverein (Swiss Bank Corp.) ............ SWTZ 4,355 $ 1,353,670 2.7
BANKS-MONEY CENTER
First Tennessee National Corp. ........................... US 16,700 1,114,723 2.2
BANKS-REGIONAL
Royal & Sun Alliance Insurance Group PLC ................. UK 108,531 1,092,438 2.2
INSURANCE - MULTI-LINE
Union Bank of Switzerland - Bearer ....................... SWTZ 744 1,075,810 2.1
BANKS-MONEY CENTER
CS Holding AG - Registered ............................... SWTZ 6,520 1,008,846 2.0
BANKS-MONEY CENTER
AEGON N.V. ............................................... NETH 8,742 778,380 1.5
INSURANCE-LIFE
ABN AMRO Holdings N.V. ................................... NETH 38,342 747,094 1.5
BANKS-MONEY CENTER
Fortis Amev N.V. ......................................... NETH 16,990 740,882 1.5
OTHER FINANCIAL
American General Corp. ................................... US 11,950 646,047 1.3
INSURANCE-LIFE
ING Groep N.V. ........................................... NETH 14,000 589,779 1.2
OTHER FINANCIAL
Commonwealth Bank of Australia ........................... AUSL 41,710 478,270 0.9
BANKS-SUPER REGIONAL
Deutsche Bank AG ......................................... GER 6,750 476,647 0.9
BANKS-MONEY CENTER
National Westminster Bank PLC ............................ UK 27,000 448,670 0.9
BANKS-MONEY CENTER
General Accident PLC ..................................... UK 23,766 411,710 0.8
INSURANCE - PROPERTY-CASUALTY
IKB Deutsche Industriebank AG ............................ GER 19,890 387,073 0.8
BANKS-REGIONAL
Generale de Banque S.A.: ................................. BEL -- -- 0.7
BANKS-MONEY CENTER
Common ................................................. -- 829 361,033 --
Strip VVPR-/- .......................................... -- 75 20 --
Lloyds TSB Group PLC ..................................... UK 26,571 343,372 0.7
BANKS-REGIONAL
Kredietbank N.V. ......................................... BEL 680 285,583 0.6
BANKS-REGIONAL
Mercury Asset Management Group PLC ....................... UK 10,211 285,036 0.6
INVESTMENT MANAGEMENT
Commercial Union PLC ..................................... UK 17,682 246,503 0.5
INSURANCE - MULTI-LINE
Reinsurance Australia Corporation Ltd. ................... AUSL 94,250 245,619 0.5
INSURANCE - MULTI-LINE
National Australia Bank Ltd. ............................. AUSL 17,375 242,587 0.5
BANKS-REGIONAL
General Property Trust ................................... AUSL 127,000 225,057 0.4
REAL ESTATE
Commerzbank AG ........................................... GER 5,400 212,577 0.4
BANKS-MONEY CENTER
</TABLE>
The accompanying notes are an integral part of the financial statements.
F18
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Infrastructure Trust of Australia Group .................. AUSL 240,625 $ 188,123 0.4
OTHER FINANCIAL
M & G Group PLC .......................................... UK 5,000 115,558 0.2
INVESTMENT MANAGEMENT
Gerrard Group PLC ........................................ UK 7,080 38,946 0.1
SECURITIES BROKER
-----------
14,140,053
-----------
Consumer Non-Durables (10.5%)
Diageo PLC ............................................... UK 113,500 1,042,746 2.1
BEVERAGES - ALCOHOLIC
Pernod Ricard ............................................ FR 12,570 739,350 1.5
BEVERAGES - ALCOHOLIC
Brown-Forman Corp. "B" ................................... US 12,855 710,239 1.4
BEVERAGES - ALCOHOLIC
Cadbury Schweppes PLC .................................... UK 64,208 646,824 1.3
BEVERAGES - NON-ALCOHOLIC
Philip Morris Cos., Inc. ................................. US 13,450 609,453 1.2
TOBACCO
Avon Products, Inc. ...................................... US 9,600 589,200 1.2
PERSONAL CARE/COSMETICS
Universal Corp. .......................................... US 12,200 501,725 1.0
TOBACCO
Reckitt & Colman PLC ..................................... UK 26,140 409,913 0.8
HOUSEHOLD PRODUCTS
-----------
5,249,450
-----------
Energy (9.5%)
Royal Dutch Petroleum Co. ................................ NETH 14,200 779,627 1.5
OIL
Exxon Corp. .............................................. US 11,940 730,579 1.4
OIL
VEBA AG .................................................. GER 9,980 679,761 1.3
ELECTRICAL & GAS UTILITIES
Mobil Corp. .............................................. US 7,300 526,969 1.0
OIL
RWE AG ................................................... GER 8,170 438,368 0.9
ELECTRICAL & GAS UTILITIES
Electrabel S.A. .......................................... BEL 1,880 435,143 0.9
ELECTRICAL & GAS UTILITIES
Elf Aquitaine ............................................ FR 2,980 346,598 0.7
OIL
Reunies Electrobel & Tractebel S.A. ...................... BEL 3,815 332,805 0.7
ELECTRICAL & GAS UTILITIES
Shell Transport & Trading Co., PLC ....................... UK 41,390 299,041 0.6
OIL
Groupe Bruxelles Lambert S.A. ............................ BEL 1,680 243,202 0.5
OIL
-----------
4,812,093
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F19
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Services (8.4%)
EMI Group PLC ............................................ UK 87,790 $ 732,304 1.5
LEISURE & TOURISM
McGraw-Hill, Inc. ........................................ US 8,880 657,120 1.3
BROADCASTING & PUBLISHING
Telecom Corporation of New Zealand Ltd. .................. NZ 133,160 645,245 1.3
TELEPHONE NETWORKS
Woolworths Ltd. .......................................... AUSL 178,125 595,336 1.2
RETAILERS-OTHER
PMP Communications Ltd. .................................. AUSL 228,950 507,154 1.0
BROADCASTING & PUBLISHING
Qantas Airways Ltd. ...................................... AUSL 244,500 432,642 0.9
TRANSPORTATION - AIRLINES
Royal PTT Nederland N.V. ................................. NETH 5,915 246,847 0.5
TELEPHONE NETWORKS
Telstra Corp. Ltd. ....................................... AUSL 89,800 189,558 0.4
TELECOM - OTHER
Dun & Bradstreet Corp. ................................... US 4,800 148,500 0.3
BROADCASTING & PUBLISHING
-----------
4,154,706
-----------
Capital Goods (4.3%)
Lockheed Martin Corp. .................................... US 16,566 1,631,751 3.2
AEROSPACE/DEFENSE
General Electric Co. PLC ................................. UK 75,600 489,724 1.0
AEROSPACE/DEFENSE
BICC PLC ................................................. UK 20,327 57,410 0.1
INDUSTRIAL COMPONENTS
-----------
2,178,885
-----------
Materials/Basic Industry (3.8%)
BASF AG .................................................. GER 15,500 549,416 1.1
CHEMICALS
Akzo Nobel N.V. .......................................... NETH 3,069 529,263 1.0
CHEMICALS
Solvay S.A. "A" .......................................... BEL 7,510 472,595 0.9
CHEMICALS
Monsanto Co. ............................................. US 7,500 315,000 0.6
CHEMICALS
Aberfoyle Ltd. ........................................... AUSL 53,130 86,537 0.2
METALS - NON-FERROUS
-----------
1,952,811
-----------
Health Care (3.4%)
Bristol Myers Squibb Co. ................................. US 13,450 1,272,706 2.5
PHARMACEUTICALS
Bayer AG ................................................. GER 12,500 467,056 0.9
PHARMACEUTICALS
-----------
1,739,762
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F20
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (1.8%)
Mannesmann AG ............................................ GER 770 $ 389,174 0.8
MULTI-INDUSTRY
Siemens AG ............................................... GER 4,270 252,852 0.5
MULTI-INDUSTRY
ICI Australia Ltd. ....................................... AUSL 34,300 240,227 0.5
MULTI-INDUSTRY
-----------
882,253
-----------
Consumer Durables (0.4%)
GKN PLC .................................................. UK 10,400 212,952 0.4
AUTO PARTS
----------- -----
TOTAL EQUITY INVESTMENTS (cost $24,935,945) ................ 35,322,965 70.2
----------- -----
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (24.6%)
Australia (0.9%)
Australian Government, 8.75% due 8/15/08 ............... AUD 552,000 433,248 0.9
Canada (1.1%)
Canadian Government, 8.75% due 12/1/05 ................. CAD 657,000 551,976 1.1
Denmark (0.6%)
Kingdom of Denmark, 7% due 11/15/07 .................... DKK 1,921,000 308,413 0.6
Germany (3.4%)
Deutschland Republic:
6.75% due 4/22/03 .................................... DEM 1,500,000 904,671 1.8
6.25 due 1/4/24 ...................................... DEM 400,000 233,684 0.5
Treuhandanstalt:
6.375% due 7/1/99 .................................... DEM 500,000 287,128 0.6
6.625% due 7/9/03 .................................... DEM 395,000 236,978 0.5
Italy (1.6%)
Italian Buoni Poliennali del Tesoro (BTPS):
6% due 2/15/00 ....................................... ITL 1,125,000,000 651,902 1.3
10.5% due 9/1/05 ..................................... ITL 215,000,000 158,526 0.3
New Zealand (0.3%)
New Zealand Government, 8% due 4/15/04 ................. NZD 253,000 152,722 0.3
Sweden (0.6%)
Swedish Government, 8% due 8/15/07 ..................... SEK 2,000,000 288,074 0.6
United Kingdom (3.1%)
United Kingdom Treasury, 7.25% due 12/7/07 ............. GBP 902,000 1,586,184 3.1
United States (13.0%)
United States Treasury:
6.5% due 8/15/05 ..................................... USD 3,840,000 4,007,700 7.9
6% due 2/15/26 ....................................... USD 2,379,000 2,376,677 4.7
</TABLE>
The accompanying notes are an integral part of the financial statements.
F21
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Federal National Mortgage Association, 6.375% due
8/15/07 ............................................... AUD 335,000 $ 221,121 0.4
-----------
Total Government & Government Agency Obligations (cost
$12,341,938) .............................................. 12,399,004
-----------
Corporate Bonds (2.3%)
Germany (1.5%)
Commerzbank AG, Convertible Bond, 9.45% due
12/31/00+ ............................................. DEM 187,000 343,119 0.7
Siemens Capital Corp., 8% due 6/24/02+/+ ............... USD 180,000 313,650 0.6
Deutsche Bank AG, 9.00% due 12/31/02+/+ ................ DEM 175,000 119,051 0.2
IKB Deutsche Industriebank, 6.45% due 3/31/06 .......... DEM 1,500 863 --
United Kingdom (0.8%)
Daily Mail & General Trust, Convertible Bond, 5.75% due
9/26/03 ............................................... GBP 167,000 386,650 0.8
-----------
Total Corporate Bonds (cost $867,223) ...................... 1,163,333
----------- -----
TOTAL FIXED INCOME INVESTMENTS (cost $13,209,161) .......... 13,562,337 26.9
----------- -----
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Societe Generale Banque put warrants due 11/15/99
Tractebel (cost $0) ..................................... BEL 763 1,958 --
----------- -----
BANKS-MONEY CENTER
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------ ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of
5.80%, collateralized by $1,735,000 U.S. Treasury Notes,
7.875% due 11/15/07 (market value of collateral is
$1,904,163, including accrued interest). (cost
$1,864,000) ............................................. 1,864,000 3.7
----------- -----
TOTAL INVESTMENTS (cost $40,009,106) * .................... 50,751,260 100.8
Other Assets and Liabilities ............................... (394,996) (0.8)
----------- -----
NET ASSETS ................................................. $50,356,264 100.0
----------- -----
----------- -----
</TABLE>
- --------------
-/- Non-income producing security.
+ The coupon rate shown on floating rate note represents the rate at
period end.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
* For Federal income tax purposes, cost is $40,012,281 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 11,390,821
Unrealized depreciation: (651,842)
-------------
Net unrealized appreciation: $ 10,738,979
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F22
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 6.9 0.9 7.8
Belgium (BEL/BEF) .................... 4.3 4.3
Canada (CAN/CAD) ..................... 1.1 1.1
Denmark (DEN/DKK) .................... 0.6 0.6
France (FR/FRF) ...................... 2.2 2.2
Germany (GER/DEM) .................... 7.6 4.9 12.5
Italy (ITLY/ITL) ..................... 1.6 1.6
Netherlands (NETH/NLG) ............... 8.7 8.7
New Zealand (NZ/NZD) ................. 1.3 0.3 1.6
Sweden (SWDN/SEK) .................... 0.6 0.6
Switzerland (SWTZ/CHF) ............... 6.8 6.8
United Kingdom (UK/GBP) .............. 13.8 3.9 17.7
United States (US/USD) ............... 18.6 13.0 2.9 34.5
------ ----- ----- -----
Total ............................... 70.2 26.9 2.9 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $50,356,264.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
French Francs........................... 33,305 5.70223 2/6/98 $ (1,769)
-------------- --------------
Total Contracts to Buy (Payable amount
$35,074)............................. 33,305 (1,769)
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 0.07%.
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
French Francs........................... 33,305 5.72800 2/6/98 1,611
-------------- --------------
Total Contracts to Sell (Receivable
amount $34,916)...................... 33,305 1,611
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 0.07%.
Total Open Forward Foreign Currency
Contracts, Net....................... $ (158)
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F23
<PAGE>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Telephone Networks (26.6%)
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} ..... BRZL 27,176 $ 3,164,306 4.6
Telecom Italia SpA - Di Risp-/- ............................ ITLY 717,093 3,152,695 4.6
WorldCom, Inc.-/- .......................................... US 62,000 1,875,500 2.8
SPT Telecom-/- ............................................. CZCH 16,570 1,773,679 2.6
Cable & Wireless PLC - ADR-/- {\/} ......................... UK 60,000 1,631,250 2.4
NTL, Inc.-/- {\/} .......................................... UK 40,000 1,115,000 1.6
Magyar Tavkozlesi Rt.: ..................................... HGRY -- -- 1.6
ADR-/- {\/} .............................................. -- 22,400 582,400 --
Common-/- ................................................ -- 100,000 531,529 --
Portugal Telecom S.A. - ADR{\/} ............................ PORT 22,000 1,034,000 1.5
Carso Global Telecom "A1" .................................. MEX 185,900 755,766 1.1
France Telecom S.A.: ....................................... FR -- -- 0.8
ADR-/- {\/} .............................................. -- 12,000 432,000 --
Common-/- ................................................ -- 3,300 119,696 --
Telstra Corp. Ltd. ......................................... AUSL 260,000 548,831 0.8
Bell Canada International, Inc.: ........................... CAN -- -- 0.8
Common-/- ................................................ -- 27,800 425,133 --
Common-/- {\/} ........................................... -- 5,400 82,350 --
Telefonica del Peru S.A. - ADR{\/} ......................... PERU 12,200 283,650 0.4
TeleBermuda International Ltd.(.) -/- {\/} ................. BDA 33,200 273,900 0.4
Compania Anonima Nacional Telefonos de Venezuela (CANTV) -
ADR{\/} ................................................... VENZ 6,400 266,400 0.4
Ionica Group PLC-/- ........................................ UK 56,400 126,877 0.2
-----------
18,174,962
-----------
Telecom Equipment (23.7%)
Nokia Oyj "A" - ADR{\/} .................................... FIN 46,000 3,220,000 4.7
ECI Telecommunications Ltd.{\/} ............................ ISRL 100,000 2,550,000 3.7
Newbridge Networks Corp.-/- ................................ CAN 56,000 1,961,646 2.9
L.M. Ericsson Telephone Co. - ADR{\/} ...................... SWDN 40,000 1,492,500 2.2
DSC Communications Corp.-/- ................................ US 47,000 1,128,000 1.7
Corning, Inc. .............................................. US 30,000 1,113,750 1.6
P-COM, Inc.-/- ............................................. US 57,000 983,250 1.4
ANTEC Corp.-/- ............................................. US 50,000 781,250 1.1
Tellabs, Inc.-/- ........................................... US 9,000 475,875 0.7
Alcatel Alsthom Compagnie Generale d'Electricite ........... FR 3,700 470,300 0.7
Tekelec-/- ................................................. US 14,300 436,150 0.6
Champion Technology Holding Ltd. ........................... HK 3,586,928 384,223 0.6
Pairgain Technologies, Inc.-/- ............................. US 14,900 288,688 0.4
Mitec Telecom, Inc.-/- ..................................... CAN 43,900 245,801 0.4
Performance Technologies, Inc.-/- .......................... US 15,000 217,500 0.3
Allen Telecom, Inc.-/- ..................................... US 11,000 202,813 0.3
Geotek Communications, Inc.-/- ............................. US 100,000 153,125 0.2
Teledata Communications Ltd.-/- {\/} ....................... ISRL 8,000 146,000 0.2
-----------
16,250,871
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F24
<PAGE>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Wireless Communications (17.0%)
Nextel Communications, Inc. "A"-/- ......................... US 106,000 $ 2,756,000 4.0
Millicom International Cellular S.A.-/- {\/} ............... LUX 46,000 1,730,750 2.5
Vimpel-Communications - ADR-/- {\/} ........................ RUS 40,000 1,425,000 2.1
Grupo Iusacell S.A. "L" - ADR-/- {\/} ...................... MEX 65,000 1,409,688 2.1
Paging Network, Inc.-/- .................................... US 85,000 913,750 1.3
DDI Corp. .................................................. JPN 327 864,483 1.3
WinStar Communications, Inc.-/- ............................ US 25,000 623,438 0.9
Western Wireless Corp. "A"-/- .............................. US 29,600 514,300 0.8
Clearnet Communications, Inc. "A"-/- ....................... CAN 40,700 448,646 0.7
Vodafone Group PLC ......................................... UK 46,617 336,040 0.5
Powertel, Inc.-/- .......................................... US 15,000 251,250 0.4
Microcell Telecommunications, Inc. "B"-/- {\/} ............. CAN 24,000 162,000 0.2
China Telecom (Hong Kong) Ltd.-/- .......................... HK 60,000 102,988 0.2
-----------
11,538,333
-----------
Telephone - Regional/Local (8.7%)
ICG Communications, Inc.-/- ................................ US 60,500 1,648,625 2.4
GTE Corp. .................................................. US 30,000 1,567,500 2.3
Intermedia Communications of Florida, Inc.-/- .............. US 23,000 1,397,250 2.0
Teleport Communications Group, Inc. "A"-/- ................. US 15,000 823,125 1.2
ING Barings Russian Regional Telecommunications Basket
Bridge Certificates-/ - {=} {\/} .......................... RUS 66 444,453 0.7
NEXTLINK Communications, Inc. "A"-/- ....................... US 2,900 61,806 0.1
-----------
5,942,759
-----------
Multi-Industry (6.4%)
Mannesmann AG .............................................. GER 5,900 2,981,985 4.4
Grupo Carso, S.A. de C.V. "A1" ............................. MEX 150,000 1,003,966 1.5
Hutchison Whampoa .......................................... HK 49,000 307,337 0.5
-----------
4,293,288
-----------
Aerospace/Defense (2.9%)
Orbital Sciences Corp.-/- .................................. US 66,000 1,963,500 2.9
-----------
Cable Television (2.4%)
Comcast UK Cable Partners Ltd. "A"{\/} ..................... UK 85,000 802,188 1.2
Comcast Corp. "A" .......................................... US 22,000 694,375 1.0
United International Holdings, Inc. "A"-/- ................. US 12,000 138,000 0.2
-----------
1,634,563
-----------
Telephone - Long Distance (1.6%)
Call-Net Enterprises, Inc. "B"-/- .......................... CAN 61,300 963,175 1.4
RSL Communications Ltd. "A"-/- ............................. US 5,100 112,200 0.2
-----------
1,075,375
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F25
<PAGE>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Telecom Technology (1.3%)
Uniphase Corp.-/- .......................................... US 21,000 $ 868,871 1.3
-----------
Semiconductors (0.4%)
DSP Communications, Inc.-/- ................................ US 23,400 280,800 0.4
----------- -----
TOTAL EQUITY INVESTMENTS (cost $53,078,512) .................. 62,023,322 91.0
----------- -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $5,715,000 of U.S. Treasury Notes, 7.875%
due 11/15/07 (market value of collateral is $6,272,213,
including accrued interest). (cost $6,148,000) ........... 6,148,000 9.0
----------- -----
TOTAL INVESTMENTS (cost $59,226,512) * ...................... 68,171,322 100.0
Other Assets and Liabilities ................................. 14,821 --
----------- -----
NET ASSETS ................................................... $68,186,143 100.0
----------- -----
----------- -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
(.) Restricted securities: At December 31, 1997 the Fund owned the
following restricted security constituting less than 0.5% of net
assets which may not be publicly sold without registration under
the Securities Act of 1933 (Note 1).
<TABLE>
<CAPTION>
VALUE
PER
SHARE
ACQUISITION (NOTE
DESCRIPTION ACQUISITION DATE SHARES COST 1)
----------------------------------------------- ----------------- ------ ----------- ------
<S> <C> <C> <C> <C>
TeleBermuda International Ltd.................. 10/4/96 33,200 $ 282,200 8.25
</TABLE>
{=} Issued by ING Barings, the value of which is linked to the
underlying value of a basket of shares issued by Russian regional
telephone companies.
* For Federal income tax purposes, cost is $59,226,512 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 13,320,057
Unrealized depreciation: (4,375,247)
-------------
Net unrealized appreciation: $ 8,944,810
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F26
<PAGE>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS
{D}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 0.8 0.8
Bermuda (BDA/BMD) .................... 0.4 0.4
Brazil (BRZL/BRL) .................... 4.6 4.6
Canada (CAN/CAD) ..................... 6.4 6.4
Czech Republic (CZCH/CSK) ............ 2.6 2.6
Finland (FIN/FIM) .................... 4.7 4.7
France (FR/FRF) ...................... 1.5 1.5
Germany (GER/DEM) .................... 4.4 4.4
Hong Kong (HK/HKD) ................... 1.3 1.3
Hungary (HGRY/HUF) ................... 1.6 1.6
Israel (ISRL/ILS) .................... 3.9 3.9
Italy (ITLY/ITL) ..................... 4.6 4.6
Japan (JPN/JPY) ...................... 1.3 1.3
Luxembourg (LUX/LUF) ................. 2.5 2.5
Mexico (MEX/MXN) ..................... 4.7 4.7
Peru (PERU/PES) ...................... 0.4 0.4
Portgual (PORT/PTE) .................. 1.5 1.5
Russia (RUS/SUR) ..................... 2.8 2.8
Sweden (SWDN/SEK) .................... 2.2 2.2
United Kingdom (UK/GBP) .............. 5.9 5.9
United States (US/USD) ............... 32.5 9.0 41.5
Venezuela (VENZ/VEB) ................. 0.4 0.4
------ ----- -----
Total ............................... 91.0 9.0 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $68,186,143.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE DELIVERY APPRECIATION
CONTRACTS TO BUY: (U.S. DOLLARS) CONTRACT PRICE DATE (DEPRECIATION)
- ---------------------------------------- ---------------- -------------- -------- ---------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 115,680 127.15000 02/12/98 $ (2,292)
Japanese Yen............................ 115,680 129.29000 02/12/98 (338)
Japanese Yen............................ 115,680 126.69000 02/12/98 (2,719)
Swedish Kroner.......................... 592,285 7.74600 01/21/98 (14,479)
---------------- ---------------
Total Contracts to Buy (Payable amount
$959,153)............................ 939,325 (19,828)
---------------- ---------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 1.38%.
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
British Pounds.......................... 1,312,454 0.61936 01/20/98 (20,798)
Deutsche Marks.......................... 334,664 1.72492 02/23/98 13,178
Deutsche Marks.......................... 446,311 1.73540 02/27/98 14,678
Finnish Markka.......................... 1,561,461 5.28300 01/21/98 47,474
Italian Liras........................... 1,696,712 1730.40000 01/21/98 36,992
Japanese Yen............................ 771,198 122.50500 02/12/98 45,094
Swedish Kroner.......................... 1,764,257 7.61030 01/21/98 75,355
---------------- ---------------
Total Contracts to Sell (Receivable
amount $8,099,030)................... 7,887,057 211,973
---------------- ---------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 11.57%.
Total Open Forward Foreign Currency
Contracts, Net....................... $ 192,145
---------------
---------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F27
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (19.5%)
Telecomunicacoes Brasileiras S.A. (Telebras): .............. BRZL -- -- 4.5
TELEPHONE NETWORKS
ADR{\/} .................................................. -- 4,048 $ 471,339 --
Common ................................................... -- 2,534,538 257,769 --
Telefonos de Mexico, S.A. de C.V. "L" - ADR{\/} ............ MEX 5,118 286,928 1.7
TELEPHONE NETWORKS
Pick'n Pay Stores Ltd.: .................................... SAFR -- -- 1.4
RETAILERS-OTHER
Common ................................................... -- 130,231 189,831 --
"N" ...................................................... -- 21,100 28,631 --
Magyar Tavkozlesi Rt. - ADR-/- {\/} ........................ HGRY 6,900 179,400 1.1
TELEPHONE NETWORKS
Cia de Telecomunicaciones de Chile S.A. - ADR{\/} .......... CHLE 5,134 153,378 0.9
TELEPHONE NETWORKS
Cifra, S.A. de C.V.: ....................................... MEX -- -- 0.9
RETAILERS-OTHER
"V" ...................................................... -- 32,502 80,167 --
"C" ...................................................... -- 32,000 71,790 --
Telefonica del Peru S.A. - ADR{\/} ......................... PERU 6,320 146,940 0.9
TELEPHONE NETWORKS
Mahanagar Telephone Nigam Ltd.: ............................ IND -- -- 0.9
TELECOM - OTHER
Common ................................................... -- 14,800 97,657 --
GDR-/- {\/} .............................................. -- 3,100 48,081 --
Telefonica de Argentina S.A. - ADR{\/} ..................... ARG 2,763 102,922 0.6
TELEPHONE NETWORKS
Companhia de Saneamento Basico do Estado de Sao Paulo -
SABESP .................................................... BRZL 416,633 98,932 0.6
BUSINESS & PUBLIC SERVICES
Telecomunicacoes de Sao Paulo S.A. (TELESP): ............... BRZL -- -- 0.6
TELEPHONE NETWORKS
Preferred ................................................ -- 243,769 64,872 --
Common-/- ................................................ -- 143,100 32,568 --
Vimpel-Communications - ADR-/- {\/} ........................ RUS 2,500 89,063 0.5
WIRELESS COMMUNICATIONS
Compania Anonima Nacional Telefonos de Venezuela (CANTV) -
ADR{\/} ................................................... VENZ 1,895 78,879 0.5
TELEPHONE NETWORKS
Carso Global Telecom "A1" .................................. MEX 16,500 67,080 0.4
TELEPHONE NETWORKS
Nortel Inversora S.A. - ADR{\/} ............................ ARG 2,300 58,650 0.4
TELEPHONE - REGIONAL/LOCAL
Guangshen Railway Co., Ltd. ................................ HK 211,000 55,824 0.3
TRANSPORTATION - ROAD & RAIL
Guangnan Holdings .......................................... HK 61,000 49,990 0.3
WHOLESALE & INTERNATIONAL TRADE
Indian Hotels Co., Ltd. - GDR{\/} .......................... IND 2,600 48,913 0.3
LEISURE & TOURISM
Grupo Televisa, S.A. de C.V. - GDR-/- {\/} ................. MEX 1,100 42,556 0.3
BROADCASTING & PUBLISHING
Danubius Hotel and Spa Rt.-/- .............................. HGRY 1,367 41,558 0.3
LEISURE & TOURISM
</TABLE>
The accompanying notes are an integral part of the financial statements.
F28
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (Continued)
Telecom Argentina S.A. - ADR{\/} ........................... ARG 1,100 $ 39,325 0.2
TELEPHONE - LONG DISTANCE
Santa Isabel S.A. - ADR{\/} ................................ CHLE 2,052 35,910 0.2
RETAILERS-FOOD
PT Indosat ................................................. INDO 17,000 32,717 0.2
TELECOM - OTHER
Migros Turk T.A.S. ......................................... TRKY 30,500 27,627 0.2
RETAILERS-FOOD
Pakistan Telecommunications Co., Ltd. - GDR-/- {\/} ........ PAK 400 27,000 0.2
TELEPHONE NETWORKS
PT Matahari Putra Prima .................................... INDO 258,000 21,906 0.1
RETAILERS-APPAREL
Super Sol Ltd. ............................................. ISRL 7,688 21,814 0.1
RETAILERS-FOOD
Shanghai Hai Xing Shipping Co., Ltd. "H"-/- {*} ............ CHNA 78,000 19,932 0.1
TRANSPORTATION - SHIPPING
Telekom Malaysia Bhd. ...................................... MAL 6,000 17,761 0.1
TELEPHONE NETWORKS
Advanced Info. Service - Foreign ........................... THAI 3,500 17,462 0.1
WIRELESS COMMUNICATIONS
Sonae Investimentos-Sociedade Gestora de Participacoes
Sociais S.A. .............................................. PORT 423 17,113 0.1
RETAILERS-OTHER
Genting Bhd. ............................................... MAL 6,000 15,058 0.1
LEISURE & TOURISM
Tanjong PLC ................................................ MAL 9,000 14,942 0.1
LEISURE & TOURISM
PT Citra Marga Nusaphala Persada ........................... INDO 130,000 14,717 0.1
BUSINESS & PUBLIC SERVICES
BEC World Public Co., Ltd. - Foreign ....................... THAI 2,200 9,131 0.1
BROADCASTING & PUBLISHING
TelecomAsia Corp. - Foreign-/- ............................. THAI 42,700 8,448 0.1
TELEPHONE NETWORKS
Jeronimo Martins, Sociedade Gestora de Participacoes Sociais
S.A. ...................................................... PORT 221 6,998 --
RETAILERS-OTHER
Siam Makro Public Co., Ltd. - Foreign ...................... THAI 6,000 6,903 --
RETAILERS-OTHER
Investec-Consultoria Internacional S.A.-/- ................. PORT 204 6,042 --
BROADCASTING & PUBLISHING
Konsortium Perkapalan Bhd. ................................. MAL 12,000 5,560 --
TRANSPORTATION - SHIPPING
-----------
3,210,084
-----------
Energy (15.8%)
LUKoil Holding - ADR{\/} ................................... RUS 3,550 324,825 2.0
OIL
Sasol Ltd. ................................................. SAFR 24,546 257,370 1.6
ENERGY SOURCES
Centrais Eletricas Brasileiras S.A.-Eletrobras "B" -
ADR{\/} ................................................... BRZL 8,816 228,112 1.4
ELECTRICAL & GAS UTILITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F29
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Companhia Energetica de Minas Gerais (CEMIG) - ADR{\/} ..... BRZL 4,720 $ 202,960 1.2
ELECTRICAL & GAS UTILITIES
Petroleo Brasileiro S.A. (Petrobras) Preferred ............. BRZL 801,780 187,513 1.1
OIL
Unified Energy Systems - Reg S GDR-/- {c} {\/} ............. RUS 6,100 183,000 1.1
ELECTRICAL & GAS UTILITIES
Light - Servicos de Electricidade S.A. ..................... BRZL 333,328 138,881 0.8
ELECTRICAL & GAS UTILITIES
Light - Participacoes S.A. ................................. BRZL 461,507 138,535 0.8
ELECTRICAL & GAS UTILITIES
Enersis S.A. - ADR{\/} ..................................... CHLE 4,583 132,907 0.8
ELECTRICAL & GAS UTILITIES
YPF S.A. - ADR{\/} ......................................... ARG 2,978 101,810 0.6
OIL
C.A. La Electricidad de Caracas ............................ VENZ 83,854 100,698 0.6
ELECTRICAL & GAS UTILITIES
Chilgener S.A. - ADR{\/} ................................... CHLE 3,996 97,902 0.6
ELECTRICAL & GAS UTILITIES
Surgutneftegaz - ADR{\/} ................................... RUS 7,960 80,635 0.5
OIL
Empresa Nacional de Electricidad S.A. - ADR{\/} ............ CHLE 4,377 77,418 0.5
ELECTRICAL & GAS UTILITIES
The Hub Power Co., Ltd. - GDR-/- {\/} ...................... PAK 2,000 61,500 0.4
ENERGY SOURCES
MOL Magyar Olaj-es Gazipari RT - Reg S GDR{c} {\/} ......... HGRY 2,200 53,460 0.3
ENERGY SOURCES
Pakistan State Oil Co., Ltd. ............................... PAK 5,280 44,934 0.3
OIL
Bombay Suburban Electric Supply (BSES) Ltd. ................ IND 8,850 38,705 0.2
ELECTRICAL & GAS UTILITIES
Tenaga Nasional Bhd. ....................................... MAL 18,000 38,456 0.2
ELECTRICAL & GAS UTILITIES
Mosenergo - ADR-/- {\/} .................................... RUS 942 34,760 0.2
ELECTRICAL & GAS UTILITIES
Perez Companc S.A. "B" ..................................... ARG 4,526 32,322 0.2
OIL
Petronas Gas Bhd. .......................................... MAL 11,000 25,058 0.2
OIL
Electricity Generating Public Co., Ltd. - Foreign .......... THAI 8,200 15,871 0.1
ELECTRICAL & GAS UTILITIES
PTT Exploration and Production Public Co., Ltd. -
Foreign ................................................... THAI 1,100 13,105 0.1
OIL
Companhia Paranaense de Energia - Copel .................... BRZL 504,000 5,645 --
ELECTRICAL & GAS UTILITIES
Banpu Public Co., Ltd. - Foreign ........................... THAI 500 2,075 --
ELECTRICAL & GAS UTILITIES
-----------
2,618,457
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F30
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (14.8%)
GT Taiwan Fund-/- +X+ {\/} ................................. TWN 49,751 $ 627,861 3.8
COUNTRY FUNDS
Barlow Ltd. ................................................ SAFR 22,457 190,681 1.2
CONGLOMERATE
Grupo Carso, S.A. de C.V. "A1" ............................. MEX 25,500 170,674 1.0
MULTI-INDUSTRY
ITC Ltd.: .................................................. IND -- -- 0.9
MULTI-INDUSTRY
Common ................................................... -- 6,500 102,820 --
GDR-/- {\/} .............................................. -- 2,100 42,210 --
Anglo American Corporation of South Africa Ltd. ............ SAFR 3,403 137,547 0.8
CONGLOMERATE
Rembrandt Group Ltd. ....................................... SAFR 18,217 132,957 0.8
CONGLOMERATE
Shanghai Industrial Holdings Ltd. .......................... HK 35,000 130,090 0.8
MULTI-INDUSTRY
China Resources Enterprise Ltd. ............................ HK 56,000 125,031 0.8
CONGLOMERATE
The Saudi Arabian Investment Fund Ltd.-/- {\/} ............. UK 12,000 100,500 0.6
COUNTRY FUNDS
Sanluis Corporacion, S.A. de C.V. .......................... MEX 10,637 87,411 0.5
CONGLOMERATE
Delta Corporation Ltd. (subdivision) ....................... ZBBW 122,800 84,110 0.5
MULTI-INDUSTRY
NASR (El) City Company For Housing & Construction .......... EGPT 1,250 81,001 0.5
MISCELLANEOUS
PT Gudang Garam ............................................ INDO 50,500 79,800 0.5
MULTI-INDUSTRY
John Keells Holdings Ltd.-/- ............................... SLNKA 11,000 59,903 0.4
MULTI-INDUSTRY
PT Telekomunikasi Indonesia ................................ INDO 93,000 51,325 0.3
MULTI-INDUSTRY
Koc Holding AS ............................................. TRKY 174,600 40,909 0.2
CONGLOMERATE
Empresas La Moderna, S.A. de C.V. "A"-/- ................... MEX 7,500 40,809 0.2
MULTI-INDUSTRY
Koor Industries Ltd. - ADR{\/} ............................. ISRL 1,345 29,506 0.2
CONGLOMERATE
Alfa, S.A. de C.V. "A" ..................................... MEX 4,000 27,119 0.2
CONGLOMERATE
PT Hanjaya Mandala Sampoerna ............................... INDO 34,000 26,623 0.2
MULTI-INDUSTRY
YTL Corporation Bhd. ....................................... MAL 16,000 21,622 0.1
MULTI-INDUSTRY
Discount Investment Corp. .................................. ISRL 732 20,480 0.1
MULTI-INDUSTRY
Quinenco S.A. - ADR-/- {\/} ................................ CHLE 1,700 19,550 0.1
CONGLOMERATE
PT Bimantara Citra ......................................... INDO 61,000 12,085 0.1
MULTI-INDUSTRY
</TABLE>
The accompanying notes are an integral part of the financial statements.
F31
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (Continued)
Sime Darby Bhd. ............................................ MAL 7,000 $ 6,739 --
MISCELLANEOUS
-----------
2,449,363
-----------
Finance (12.7%)
ABSA Group Ltd. ............................................ SAFR 38,125 219,470 1.3
BANKS-REGIONAL
State Bank of India Ltd. - GDR{\/} ......................... IND 7,380 131,918 0.8
BANKS-REGIONAL
Unibanco Units-/- .......................................... BRZL 1,845,564 125,684 0.8
BANKS-MONEY CENTER
Administradora de Fondos de Pensiones Provida S.A. -
ADR{\/} ................................................... CHLE 7,022 119,813 0.7
INVESTMENT MANAGEMENT
Akbank T.A.S. .............................................. TRKY 1,280,000 112,850 0.7
BANKS-REGIONAL
Commercial International Bank: ............................. EGPT -- -- 0.6
BANKS-MONEY CENTER
Common ................................................... -- 5,000 101,119 --
144A GDR{.} {\/} ......................................... -- 200 4,200 --
Turkiye Is Bankasi (Isbank) "C" ............................ TRKY 542,800 98,333 0.6
BANKS-MONEY CENTER
Liberty Life Association of Africa Ltd. .................... SAFR 3,400 87,377 0.5
INSURANCE-LIFE
Credicorp Ltd. - ADR{\/} ................................... PERU 4,300 77,400 0.5
BANKS-MONEY CENTER
Global Menkul Degerler AS-/- ............................... TRKY 3,540,026 75,247 0.5
SECURITIES BROKER
Banco Rio de La Plata S.A. - ADR-/- {\/} ................... ARG 5,100 71,400 0.4
BANKS-MONEY CENTER
C.G. Smith Ltd. ............................................ SAFR 16,800 69,079 0.4
INVESTMENT MANAGEMENT
Egyptian American Bank SAE ................................. EGPT 2,100 65,567 0.4
BANKS-MONEY CENTER
Banco Frances del Rio de la Plata S.A. - ADR{\/} ........... ARG 2,374 64,988 0.4
BANKS-MONEY CENTER
Haci Omer Sabanci Holding AS: .............................. TRKY -- -- 0.4
INVESTMENT MANAGEMENT
Common-/- ................................................ -- 829,000 51,062 --
ADR Reg S-/- {c} {\/} .................................... -- 700 10,675 --
Banco de A. Edwards - ADR{\/} .............................. CHLE 3,463 58,871 0.4
BANKS-MONEY CENTER
Aksigorta AS ............................................... TRKY 862,500 55,208 0.3
INSURANCE - MULTI-LINE
Nedcor Ltd. ................................................ SAFR 2,400 53,289 0.3
BANKS-REGIONAL
Golden Hope Plantations Bhd. ............................... MAL 40,000 46,332 0.3
INVESTMENT MANAGEMENT
Banco de Galicia y Buenos Aires, S.A. de C.V. - ADR{\/} .... ARG 1,400 36,050 0.2
BANKS-MONEY CENTER
Berjaya Sports Toto Bhd. ................................... MAL 14,000 35,856 0.2
REAL ESTATE
</TABLE>
The accompanying notes are an integral part of the financial statements.
F32
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Finance (Continued)
National Development Bank-/- ............................... SLNKA 7,800 $ 29,045 0.2
BANKS-REGIONAL
Muslim Commercial Bank Ltd.-/- ............................. PAK 32,100 28,813 0.2
BANKS-MONEY CENTER
Banco Santander Chile - ADR{\/} ............................ CHLE 2,000 28,250 0.2
BANKS-REGIONAL
Bank Hapoalim Ltd. ......................................... ISRL 11,434 27,462 0.2
BANKS-REGIONAL
Bank Leumi Le - Israel ..................................... ISRL 14,626 24,577 0.2
BANKS-REGIONAL
Inversiones y Representaciones S.A. (IRSA) - GDR{\/} ....... ARG 650 24,456 0.1
REAL ESTATE
Malayan Banking Bhd. ....................................... MAL 8,000 23,269 0.1
BANKS-MONEY CENTER
Kazkommertsbank Co. - GDR-/- {\/} .......................... KAZ 1,070 21,400 0.1
BANKS-REGIONAL
Turkiye Garanti Bankasi AS ................................. TRKY 416,000 20,599 0.1
BANKS-REGIONAL
Bank Slaski S.A. ........................................... POL 363 20,109 0.1
BANKS-MONEY CENTER
MISR International Bank SAE - GDR-/- {\/} .................. EGPT 1,000 14,675 0.1
BANKS-MONEY CENTER
Yapi ve Kredi Bankasi AS ................................... TRKY 299,645 11,436 0.1
BANKS-REGIONAL
Bangkok Bank Public Co., Ltd. - Foreign .................... THAI 4,100 10,581 0.1
BANKS-MONEY CENTER
Thai Farmers Bank Public Co., Ltd. - Foreign ............... THAI 5,600 10,538 0.1
BANKS-REGIONAL
F.I.B.I. Holdings Ltd. ..................................... ISRL 48 8,623 0.1
BANKS-SUPER REGIONAL
Malaysian Assurance Alliance Bhd. .......................... MAL 5,900 6,773 --
INSURANCE - MULTI-LINE
-----------
2,082,394
-----------
Materials/Basic Industry (11.2%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................. MEX 58,809 287,922 1.7
PAPER/PACKAGING
Suez Cement Co. - Reg S GDR{c} {\/} ........................ EGPT 9,963 203,494 1.2
CEMENT
Helwan Portland Cement Co.-/- .............................. EGPT 6,500 131,149 0.8
CEMENT
SA Iron & Steel Industrial Corporation Ltd. (ISCOR) ........ SAFR 373,247 110,501 0.7
METALS - STEEL
Sappi Ltd. ................................................. SAFR 21,652 109,061 0.7
FOREST PRODUCTS
Industrias Penoles S.A. (CP) ............................... MEX 23,240 105,139 0.6
METALS - NON-FERROUS
De Beers Centenary AG - Linked Unit{.:} .................... SAFR 4,400 89,556 0.5
MISC. MATERIALS & COMMODITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F33
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Apasco, S.A. de C.V. ....................................... MEX 11,931 $ 82,813 0.5
CEMENT
Torah Portland Cement Co. .................................. EGPT 3,600 82,699 0.5
CEMENT
Pannonplast Rt. ............................................ HGRY 1,301 68,584 0.4
MISC. MATERIALS & COMMODITIES
Helioplis Housing .......................................... EGPT 500 66,642 0.4
BUILDING MATERIALS & COMPONENTS
Turk Sise ve Cam Fabrikalari AS-/- ......................... TRKY 740,000 54,517 0.3
GLASS
Ameriyah Cement Co. ........................................ EGPT 2,000 46,834 0.3
CEMENT
Grupo Mexico S.A. "L" ...................................... MEX 14,200 44,881 0.3
METALS - NON-FERROUS
Siderca S.A. ............................................... ARG 14,900 41,430 0.3
METALS - STEEL
Israel Chemicals Ltd. ...................................... ISRL 23,326 31,608 0.2
CHEMICALS
North Cairo Flour Mills .................................... EGPT 1,000 28,571 0.2
MISC. MATERIALS & COMMODITIES
Sociedad Quimica y Minera de Chile S.A. - ADR{\/} .......... CHLE 600 26,400 0.2
CHEMICALS
Hindalco Industries Ltd.: .................................. IND -- -- 0.1
METALS - NON-FERROUS
GDR{\/} .................................................. -- 800 15,750 --
Common ................................................... -- 400 7,601 --
HI Cement Corp. ............................................ PHIL 305,000 23,256 0.1
CEMENT
Maanshan Iron and Steel Co. "H"{*} ......................... CHNA 174,000 19,312 0.1
METALS - STEEL
Agros Holding S.A. "C"-/- .................................. POL 766 15,886 0.1
MISC. MATERIALS & COMMODITIES
PT Indah Kiat Pulp & Paper Corp.Tbk ........................ INDO 85,000 15,637 0.1
PAPER/PACKAGING
PT Aneka Tambang-/- ........................................ INDO 60,500 15,125 0.1
METALS - NON-FERROUS
Engro Chemicals Pakistan Ltd. .............................. PAK 5,800 15,045 0.1
CHEMICALS
Nampak Ltd. ................................................ SAFR 4,400 13,207 0.1
PAPER/PACKAGING
Cosco Pacific Ltd. ......................................... HK 16,000 13,009 0.1
PAPER/PACKAGING
Compania de Minas Buenaventura S.A. - ADR{\/} .............. PERU 800 12,800 0.1
METALS - NON-FERROUS
IOI Corporation Bhd. ....................................... MAL 36,000 11,676 0.1
MISC. MATERIALS & COMMODITIES
Cahya Mata Sarawak Bhd. .................................... MAL 16,000 9,843 0.1
BUILDING MATERIALS & COMPONENTS
Fauji Fertilizer Co., Ltd. ................................. PAK 5,100 9,764 0.1
MISC. MATERIALS & COMMODITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F34
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Makhteshim Chemical Works Ltd.-/- .......................... ISRL 1,200 $ 8,690 0.1
CHEMICALS
Shanghai Petrochemical Co., Ltd. "H" ....................... HK 39,000 6,090 --
CHEMICALS
The Siam Cement Public Co., Ltd. - Foreign ................. THAI 700 5,720 --
CEMENT
Yizheng Chemical Fibre Co., Ltd.{*} ........................ CHNA 20,000 3,614 --
CHEMICALS
-----------
1,833,826
-----------
Consumer Non-Durables (7.2%)
Fomento Economico Mexicano, S.A. de C.V. "B" ............... MEX 26,334 210,528 1.3
BEVERAGES - ALCOHOLIC
South African Breweries Ltd. ............................... SAFR 8,523 210,271 1.3
BEVERAGES - ALCOHOLIC
Gruma S.A. "B"-/- .......................................... MEX 42,097 166,969 1.0
FOOD
Hindustan Lever Ltd. ....................................... IND 2,800 99,074 0.6
PERSONAL CARE/COSMETICS
Companhia Cervejaria Brahma Preferred ...................... BRZL 142,241 95,592 0.6
BEVERAGES - ALCOHOLIC
A-Ahram Beverages Co. S.A.E. - 144A GDR{.} {\/} ............ EGPT 3,000 84,750 0.5
BEVERAGES - ALCOHOLIC
Eastern Tobacco Co. ........................................ EGPT 2,700 62,836 0.4
TOBACCO
Embotelladora Andina S.A. "B" - ADR{\/} .................... CHLE 3,207 62,336 0.4
BEVERAGES - NON-ALCOHOLIC
Reliance Industries Ltd. - GDR{\/} ......................... IND 6,200 52,313 0.3
TEXTILES & APPAREL
Compania Cervecerias Unidas S.A. - ADR{\/} ................. CHLE 1,400 41,125 0.3
BEVERAGES - ALCOHOLIC
C.G. Smith Foods Ltd. ...................................... SAFR 2,000 28,783 0.2
FOOD
Ng Fung Hong Ltd. .......................................... HK 22,000 23,140 0.1
FOOD
Kuala Lumpur Kepong Bhd. ................................... MAL 10,000 21,493 0.1
OTHER CONSUMER GOODS
Zaklady Piwowarskie w Zywcu S.A. (Zywiec) .................. POL 215 18,080 0.1
BEVERAGES - ALCOHOLIC
Rothmans of Pall Mall Bhd. ................................. MAL 800 6,229 --
TOBACCO
Oriental Weavers "C"-/- .................................... EGPT 350 6,082 --
TEXTILES & APPAREL
-----------
1,189,601
-----------
Health Care (1.7%)
Richter Gedeon Rt. - Reg S GDR{c} {\/} ..................... HGRY 805 92,474 0.6
PHARMACEUTICALS
Egypt International Pharmaceutical Industries Co.
(EIPICO) .................................................. EGPT 1,000 70,103 0.4
PHARMACEUTICALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F35
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Health Care (Continued)
Teva Pharmaceutical Industries Ltd. ........................ ISRL 1,238 $ 58,767 0.4
PHARMACEUTICALS
Ranbaxy Laboratories Ltd. .................................. IND 3,000 54,035 0.3
MEDICAL TECHNOLOGY & SUPPLIES
PT Kalbe Farma - Foreign ................................... INDO 31,000 5,703 --
PHARMACEUTICALS
-----------
281,082
-----------
Consumer Durables (1.4%)
Bajaj Auto Ltd. ............................................ IND 5,850 90,518 0.5
AUTOMOBILES
Arcelik AS ................................................. TRKY 566,466 53,363 0.3
APPLIANCES & HOUSEHOLD
Qingling Motors Co., Ltd.{*} ............................... CHNA 78,000 38,253 0.2
AUTOMOBILES
Tata Engineering and Locomotive Co., Ltd. - GDR{\/} ........ IND 4,200 35,007 0.2
AUTOMOBILES
Mahindra & Mahindra Ltd. ................................... IND 3,800 31,246 0.2
AUTOMOBILES
-----------
248,387
-----------
Capital Goods (1.0%)
Empresas ICA Sociedad Controladora, S.A. de C.V. -
ADR{\/} ................................................... MEX 2,300 37,806 0.2
CONSTRUCTION
Cheung Kong Infrastructure Holdings ........................ HK 12,000 33,916 0.2
CONSTRUCTION
New World Infrastructure Ltd.-/- ........................... HK 13,000 29,277 0.2
CONSTRUCTION
Elektrim Spolka Akcyjna S.A. ............................... POL 2,882 27,919 0.2
ELECTRICAL PLANT/EQUIPMENT
Irkutskenergo - ADR{\/} .................................... RUS 1,898 18,031 0.1
ELECTRICAL PLANT/EQUIPMENT
ECI Telecommunications Ltd.{\/} ............................ ISRL 650 16,575 0.1
TELECOM EQUIPMENT
Arabian International Construction-/- ...................... EGPT 275 7,776 --
CONSTRUCTION
Sungmi Telecom Electronics Co. ............................. KOR 1 28 --
TELECOM EQUIPMENT
-----------
171,328
-----------
Technology (0.3%)
Clal Electronics Industries Ltd. ........................... ISRL 173 25,155 0.2
SEMICONDUCTORS
Tadiran Ltd. ............................................... ISRL 500 17,851 0.1
TELECOM TECHNOLOGY
-----------
43,006
----------- -----
TOTAL EQUITY INVESTMENTS (cost $15,806,682) .................. 14,127,528 85.6
----------- -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F36
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (0.1%)
Pakistan (0.1%)
Republic of Pakistan, 6% due 2/26/02 - Reg S-/- {c} (cost
$13,764) ................................................ USD 15,000 $ 13,650 0.1
----------- -----
<CAPTION>
NO. OF
WARRANTS COUNTRY WARRANTS
- -------------------------------------------------------------- -------- -----------
<S> <C> <C> <C> <C>
Belle Corp. Warrants, expire 2002 (cost $0) ................ PHIL 41,720 65 --
----------- -----
OIL
<CAPTION>
REPURCHASE AGREEMENT
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $2,475,000 U.S. Treasury Notes, 7.875%
due 11/15/07 (market value of collateral is $2,716,313,
including accrued interest). (cost $2,659,000) ........... 2,659,000 16.1
----------- -----
TOTAL INVESTMENTS (cost $18,479,446) * ...................... 16,800,243 101.8
Other Assets and Liabilities ................................. (291,486) (1.8)
----------- -----
NET ASSETS ................................................... $16,508,757 100.0
----------- -----
----------- -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{*} Security denominated in Hong Kong Dollars.
{.} Security exempt from registration under Rule144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{c} Security issued under Regulation S. Rule 144A andadditional
restrictions may apply in the resale of such securities.
{.:} Each Centenary Linked Unit consists of 1registered deferred share
of De Beers Consolidated Mine + 1 Centenary Depositary Receipt.
+X+ The GT Global Variable Emerging Markets Fund (the"Fund") has
invested in the GT Global Taiwan Fund, a fund managed by GT Asset
Management Ltd. who is an affiliate of the Fund's manager,
[Chancellor LGT] Asset Management, Inc.
* For Federal income tax purposes, cost is $18,619,373
andappreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 745,251
Unrealized depreciation: (2,564,381)
-------------
Net unrealized depreciation: $ (1,819,130)
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F37
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) .................. 3.4 3.4
Brazil (BRZL/BRL) .................... 12.4 12.4
Chile (CHLE/CLP) ..................... 5.3 5.3
China (CHNA/RMB) ..................... 0.4 0.4
Egypt (EGPT/EGP) ..................... 6.3 6.3
Hong Kong (HK/HKD) ................... 2.8 2.8
Hungary (HGRY/HUF) ................... 2.7 2.7
India (IND/INR) ...................... 5.3 5.3
Indonesia (INDO/IDR) ................. 1.7 1.7
Israel (ISRL/ILS) .................... 2.0 2.0
Kazakhstan (KAZ/KTS) ................. 0.1 0.1
Malaysia (MAL/MYR) ................... 1.7 1.7
Mexico (MEX/MXN) ..................... 10.8 10.8
Pakistan (PAK/PKR) ................... 1.3 0.1 1.4
Peru (PERU/PES) ...................... 1.5 1.5
Philippines (PHIL/PHP) ............... 0.1 0.1
Poland (POL/PLZ) ..................... 0.5 0.5
Portugal (PORT/PTE) .................. 0.1 0.1
Russia (RUS/SUR) ..................... 4.4 4.4
South Africa (SAFR/ZAR) .............. 11.8 11.8
Sri Lanka (S LNKA/LKR) ............... 0.6 0.6
Taiwan (TWN/TWD) ..................... 3.8 3.8
Thailand (THAI/THB) .................. 0.7 0.7
Turkey (TRKY/TRL) .................... 3.7 3.7
United Kingdom (UK/GBP) .............. 0.6 0.6
United States (US/USD) ............... 14.3 14.3
Venezuela (VENZ/VEB) ................. 1.1 1.1
Zimbabwe (ZBBW/ZWD) .................. 0.5 0.5
------ ----- ----- -----
Total ............................... 85.6 0.1 14.3 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $16,508,757.
The accompanying notes are an integral part of the financial statements.
F38
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Electrical & Gas Utilities (29.7%)
AES Corp.-/- ................................................ US 6,400 $ 298,400 3.4
Endesa S.A. - ADR{\/} ....................................... SPN 15,200 276,450 3.2
Hub Power Co.-/- ............................................ PAK 204,000 265,627 3.0
IES Industries, Inc. ........................................ US 6,900 254,006 2.9
Edison S.p.A. ............................................... ITLY 38,200 228,681 2.6
Light - Participacoes S.A. .................................. BRZL 650,000 195,116 2.2
EVN Energie-Versorgung Niederoesterreich AG ................. ASTRI 1,400 184,021 2.1
Light - Servicos de Electricidade S.A. ...................... BRZL 440,000 183,325 2.1
Companhia Energetica de Minas Gerais (CEMIG) - ADR{\/} ...... BRZL 3,600 154,800 1.8
VEBA AG ..................................................... GER 2,000 136,225 1.6
RWE AG ...................................................... GER 2,500 134,140 1.5
Viag AG ..................................................... GER 200 107,756 1.2
BSES Ltd. - 144A GDR{.} {\/} ................................ IND 6,000 99,000 1.1
MetroGas S.A. - ADR{\/} ..................................... ARG 7,662 59,381 0.7
Chilgener S.A. - ADR{\/} .................................... CHLE 930 22,785 0.3
----------
2,599,713
----------
Telephone Networks (10.8%)
Telecom Italia SpA - Di Risp-/- ............................. ITLY 50,900 223,782 2.6
Telefonica de Espana - ADR{\/} .............................. SPN 2,400 218,550 2.5
Portugal Telecom S.A. - ADR{\/} ............................. PORT 3,700 173,900 2.0
Magyar Tavkozlesi Rt. - ADR-/- {\/} ......................... HGRY 6,400 166,400 1.9
SPT Telecom-/- .............................................. CZCH 1,100 117,746 1.3
Compania Anonima Nacional Telefonos de Venezuela (CANTV) -
ADR{\/} .................................................... VENZ 1,100 45,788 0.5
----------
946,166
----------
Metals - Steel (10.3%)
Northwest Pipe Co.-/- ....................................... US 10,800 259,200 3.0
IPSCO, Inc. ................................................. CAN 5,800 225,294 2.6
Hylsamex, S.A. de C.V. - 144A ADR{.} {\/} ................... MEX 4,800 170,400 1.9
NS Group, Inc.-/- ........................................... US 9,800 167,825 1.9
EVI, Inc.-/- ................................................ US 1,500 77,625 0.9
----------
900,344
----------
Cement (5.6%)
Giant Cement Holding, Inc.-/- ............................... US 10,300 238,188 2.7
La Cementos Nacional, C.A. - 144A GDR{.} {\/} ............... ECDR 723 148,215 1.7
Suez Cement Co. - Reg S GDR{c} {\/} ......................... EGPT 5,100 104,168 1.2
----------
490,571
----------
Transportation - Road & Rail (5.5%)
Canadian National Railway Co. ............................... CAN 5,200 244,933 2.8
Tranz Rail Holdings Ltd. - ADR{\/} .......................... NZ 9,000 103,500 1.2
CNF Transportation, Inc. .................................... US 2,000 76,750 0.9
Brisa-Auto Estradas de Portugal S.A.-/- ..................... PORT 1,600 57,330 0.6
----------
482,513
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F39
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Transportation - Airlines (4.0%)
Aeroporti di Roma SpA-/- .................................... ITLY 24,400 $ 252,391 2.9
Airborne Freight Corp. ...................................... US 1,500 93,188 1.1
----------
345,579
----------
Multi-Industry (3.5%)
Mannesmann AG ............................................... GER 600 303,253 3.5
----------
Semiconductors (3.1%)
EMCORE Corp.-/- ............................................. US 8,000 156,000 1.8
DSP Communications, Inc.-/- ................................. US 9,600 115,200 1.3
----------
271,200
----------
Networking (2.9%)
Cisco Systems, Inc.-/- ...................................... US 4,500 250,875 2.9
----------
Telecom Equipment (2.8%)
Nokia Oyj "A" - ADR{\/} ..................................... FIN 2,000 140,000 1.6
Tadiran Ltd. - ADR{\/} ...................................... ISRL 3,100 109,663 1.2
----------
249,663
----------
Gas Production & Distribution (2.7%)
Enron Corporation ........................................... US 5,697 236,778 2.7
----------
Machinery & Engineering (2.0%)
Caterpillar, Inc. ........................................... US 3,100 150,544 1.7
United Engineers (Malaysia) Bhd.(::) ........................ MAL 23,000 19,181 0.2
KCI Konecranes International ................................ FIN 300 10,272 0.1
----------
179,997
----------
Aerospace/Defense (1.9%)
Doncasters PLC - ADR-/- {\/} ................................ UK 7,700 162,663 1.9
----------
Wireless Communications (1.8%)
Paging Network, Inc.-/- ..................................... US 9,000 96,750 1.1
DDI Corp. ................................................... JPN 18 47,586 0.5
China Telecom (Hong Kong) Ltd.-/- ........................... HK 8,000 13,732 0.2
----------
158,068
----------
Energy Equipment & Services (1.8%)
The Shaw Group, Inc.-/- ..................................... US 6,800 156,400 1.8
----------
Telecom Technology (1.4%)
Tadiran Telecommunications Ltd.{\/} ......................... ISRL 6,500 90,188 1.0
Asia Pacific Wire & Cable Corporation Ltd.-/- {\/} .......... SING 4,600 33,063 0.4
----------
123,251
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F40
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Transportation - Shipping (0.0%)
International Container Terminal Services (ICTS)-/- ......... PHIL 6,768 $ 846 --
---------- -----
TOTAL EQUITY INVESTMENTS (cost $7,192,094) .................... 7,857,880 89.8
---------- -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- --------------------------------------------------------------- ---------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $715,000 U.S. Treasury Notes, 7.875% due
11/15/07 (market value of collateral is $784,713 including
accrued interest). (cost $767,000) ........................ 767,000 8.8
---------- -----
TOTAL INVESTMENTS (cost $7,959,094) * ........................ 8,624,880 98.6
Other Assets and Liabilities .................................. 120,305 1.4
---------- -----
NET ASSETS .................................................... $8,745,185 100.0
---------- -----
---------- -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
(::) Valued in good faith at fair value using procedures approved by the
Board of Directors (See Note 1 of Notes to Financial Statements).
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
* For Federal income tax purposes, cost is $7,959,094 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 1,252,732
Unrealized depreciation: (586,946)
-------------
Net unrealized appreciation: $ 665,786
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F41
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-----------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- ----------
<S> <C> <C> <C>
Argentina (ARG/ARS) .................. 0.7 0.7
Austria (ASTRI/ATS) .................. 2.1 2.1
Brazil (BRZL/BRL) .................... 6.1 6.1
Canada (CAN/CAD) ..................... 5.4 5.4
Chile (CHLE/CLP) ..................... 0.3 0.3
Czech Republic (CZCH/CSK) ............ 1.3 1.3
Ecuador (ECDR/ECS) ................... 1.7 1.7
Egypt (EGPT/EGP) ..................... 1.2 1.2
Finland (FIN/FIM) .................... 1.7 1.7
Germany (GER/DEM) .................... 7.8 7.8
Hong Kong (HK/HKD) ................... 0.2 0.2
Hungary (HGRY/HUF) ................... 1.9 1.9
India (IND/INR) ...................... 1.1 1.1
Israel (ISRL/ILS) .................... 2.2 2.2
Italy (ITLY/ITL) ..................... 8.1 8.1
Japan (JPN/JPY) ...................... 0.5 0.5
Malaysia (MAL/MYR) ................... 0.2 0.2
Mexico (MEX/MXN) ..................... 1.9 1.9
New Zealand (NZ/NZD) ................. 1.2 1.2
Pakistan (PAK/PKR) ................... 3.0 3.0
Portgual (PORT/PTE) .................. 2.6 2.6
Singapore (SING/SGD) ................. 0.4 0.4
Spain (SPN/ESP) ...................... 5.7 5.7
United Kingdom (UK/GBP) .............. 1.9 1.9
United States (US/USD) ............... 30.1 10.2 40.3
Venezuela (VENZ/VEB) ................. 0.5 0.5
------ ----- ----------
Total ............................... 89.8 10.2 100.0
------ ----- ----------
------ ----- ----------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $8,745,185.
The accompanying notes are an integral part of the financial statements.
F42
<PAGE>
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy Equipment & Services (37.7%)
Schlumberger Ltd. .......................................... US 6,300 $ 507,150 3.0
Falcon Drilling Co., Inc.-/- ............................... US 14,400 504,900 3.0
Santa Fe International Corp. ............................... US 11,500 467,906 2.8
Helmerich & Payne, Inc. .................................... US 6,800 461,550 2.8
Diamond Offshore Drilling, Inc. ............................ US 8,700 418,688 2.5
Nabors Industries, Inc.-/- ................................. US 13,300 418,119 2.5
Patterson Energy, Inc.-/- .................................. US 10,000 386,875 2.3
Cliffs Drilling Co.-/- ..................................... US 7,400 369,075 2.2
Pool Energy Services Co.-/- ................................ US 16,400 364,900 2.2
Key Energy Group, Inc.-/- .................................. US 16,800 364,350 2.2
Veritas DGC, Inc.-/- ....................................... US 9,100 359,450 2.2
Noble Drilling Corp.-/- .................................... US 11,400 349,125 2.1
UTI Energy Corp.-/- ........................................ US 12,000 310,500 1.9
Smith International, Inc.-/- ............................... US 4,800 294,600 1.8
Fred Olsen Energy ASA-/- ................................... NOR 11,900 238,839 1.4
Computalog Ltd.-/- ......................................... CAN 10,400 174,692 1.0
Bonus Resource Services Corp.-/- ........................... CAN 41,674 172,086 1.0
Bayard Drilling Technologies, Inc.-/- ...................... US 4,600 74,750 0.4
IRI International Corp.-/- ................................. US 5,000 70,000 0.4
-----------
6,307,555
-----------
Construction (13.5%)
National-Oilwell, Inc.-/- .................................. US 14,600 499,138 3.0
Global Industries Ltd.-/- .................................. US 27,400 465,800 2.8
Coflexip - ADR{\/} ......................................... FR 5,400 299,700 1.8
Halter Marine Group, Inc.-/- ............................... US 9,450 272,869 1.6
Stolt Comex Seaway S.A.-/- ................................. US 5,300 265,000 1.6
Cal Dive International, Inc.-/- ............................ US 10,700 262,150 1.6
Bouygues Offshore S.A. - ADR{\/} ........................... FR 5,100 110,925 0.7
TransCoastal Marine Services, Inc.-/- ...................... US 5,100 72,675 0.4
-----------
2,248,257
-----------
Oil (12.1%)
Petroleo Brasileiro S.A. (Petrobras) Preferred ............. BRZL 2,000,000 467,742 2.8
Remington Energy Ltd.-/- ................................... CAN 27,000 453,527 2.7
Canadian Fracmaster Ltd.-/- ................................ CAN 41,800 351,064 2.1
Pinnacle Resources Ltd.-/- ................................. CAN 22,700 282,002 1.7
Orogen Minerals Ltd. - 144A ADR{.} {\/} .................... AUSL 13,500 263,860 1.6
Black Sea Energy Ltd.-/- ................................... CAN 157,800 208,736 1.2
-----------
2,026,931
-----------
Metals - Steel (10.1%)
Tubos de Acero de Mexico S.A. - ADR-/- {\/} ................ MEX 23,600 510,350 3.1
IPSCO, Inc. ................................................ CAN 12,500 485,547 2.9
EVI, Inc.-/- ............................................... US 8,700 450,225 2.7
NS Group, Inc.-/- .......................................... US 7,700 131,863 0.8
</TABLE>
The accompanying notes are an integral part of the financial statements.
F43
<PAGE>
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Metals - Steel (Continued)
Maverick Tube Corp.-/- ..................................... US 4,000 $ 101,250 0.6
-----------
1,679,235
-----------
Forest Products (5.0%)
The TimberWest Timber Trust: ............................... CAN -- -- 5.0
Common ................................................... -- 61,000 441,874 --
Installment Receipts ..................................... -- 110,200 408,777 --
-----------
850,651
-----------
Coal (5.0%)
Manalta Coal Income Trust Units ............................ CAN 137,500 413,809 2.5
Luscar Coal Income Fund-/- ................................. CAN 65,600 218,085 1.3
Westshore Terminals, Inc. - Installment Receipts ........... CAN 76,600 193,001 1.2
-----------
824,895
-----------
Chemicals (3.9%)
Giant Industries, Inc. ..................................... US 22,700 431,300 2.6
ERG SpA-/- ................................................. ITLY 59,000 219,982 1.3
-----------
651,282
-----------
Gas Production & Distribution (3.3%)
Berkley Petroleum Corp.-/- ................................. CAN 35,800 375,840 2.2
Comstock Resources, Inc.-/- ................................ US 15,100 180,256 1.1
-----------
556,096
-----------
Paper/Packaging (3.0%)
Fort James Corp. ........................................... US 10,000 382,500 2.3
Jefferson Smurfit Corp.-/- ................................. US 8,000 113,000 0.7
-----------
495,500
-----------
Machinery & Engineering (2.8%)
Enerflex Systems Ltd. ...................................... CAN 20,900 475,399 2.8
----------- -----
TOTAL EQUITY INVESTMENTS (cost $16,229,109) .................. 16,115,801 96.4
----------- -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F44
<PAGE>
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $695,000 U.S. Treasury Notes, 5.75% due
12/31/98 (market value of collateral is $695,652, including
accrued interest). (cost $678,000) ....................... $ 678,000 4.1
----------- -----
TOTAL INVESTMENTS (cost $16,907,109) * ...................... 16,793,801 100.5
Other Assets and Liabilities ................................. (84,794) (0.5)
----------- -----
NET ASSETS ................................................... $16,709,007 100.0
----------- -----
----------- -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
* For Federal income tax purposes, cost is $16,986,496 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 1,647,851
Unrealized depreciation: (1,840,546)
-------------
Net unrealized depreciation: $ (192,695)
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-----------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- ----------
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 1.6 1.6
Brazil (BRZL/BRL) .................... 2.8 2.8
Canada (CAN/CAD) ..................... 27.6 27.6
France (FR/FRF) ...................... 2.5 2.5
Italy (ITLY/ITL) ..................... 1.3 1.3
Mexico (MEX/MXN) ..................... 3.1 3.1
Norway (NOR/NOK) ..................... 1.4 1.4
United States (US/USD) ............... 56.1 3.6 59.7
------ --- ----------
Total ............................... 96.4 3.6 100.0
------ --- ----------
------ --- ----------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $16,709,007.
The accompanying notes are an integral part of the financial statements.
F45
<PAGE>
GT GLOBAL VARIABLE AMERICA FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (36.3%)
Cendant Corp.-/- ........................................... US 73,775 $ 2,536,017 5.8
RETAILERS-OTHER
Snyder Communications, Inc.-/- ............................. US 49,400 1,803,100 4.1
CONSUMER SERVICES
Outdoor Systems, Inc.-/- ................................... US 45,200 1,734,550 3.9
BUSINESS & PUBLIC SERVICES
U.S. Office Products Co.-/- ................................ US 71,350 1,400,240 3.2
CONSUMER SERVICES
Signature Resorts, Inc.-/- ................................. US 63,600 1,391,250 3.2
LEISURE & TOURISM
Universal Outdoor Holdings, Inc.-/- ........................ US 25,700 1,336,400 3.0
BUSINESS & PUBLIC SERVICES
Hilton Hotels Corp. ........................................ US 42,400 1,261,400 2.9
LEISURE & TOURISM
Caribiner International, Inc.-/- ........................... US 23,400 1,041,300 2.4
CONSUMER SERVICES
Mirage Resorts, Inc.-/- .................................... US 39,800 905,450 2.1
LEISURE & TOURISM
Valassis Communications, Inc.-/- ........................... US 20,800 769,600 1.7
BROADCASTING & PUBLISHING
Paychex, Inc. .............................................. US 11,500 582,188 1.3
CONSUMER SERVICES
Service Corporation International .......................... US 11,600 428,475 1.0
CONSUMER SERVICES
Nextel Communications, Inc. "A"-/- ......................... US 15,900 413,400 0.9
WIRELESS COMMUNICATIONS
Wolverine World Wide, Inc. ................................. US 16,500 373,313 0.8
RETAILERS-APPAREL
-----------
15,976,683
-----------
Finance (15.2%)
Conseco, Inc. .............................................. US 29,200 1,326,775 3.0
INSURANCE - MULTI-LINE
GreenPoint Financial Corp. ................................. US 14,900 1,081,181 2.5
BANKS-REGIONAL
CMAC Investment Corp. ...................................... US 14,300 863,363 2.0
INSURANCE - PROPERTY-CASUALTY
National Commerce Bancorp. ................................. US 24,400 860,100 2.0
OTHER FINANCIAL
Exel Ltd. .................................................. US 13,500 855,563 1.9
INSURANCE - PROPERTY-CASUALTY
The CIT Group, Inc. "A"-/- ................................. US 18,100 583,725 1.3
CONSUMER FINANCE
Consolidated Capital Corp.-/- .............................. US 25,000 507,813 1.2
INVESTMENT MANAGEMENT
Student Loan Marketing Association ......................... US 2,800 389,550 0.9
OTHER FINANCIAL
Ace Ltd. ................................................... US 1,600 154,400 0.4
INSURANCE - PROPERTY-CASUALTY
-----------
6,622,470
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F46
<PAGE>
GT GLOBAL VARIABLE AMERICA FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Health Care (11.5%)
McKesson Corp. ............................................. US 11,100 $ 1,200,881 2.7
HEALTH CARE SERVICES
AmeriSource Health Corp. "A"-/- ............................ US 17,700 1,039,875 2.4
HEALTH CARE SERVICES
Quintiles Transnational Corp.-/- ........................... US 23,800 910,350 2.1
HEALTH CARE SERVICES
HBO & Co. .................................................. US 16,000 768,000 1.7
HEALTH CARE SERVICES
Covance, Inc.-/- ........................................... US 36,800 731,400 1.7
HEALTH CARE SERVICES
Guidant Corp. .............................................. US 6,500 404,625 0.9
MEDICAL TECHNOLOGY & SUPPLIES
-----------
5,055,131
-----------
Materials/Basic Industry (10.4%)
Crompton & Knowles Corp. ................................... US 48,300 1,279,950 2.9
CHEMICALS
International Specialty Products, Inc.-/- .................. US 82,400 1,230,850 2.8
CHEMICALS
J. Ray McDermott S.A.-/- ................................... US 25,500 1,096,500 2.5
BUILDING MATERIALS & COMPONENTS
Sealed Air Corp.-/- ........................................ US 16,000 988,000 2.2
PLASTICS & RUBBER
-----------
4,595,300
-----------
Technology (10.0%)
Sterling Commerce, Inc.-/- ................................. US 34,700 1,333,781 3.0
SOFTWARE
Peoplesoft, Inc.-/- ........................................ US 31,400 1,224,600 2.8
SOFTWARE
Ciena Corp.-/- ............................................. US 13,200 806,850 1.8
TELECOM TECHNOLOGY
Pegasystems, Inc.-/- ....................................... US 29,600 597,550 1.4
SOFTWARE
CBT Group PLC - ADR-/- {\/} ................................ IRE 5,600 459,900 1.0
COMPUTERS & PERIPHERALS
-----------
4,422,681
-----------
Energy (8.2%)
Anadarko Petroleum Corp. ................................... US 15,500 940,656 2.1
OIL
Cooper Cameron Corp.-/- .................................... US 12,700 774,700 1.8
ENERGY EQUIPMENT & SERVICES
BJ Services Co.-/- ......................................... US 10,000 719,375 1.6
ENERGY EQUIPMENT & SERVICES
Santa Fe International Corp. ............................... US 14,900 606,244 1.4
ENERGY EQUIPMENT & SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F47
<PAGE>
GT GLOBAL VARIABLE AMERICA FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Smith International, Inc.-/- ............................... US 9,500 $ 583,063 1.3
ENERGY EQUIPMENT & SERVICES
-----------
3,624,038
-----------
Consumer Durables (4.5%)
Avis Rent A Car, Inc.-/- ................................... US 27,500 878,281 2.0
AUTOMOBILES
Hertz Corp. "A" ............................................ US 17,000 684,250 1.6
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- ................... US 19,000 389,500 0.9
AUTOMOBILES
-----------
1,952,031
-----------
Multi-Industry/Miscellaneous (2.7%)
Corrections Corporation of America-/- ...................... US 32,200 1,193,413 2.7
-----------
MISCELLANEOUS
Consumer Non-Durables (1.2%)
International Home Foods, Inc.-/- .......................... US 19,200 537,600 1.2
-----------
FOOD
Capital Goods (1.2%)
U.S. Filter Corp.-/- ....................................... US 17,400 520,913 1.2
ENVIRONMENTAL
----------- -----
TOTAL EQUITY INVESTMENTS (cost $39,605,742) .................. 44,500,260 101.2
----------- -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Co., due
January 2, 1998, for an effective yield of 5.80%,
collateralized by $3,775,000 U.S. Treasury Notes, 7.875%
due 11/15/07 (market value of collateral is $4,143,063,
including accrued interest). (cost $4,057,000) ........... 4,057,000 9.2
----------- -----
TOTAL INVESTMENTS (cost $43,662,742) * ...................... 48,557,260 110.4
Other Assets and Liabilities ................................. (4,580,436) (10.4)
----------- -----
NET ASSETS ................................................... $43,976,824 100.0
----------- -----
----------- -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $43,764,519 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 5,422,864
Unrealized depreciation: (630,123)
-------------
Net unrealized appreciation: $ 4,792,741
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F48
<PAGE>
GT GLOBAL VARIABLE NEW PACIFIC FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (27.8%)
Hong Kong Telecommunications Ltd. .......................... HK 409,729 $ 843,412 5.1
TELEPHONE NETWORKS
Woolworths Ltd. ............................................ AUSL 206,000 688,501 4.2
RETAILERS-OTHER
Brambles Industries Ltd. ................................... AUSL 28,600 567,379 3.5
BUSINESS & PUBLIC SERVICES
Telekom Malaysia Bhd. ...................................... MAL 146,000 432,175 2.6
TELEPHONE NETWORKS
Qantas Airways Ltd. ........................................ AUSL 186,000 329,126 2.0
TRANSPORTATION - AIRLINES
China Telecom (Hong Kong) Ltd.-/- .......................... HK 178,000 305,530 1.9
WIRELESS COMMUNICATIONS
Singapore Press Holdings Ltd. - Foreign .................... SING 24,000 300,891 1.8
BROADCASTING & PUBLISHING
Guangnan Holdings .......................................... HK 300,000 245,854 1.5
WHOLESALE & INTERNATIONAL TRADE
Philippine Long Distance Telephone Co. ..................... PHIL 10,590 232,980 1.4
TELEPHONE - LONG DISTANCE
Telstra Corp. Ltd. ......................................... AUSL 106,100 223,965 1.4
TELECOM - OTHER
Genting Bhd. ............................................... MAL 73,000 183,205 1.1
LEISURE & TOURISM
Resorts World Bhd. ......................................... MAL 70,000 118,018 0.7
LEISURE & TOURISM
Mahanagar Telephone Nigam Ltd. - GDR-/- {\/} ............... IND 6,300 97,713 0.6
TELECOM - OTHER
-----------
4,568,749
-----------
Finance (20.8%)
Australia & New Zealand Banking Group Ltd. ................. AUSL 158,000 1,043,794 6.3
BANKS-REGIONAL
Overseas-Chinese Banking Corp., Ltd. - Foreign ............. SING 83,000 483,304 2.9
BANKS-REGIONAL
Development Bank of Singapore - Foreign .................... SING 56,000 479,144 2.9
BANKS-MONEY CENTER
HSBC Holdings PLC .......................................... HK 16,000 394,399 2.4
BANKS-MONEY CENTER
Hysan Development Co., Ltd. ................................ HK 150,000 299,090 1.8
REAL ESTATE
United Overseas Bank Ltd. - Foreign ........................ SING 46,000 255,556 1.6
BANKS-MONEY CENTER
City Developments Ltd. ..................................... SING 42,000 194,652 1.2
REAL ESTATE
Hang Seng Bank ............................................. HK 16,030 154,642 0.9
BANKS-MONEY CENTER
Keppel Land Ltd. ........................................... SING 100,000 137,849 0.8
REAL ESTATE
-----------
3,442,430
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F49
<PAGE>
GT GLOBAL VARIABLE NEW PACIFIC FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (14.7%)
Hutchison Whampoa .......................................... HK 175,000 $ 1,097,632 6.7
MULTI-INDUSTRY
Pacific Dunlop Ltd. ........................................ AUSL 270,000 571,698 3.5
MULTI-INDUSTRY
Citic Pacific Ltd. ......................................... HK 105,000 417,371 2.5
CONGLOMERATE
China Resources Enterprise Ltd. ............................ HK 148,000 330,438 2.0
CONGLOMERATE
-----------
2,417,139
-----------
Materials/Basic Industry (10.1%)
Leighton Holdings Ltd. ..................................... AUSL 150,000 523,813 3.2
BUILDING MATERIALS & COMPONENTS
Broken Hill Proprietary Co., Ltd. .......................... AUSL 43,000 399,212 2.4
MISC. MATERIALS & COMMODITIES
Pasminco Ltd. .............................................. AUSL 290,000 332,530 2.0
METALS - NON-FERROUS
QNI Ltd. ................................................... AUSL 315,000 209,330 1.3
METALS - NON-FERROUS
Cosco Pacific Ltd. ......................................... HK 250,000 203,265 1.2
PAPER/PACKAGING
-----------
1,668,150
-----------
Consumer Durables (7.8%)
Henderson Land Development Co., Ltd. ....................... HK 125,000 588,824 3.6
HOUSING
New World Development Co., Ltd. ............................ HK 125,000 432,342 2.6
HOUSING
Cheung Kong (Holdings) Ltd. ................................ HK 40,000 261,986 1.6
HOUSING
-----------
1,283,152
-----------
Energy (5.2%)
China Light & Power Co., Ltd. .............................. HK 98,000 543,847 3.3
ELECTRICAL & GAS UTILITIES
Manila Electric Co. "B" .................................... PHIL 78,670 263,545 1.6
ELECTRICAL & GAS UTILITIES
YTL Power International Bhd.-/- ............................ MAL 72,000 55,413 0.3
ENERGY SOURCES
-----------
862,805
-----------
Capital Goods (3.9%)
Cheung Kong Infrastructure Holdings ........................ HK 229,000 647,235 3.9
CONSTRUCTION
----------- -----
TOTAL EQUITY INVESTMENTS (cost $17,371,716) .................. 14,889,660 90.3
----------- -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F50
<PAGE>
GT GLOBAL VARIABLE NEW PACIFIC FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%
collateralized by $3,110,000 U.S. Treasury Notes, 7.875%
due 11/15/07 (market value of collateral is $3,413,225,
including accrued interest). (cost $3,341,000) ........... $ 3,341,000 20.3
----------- -----
TOTAL INVESTMENTS (cost $20,712,716) * ...................... 18,230,660 110.6
Other Assets and Liabilities ................................. (1,740,576) (10.6)
----------- -----
NET ASSETS ................................................... $16,490,084 100.0
----------- -----
----------- -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $20,800,974 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 578,668
Unrealized depreciation: (3,148,982)
-------------
Net unrealized depreciation: $ (2,570,314)
-------------
-------------
</TABLE>
Abbreviation:
GDR--Global Depositary Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS
{D}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 29.8 29.8
Hong Kong (HK/HKD) ................... 41.0 41.0
India (IND/INR) ...................... 0.6 0.6
Malaysia (MAL/MYR) ................... 4.7 4.7
Philippines (PHIL/PHP) ............... 3.0 3.0
Singapore (SING/SGD) ................. 11.2 11.2
United States (US/USD) ............... 9.7 9.7
------ ----- -----
Total ............................... 90.3 9.7 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $16,490,084.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 1,702,630 1.44937 2/24/98 $ 98,158
Singapore Dollars....................... 855,479 1.67140 3/17/98 12,057
-------------- --------------
Total Contracts to Sell (Receivable
amount $2,668,324)..................... 2,558,109 110,215
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 15.51%.
Total Open Forward Foreign Currency
Contracts............................ $ 110,215
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F51
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Finance (32.8%)
Schweizerischer Bankverein (Swiss Bank Corp.) .............. SWTZ 3,670 $ 1,140,751 4.2
BANKS-MONEY CENTER
ING Groep N.V. ............................................. NETH 23,850 1,004,731 3.7
OTHER FINANCIAL
Axa - UAP .................................................. FR 11,400 882,110 3.2
INSURANCE - MULTI-LINE
Safra Republic Holdings S.A.{\/} ........................... LUX 6,800 724,200 2.6
OTHER FINANCIAL
General Accident PLC ....................................... UK 40,700 705,066 2.6
INSURANCE - PROPERTY-CASUALTY
ForeningsSparbanken AB ..................................... SWDN 29,711 675,641 2.5
BANKS-REGIONAL
Banque Nationale de Paris .................................. FR 12,000 637,833 2.3
BANKS-MONEY CENTER
National Westminster Bank PLC .............................. UK 37,000 614,844 2.2
BANKS-MONEY CENTER
Unidanmark AS "A" .......................................... DEN 7,900 580,026 2.1
BANKS-REGIONAL
Nordbanken Holding AB ...................................... SWDN 94,665 535,498 2.0
OTHER FINANCIAL
Lloyds TSB Group PLC ....................................... UK 40,560 524,150 1.9
BANKS-REGIONAL
Svenska Handelsbanken, Inc. "A" Free ....................... SWDN 14,900 515,288 1.9
BANKS-MONEY CENTER
Abbey National PLC ......................................... UK 23,999 429,933 1.6
BANKS-SUPER REGIONAL
-----------
8,970,071
-----------
Energy (15.8%)
Total S.A. "B" ............................................. FR 10,000 1,088,311 4.0
OIL
Petroleum Geo-Services ASA-/- .............................. NOR 13,830 871,174 3.2
ENERGY EQUIPMENT & SERVICES
Shell Transport & Trading Co., PLC ......................... UK 86,000 621,346 2.3
OIL
Viag AG .................................................... GER 1,110 598,048 2.2
ELECTRICAL & GAS UTILITIES
Ente Nazionale Idrocarburi (ENI) S.p.A. .................... ITLY 99,530 568,695 2.1
OIL
Coflexip - ADR{\/} ......................................... FR 10,000 555,000 2.0
ENERGY EQUIPMENT & SERVICES
-----------
4,302,574
-----------
Services (13.5%)
VNU (Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit) .................................................... NETH 32,500 917,028 3.3
BROADCASTING & PUBLISHING
Telecel - Comunicacaoes Pessoais S.A.-/- ................... PORT 8,107 864,012 3.1
WIRELESS COMMUNICATIONS
Telecom Italia SpA ......................................... ITLY 123,900 793,016 2.9
TELEPHONE NETWORKS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F52
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (Continued)
Vodafone Group PLC ......................................... UK 90,000 $ 648,768 2.4
WIRELESS COMMUNICATIONS
Koninklijke Ahold N.V. ..................................... NETH 19,367 505,384 1.8
RETAILERS-FOOD
-----------
3,728,208
-----------
Health Care (12.4%)
Roche Holding AG ........................................... SWTZ 90 893,777 3.3
PHARMACEUTICALS
Nycomed Amersham PLC ....................................... UK 18,800 698,286 2.5
PHARMACEUTICALS
Genset: .................................................... FR -- -- 2.2
BIOTECHNOLOGY
ADR-/- {\/} .............................................. -- 27,204 537,279 --
Common-/- ................................................ -- 900 53,834 --
Glaxo Wellcome PLC ......................................... UK 20,397 482,294 1.8
PHARMACEUTICALS
Schering AG ................................................ GER 4,160 401,312 1.5
PHARMACEUTICALS
Incentive AB "A" ........................................... SWDN 1,950 175,656 0.6
MEDICAL TECHNOLOGY & SUPPLIES
Nearmedic Ltd.-/- .......................................... ASTRI 71,100 146,377 0.5
PHARMACEUTICALS
-----------
3,388,815
-----------
Consumer Non-Durables (8.8%)
Nestle S.A. - Registered ................................... SWTZ 600 899,219 3.3
FOOD
Cadbury Schweppes PLC ...................................... UK 63,500 639,692 2.3
BEVERAGES - NON-ALCOHOLIC
Gucci Group - NY Registered Shares{\/} ..................... NETH 10,800 452,250 1.6
TEXTILES & APPAREL
OY Hartwall AB "A" ......................................... FIN 5,300 437,880 1.6
BEVERAGES - ALCOHOLIC
-----------
2,429,041
-----------
Technology (7.6%)
Baan Company N.V.-/- {\/} .................................. NETH 26,000 858,000 3.1
SOFTWARE
Misys PLC .................................................. UK 25,714 772,687 2.8
SOFTWARE
TT Tieto Oy "B" ............................................ FIN 4,129 464,699 1.7
COMPUTERS & PERIPHERALS
-----------
2,095,386
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F53
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (6.8%)
Ciba Specialty Chemicals AG-/- ............................. SWTZ 9,000 $ 1,072,162 3.9
CHEMICALS
Akzo Nobel N.V. ............................................ NETH 4,600 793,291 2.9
CHEMICALS
-----------
1,865,453
-----------
Capital Goods (6.4%)
Nokia AB "A" ............................................... FIN 14,500 1,014,284 3.7
TELECOM EQUIPMENT
Alcatel Alsthom Compagnie Generale d'Electricite ........... FR 5,800 737,227 2.7
TELECOM EQUIPMENT
-----------
1,751,511
----------- -----
TOTAL EQUITY INVESTMENTS (cost $23,991,189) .................. 28,531,059 104.1
----------- -----
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Union Bank of Switzerland Roche Warrants "C", expire 7/98
(cost $185,238) ........................................... SWTZ 26,100 197,457 0.7
----------- -----
PHARMACEUTICALS
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $2,505,000 U.S. Treasury Notes, 7.875%
due 11/15/07 (market value of collateral is $2,749,238,
including accrued interest). (cost $2,694,000) ............ 2,694,000 9.8
----------- -----
TOTAL INVESTMENTS (cost $26,870,427) * ...................... 31,422,516 114.6
Other Assets and Liabilities ................................. (4,012,766) (14.6)
----------- -----
NET ASSETS ................................................... $27,409,750 100.0
----------- -----
----------- -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $26,870,427 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 4,646,796
Unrealized depreciation: (94,707)
-------------
Net unrealized appreciation: $ 4,552,089
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F54
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Austria (ASTRI/ATS) .................. 0.5 0.5
Denmark (DEN/DKK) .................... 2.1 2.1
Finland (FIN/FIM) .................... 7.0 7.0
France (FR/FRF) ...................... 16.4 16.4
Germany (GER/DEM) .................... 3.7 3.7
Italy (ITLY/ITL) ..................... 5.0 5.0
Luxembourg (LUX/LUF) ................. 2.6 2.6
Netherlands (NETH/NLG) ............... 16.4 16.4
Norway (NOR/NOK) ..................... 3.2 3.2
Portugal (PORT/PTE) .................. 3.1 3.1
Sweden (SWDN/SEK) .................... 7.0 7.0
Switzerland (SWTZ/CHF) ............... 14.7 0.7 15.4
United Kingdom (UK/GBP) .............. 22.4 22.4
United States (US/USD) ............... (4.8) (4.8)
------ --- --- -----
Total ............................... 104.1 0.7 (4.8) 100.0
------ --- --- -----
------ --- --- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $27,409,750.
The accompanying notes are an integral part of the financial statements.
F55
<PAGE>
GT GLOBAL MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS YIELD DATE AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------------- --------- --------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Commercial Paper - Discounted (48.6%)
Pitney Bowes Credit Corp. ..................................... 6.02% 14-Jan-98 1,000,000 $ 997,832 3.7
AIG Funding, Inc. ............................................. 5.73% 30-Jan-98 1,000,000 995,425 3.7
Motorola, Inc. ................................................ 5.59% 09-Feb-98 1,000,000 994,042 3.7
Bellsouth Telecommunications, Inc. ............................ 5.78% 25-Feb-98 1,000,000 991,261 3.7
General Electric Capital Corp. ................................ 5.71% 11-Mar-98 1,000,000 989,363 3.7
John Deere Capital Corp. ...................................... 5.73% 19-Mar-98 1,000,000 987,915 3.7
Walt Disney Co. ............................................... 5.59% 14-Apr-98 1,000,000 984,407 3.6
3M Corp. ...................................................... 5.68% 24-Apr-98 1,000,000 982,485 3.6
American Express Credit Corp. ................................. 5.71% 21-May-98 1,000,000 978,339 3.6
The Procter & Gamble Co. ...................................... 5.72% 11-Jun-98 1,000,000 975,090 3.6
Kingdom of Sweden ............................................. 5.62% 26-Jan-98 750,000 747,141 2.8
E.I. DuPont de Nemours & Co. .................................. 5.62% 09-Feb-98 750,000 745,556 2.8
Ford Motor Credit Corp. ....................................... 5.63% 13-Feb-98 750,000 745,091 2.8
Emerson Electric Co. .......................................... 5.66% 05-Jan-98 500,000 499,694 1.8
AT&T Corp. .................................................... 5.58% 15-Jan-98 500,000 498,942 1.8
----------- -----
Total Commercial Paper - Discounted (amortized cost
$13,112,583) ................................................... 13,112,583 48.6
----------- -----
Government & Government Agency Obligations (3.7%)
Federal Home Loan Bank (amortized cost $990,329) .............. 5.59% 06-Mar-98 1,000,000 990,329 3.7
----------- -----
TOTAL SHORT-TERM INVESTMENTS (amortized cost $14,102,912) * .... 14,102,912 52.3
----------- -----
<CAPTION>
REPURCHASE AGREEMENT
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $3,175,000 U.S. Treasury Notes, 7.875% due
11/15/07 (market value of collateral is $3,484,563, including
accrued interest). (cost $3,413,000) ......................... 3,413,000 12.7
----------- -----
TOTAL INVESTMENTS (cost $17,515,912) * ......................... 17,515,912 65.0
Other Assets and Liabilities .................................... 9,448,295 35.0
----------- -----
NET ASSETS ...................................................... $26,964,207 100.0
----------- -----
----------- -----
</TABLE>
- --------------
* For Federal income tax purposes, cost is $17,515,912
The accompanying notes are an integral part of the financial statements.
F56
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Finance (26.4%)
Australia & New Zealand Banking Group Ltd. .................. AUSL 22,700 $ 149,963 2.5
BANKS-REGIONAL
HSBC Holdings PLC ........................................... HK 5,100 125,715 2.1
BANKS-MONEY CENTER
Nordbanken Holding AB-/- .................................... SWDN 21,330 120,659 2.0
OTHER FINANCIAL
M & G Group PLC ............................................. UK 5,100 117,869 2.0
INVESTMENT MANAGEMENT
Royal & Sun Alliance Insurance Group PLC .................... UK 11,000 110,722 1.9
INSURANCE - MULTI-LINE
ING Groep N.V. .............................................. NETH 2,243 94,491 1.6
OTHER FINANCIAL
Abbey National PLC .......................................... UK 4,800 85,990 1.5
BANKS-SUPER REGIONAL
ForeningsSparbanken AB ...................................... SWDN 3,710 84,367 1.4
BANKS-REGIONAL
National Westminster Bank PLC ............................... UK 4,900 81,425 1.4
BANKS-MONEY CENTER
Lloyds TSB Group PLC ........................................ UK 6,000 77,537 1.3
BANKS-REGIONAL
Axa Group ................................................... FR 860 66,545 1.1
INSURANCE - MULTI-LINE
Unidanmark AS "A" ........................................... DEN 900 66,079 1.1
BANKS-REGIONAL
Schroders PLC ............................................... UK 2,100 65,966 1.1
BANKS-MONEY CENTER
Nichiei Co., Ltd. ........................................... JPN 600 63,908 1.1
OTHER FINANCIAL
Banque Nationale de Paris ................................... FR 1,051 55,864 0.9
BANKS-MONEY CENTER
State Bank of India Ltd. - GDR{\/} .......................... IND 3,000 53,625 0.9
BANKS-REGIONAL
Schweizerischer Bankverein (Swiss Bank Corp.)-/- ............ SWTZ 170 52,841 0.9
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ......................... SING 6,000 33,333 0.6
BANKS-MONEY CENTER
Cheung Kong (Holdings) Ltd. ................................. HK 5,000 32,748 0.6
REAL ESTATE
PSIL Bangkok Bank Co., Ltd. (Entitlement Certificates){\/}
{=} ........................................................ THAI 8,000 14,720 0.2
OTHER FINANCIAL
Union Bank of Switzerland - Bearer .......................... SWTZ 8 11,568 0.2
BANKS-MONEY CENTER
----------
1,565,935
----------
Services (20.9%)
EMI Group PLC ............................................... UK 17,400 145,143 2.4
LEISURE & TOURISM
Woolworths Ltd. ............................................. AUSL 38,500 128,676 2.2
RETAILERS-OTHER
</TABLE>
The accompanying notes are an integral part of the financial statements.
F57
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Services (Continued)
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} ...... BRZL 1,000 $ 116,438 2.0
TELEPHONE NETWORKS
Telecom Italia SpA .......................................... ITLY 16,340 104,583 1.8
TELEPHONE NETWORKS
Telecom Corporation of New Zealand Ltd. ..................... NZ 19,000 92,067 1.6
TELEPHONE NETWORKS
Reuters Holdings PLC ........................................ UK 8,400 91,724 1.5
BROADCASTING & PUBLISHING
Koninklijke Ahold N.V. ...................................... NETH 3,216 83,922 1.4
RETAILERS-FOOD
EMAP PLC .................................................... UK 5,000 74,507 1.3
BROADCASTING & PUBLISHING
Great Universal Stores PLC .................................. UK 5,700 71,788 1.2
RETAILERS-OTHER
Portugal Telecom S.A. - Registered .......................... PORT 1,270 58,945 1.0
TELEPHONE NETWORKS
Amway Japan Ltd. ............................................ JPN 2,900 55,556 0.9
RETAILERS-OTHER
Ezaki Glico Co., Ltd. ....................................... JPN 8,000 51,678 0.9
RETAILERS-FOOD
Telecel - Comunicacaoes Pessoais S.A.-/- .................... PORT 480 51,157 0.9
WIRELESS COMMUNICATIONS
Vendex International N.V. ................................... NETH 815 44,987 0.8
RETAILERS-OTHER
Vodafone Group PLC .......................................... UK 4,764 34,341 0.6
WIRELESS COMMUNICATIONS
Telstra Corp. Ltd.-/- ....................................... AUSL 12,300 25,964 0.4
TELECOM - OTHER
Fast Retailing Co., Ltd. .................................... JPN 44 705 --
RETAILERS-APPAREL
----------
1,232,181
----------
Health Care (8.4%)
Roche Holding AG ............................................ SWTZ 18 178,755 3.0
PHARMACEUTICALS
Novartis AG ................................................. SWTZ 46 74,641 1.3
PHARMACEUTICALS
Schering AG ................................................. GER 680 65,599 1.1
PHARMACEUTICALS
Astra AB "B" ................................................ SWDN 3,463 58,245 1.0
MEDICAL TECHNOLOGY & SUPPLIES
Richter Gedeon Rt. - Reg S GDR{c} {\/} ...................... HGRY 500 57,438 1.0
PHARMACEUTICALS
Takeda Chemical Industries .................................. JPN 2,000 57,011 1.0
PHARMACEUTICALS
M.L. Laboratories PLC-/- .................................... UK 630 853 --
PHARMACEUTICALS
----------
492,542
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F58
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Energy (8.2%)
Shell Transport & Trading Co., PLC .......................... UK 12,900 $ 93,202 1.6
OIL
Viag AG ..................................................... GER 168 90,515 1.5
ELECTRICAL & GAS UTILITIES
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} .............. BRZL 3,600 85,950 1.5
GAS PRODUCTION & DISTRIBUTION
Total S.A. "B" .............................................. FR 760 82,712 1.4
OIL
Petroleum Geo-Services ASA-/- ............................... NOR 1,250 78,739 1.3
ENERGY EQUIPMENT & SERVICES
Ente Nazionale Idrocarburi (ENI) S.p.A. ..................... ITLY 9,500 54,281 0.9
OIL
----------
485,399
----------
Materials/Basic Industry (6.6%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" .................. MEX 23,300 114,074 1.9
PAPER/PACKAGING
Ciba Specialty Chemicals AG-/- .............................. SWTZ 860 102,451 1.7
CHEMICALS
Akzo Nobel N.V. ............................................. NETH 420 72,431 1.2
CHEMICALS
BOC Group PLC ............................................... UK 4,100 67,391 1.1
CHEMICALS
CRH PLC ..................................................... UK 3,600 41,675 0.7
BUILDING MATERIALS & COMPONENTS
----------
398,022
----------
Technology (4.7%)
Alcatel Alsthom Compagnie Generale d'Electricite ............ FR 840 106,771 1.8
TELECOM TECHNOLOGY
Cap Gemini N.V. ............................................. NETH 1,850 63,060 1.1
COMPUTERS & PERIPHERALS
Baan Company N.V.-/- {\/} ................................... NETH 1,840 60,720 1.0
SOFTWARE
Matsushita-Kotobuki Electronics Ltd. ........................ JPN 2,000 50,268 0.8
COMPUTERS & PERIPHERALS
----------
280,819
----------
Consumer Non-Durables (4.4%)
Nestle S.A. - Registered .................................... SWTZ 51 76,434 1.3
FOOD
Asahi Breweries Ltd. ........................................ JPN 5,000 72,797 1.2
BEVERAGES - ALCOHOLIC
Diageo PLC .................................................. UK 6,500 59,717 1.0
BEVERAGES - ALCOHOLIC
Benckiser N.V. "B"-/- ....................................... NETH 700 28,971 0.5
HOUSEHOLD PRODUCTS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F59
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
South African Breweries Ltd. ................................ SAFR 1,000 $ 24,671 0.4
BEVERAGES - ALCOHOLIC
----------
262,590
----------
Capital Goods (3.5%)
Canon, Inc. ................................................. JPN 3,000 69,885 1.2
OFFICE EQUIPMENT
Nokia AB "A" ................................................ FIN 900 62,956 1.1
TELECOM EQUIPMENT
Coflexip - ADR{\/} .......................................... FR 890 49,395 0.8
CONSTRUCTION
Kurita Water Industries Ltd. ................................ JPN 2,200 22,421 0.4
ENVIRONMENTAL
----------
204,657
----------
Multi-Industry/Miscellaneous (3.1%)
Shanghai Industrial Holdings Ltd. ........................... HK 20,000 74,337 1.3
MULTI-INDUSTRY
BBA Group PLC ............................................... UK 11,000 73,695 1.2
MULTI-INDUSTRY
Hutchison Whampoa ........................................... HK 6,000 37,633 0.6
MULTI-INDUSTRY
----------
185,665
----------
Consumer Durables (2.1%)
Futuris Corp., Ltd. ......................................... AUSL 63,700 69,722 1.2
AUTO PARTS
Uny Co., Ltd. ............................................... JPN 4,000 54,866 0.9
APPLIANCES & HOUSEHOLD
----------
124,588
---------- -----
TOTAL EQUITY INVESTMENTS (cost $4,979,064) .................... 5,232,398 88.3
---------- -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F60
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- --------------------------------------------------------------- ---------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%
collateralized by $755,000 U.S. Treasury Bills, 5.75% due
12/31/98 (market value of collateral is 755,708 including
accrued interest). (cost $737,000) ........................ $ 737,000 12.4
---------- -----
TOTAL INVESTMENTS (cost $5,716,064) * ........................ 5,969,398 100.7
Other Assets and Liabilities .................................. (40,219) (0.7)
---------- -----
NET ASSETS .................................................... $5,929,179 100.0
---------- -----
---------- -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{=} Each share of Entitlement Certificates represents one local share
of PSIL Bangkok Bank Co., Ltd.
* For Federal income tax purposes, cost is $5,742,779 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 550,414
Unrealized depreciation: (323,795)
-------------
Net unrealized appreciation: $ 226,619
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F61
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 6.3 6.3
Brazil (BRZL/BRL) .................... 3.5 3.5
Denmark (DEN/DKK) .................... 1.1 1.1
Finland (FIN/FIM) .................... 1.1 1.1
France (FR/FRF) ...................... 6.0 6.0
Germany (GER/DEM) .................... 2.6 2.6
Hong Kong (HK/HKD) ................... 4.6 4.6
Hungary (HGRY/HUF) ................... 1.0 1.0
India (IND/INR) ...................... 0.9 0.9
Italy (ITLY/ITL) ..................... 2.7 2.7
Japan (JPN/JPY) ...................... 8.4 8.4
Mexico (MEX/MXN) ..................... 1.9 1.9
Netherlands (NETH/NLG) ............... 7.6 7.6
New Zealand (NZ/NZD) ................. 1.6 1.6
Norway (NOR/NOK) ..................... 1.3 1.3
Portugal (PORT/PTE) .................. 1.9 1.9
Singapore (SING/SGD) ................. 0.6 0.6
South Africa (SAFR/ZAR) .............. 0.4 0.4
Sweden (SWDN/SEK) .................... 4.4 4.4
Switzerland (SWTZ/CHF) ............... 8.4 8.4
Thailand (THAI/THB) .................. 0.2 0.2
United Kingdom (UK/GBP) .............. 21.8 21.8
United States (US/USD) ............... 11.7 11.7
------ ----- -----
Total ............................... 88.3 11.7 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $5,929,179.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 103,209 1.73540 2/27/98 $ 3,394
French Francs........................... 109,074 5.72800 2/6/98 5,276
French Francs........................... 58,284 5.77490 2/6/98 2,323
Japanese Yen............................ 71,264 120.70000 1/7/98 5,786
Japanese Yen............................ 77,032 118.82300 2/4/98 7,127
Japanese Yen............................ 185,089 122.20000 2/12/98 11,312
Swiss Francs............................ 141,640 1.42180 3/19/98 2,544
-------------- --------------
Total Contracts to Sell (Receivable
amount $783,354)..................... 745,592 37,762
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 12.57%.
Total Open Forward Foreign Currency
Contracts............................ $ 37,762
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F62
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
F63
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------------
VARIABLE VARIABLE
VARIABLE GLOBAL U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN
INCOME INCOME INCOME AMERICA
FUND FUND FUND FUND
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Assets:
Investments in securities: (Note 1)
At identified cost.................. $26,107,023 $7,297,293 $6,740,169 $27,501,963
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
At value............................ $26,190,001 $7,209,750 $6,891,579 $27,768,692
Repurchase Agreement, at value and
cost (Note 1)........................ 2,721,000 55,000 1,031,000 881,000
U.S. currency......................... 787 689 673 333
Foreign currencies (cost $11,696; $0;
$0; $366,104; $927,628; $5,078;
$144,519; $29,071; $386; $0;
$137,665; $442,937; $0; $129,665,
respectively)........................ 11,612 -- -- 366,083
Dividends and dividend withholding tax
reclaims receivable.................. -- -- -- 38,108
Interest and interest withholding tax
reclaims receivable.................. 641,631 129,185 96,042 142
Receivable for forward foreign
currency contracts -- closed (Note
1)................................... 22,808 -- -- --
Receivable for Fund shares sold....... 60,753 17,673 69,470 74,881
Receivable for open forward foreign
currency contracts, net (Note 1)..... 324,236 861,247 -- --
Receivable for securities sold........ 85,997 1,021 -- 104,354
Unamortized organizational costs (Note
1)................................... 720 720 720 720
Miscellaneous receivable.............. 7,942 -- -- --
---------- ----------- ----------- ----------
Total assets........................ 30,067,487 8,275,285 8,089,484 29,234,313
---------- ----------- ----------- ----------
Liabilities:
Distribution payable (Note 1)......... -- -- -- --
Payable for custodian fees............ 5,647 1,400 499 1,464
Payable for fund accounting fees (Note
2)................................... 382 109 141 364
Payable for Fund shares repurchased... 175 -- 39,093 417,685
Payable for investment management and
administration fees (Note 2)......... 8,042 104 1,833 2,743
Payable for open forward foreign
currency contracts, net (Note 1)..... -- -- -- --
Payable for printing and postage
expenses............................. 7,954 9,458 11,676 10,604
Payable for professional fees......... 5,391 8,142 7,947 11,409
Payable for registration and filing
fees................................. 791 986 973 974
Payable for securities purchased...... 1,538,668 -- 652,860 --
Payable for Trustees' fees and
expenses (Note 2).................... 2,193 2,896 1,806 1,005
Other accrued expenses................ 1,552 1,163 20 1,848
---------- ----------- ----------- ----------
Total liabilities................... 1,570,795 24,258 716,848 448,096
---------- ----------- ----------- ----------
Net assets.............................. $28,496,692 $8,251,027 $7,372,636 $28,786,217
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
Shares outstanding...................... 2,128,526 738,630 629,899 1,697,887
Net asset value per share............... $ 13.39 $ 11.17 $ 11.70 $ 16.95
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
Net assets consist of:
Paid in capital (Note 4).............. $28,211,677 $9,025,361 $7,168,948 $28,083,619
Undistributed/Accumulated net
investment income (loss)............. 397,677 98,996 70,621 304,812
Accumulated net realized gain (loss)
on investments and foreign currency
transactions......................... (511,122) (1,643,521) (18,343) 130,952
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 315,482 857,734 -- 105
Net unrealized appreciation
(depreciation) of investments........ 82,978 (87,543) 151,410 266,729
---------- ----------- ----------- ----------
Total -- representing net assets
applicable to capital shares
outstanding............................ $28,496,692 $8,251,027 $7,372,636 $28,786,217
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F64
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & TELECOM- EMERGING VARIABLE NATURAL VARIABLE NEW
INCOME MUNICATIONS MARKETS INFRASTRUCTURE RESOURCES AMERICA PACIFIC
FUND FUND FUND FUND FUND FUND FUND
---------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments in securities: (Note 1)
At identified cost.................. $38,145,106 $53,078,512 $15,820,446 $7,192,094 $16,229,109 $39,605,742 $17,371,716
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
At value............................ $48,887,260 $62,023,322 $14,141,243 $7,857,880 $16,115,801 $44,500,260 $14,889,660
Repurchase Agreement, at value and
cost (Note 1)........................ 1,864,000 6,148,000 2,659,000 767,000 678,000 4,057,000 3,341,000
U.S. currency......................... 419 27,840 622 237 653 745 894
Foreign currencies (cost $11,696; $0;
$0; $366,104; $927,628; $5,078;
$144,519; $29,071; $386; $0;
$137,665; $442,937; $0; $129,665,
respectively)........................ 918,800 4,993 144,328 28,443 583 -- 133,271
Dividends and dividend withholding tax
reclaims receivable.................. 69,481 22,431 29,371 6,871 57,073 11,542 49,059
Interest and interest withholding tax
reclaims receivable.................. 301,826 991 741 124 109 654 538
Receivable for forward foreign
currency contracts -- closed (Note
1)................................... -- -- -- -- -- -- --
Receivable for Fund shares sold....... 522 15,989 40,934 3,769 21,811 128,089 3,873
Receivable for open forward foreign
currency contracts, net (Note 1)..... -- 192,145 -- -- -- -- 110,215
Receivable for securities sold........ 24,586 -- 314,868 128,096 49,242 780,668 586,144
Unamortized organizational costs (Note
1)................................... 720 5,009 -- -- -- 720 720
Miscellaneous receivable.............. 2,771 -- 802 -- -- -- 1,279
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total assets........................ 52,070,385 68,440,720 17,331,909 8,792,420 16,923,272 49,479,678 19,116,653
---------- ---------- ---------- ----------- ---------- ---------- ----------
Liabilities:
Distribution payable (Note 1)......... -- -- -- -- -- -- --
Payable for custodian fees............ 1,759 3,652 4,187 1,631 6,278 3,860 3,811
Payable for fund accounting fees (Note
2)................................... 779 2,005 165 182 356 629 160
Payable for Fund shares repurchased... 1,650,561 92,027 742,945 26,066 165,416 941,221 2,500,744
Payable for investment management and
administration fees (Note 2)......... 8,813 56,704 3,824 3,461 20,687 27,168 340
Payable for open forward foreign
currency contracts, net (Note 1)..... 158 -- -- -- -- -- --
Payable for printing and postage
expenses............................. 11,234 18,205 9,964 9,855 9,994 10,799 8,697
Payable for professional fees......... 9,207 11,747 16,597 2,479 9,089 13,746 12,378
Payable for registration and filing
fees................................. 849 647 868 718 718 971 786
Payable for securities purchased...... 26,672 51,615 39,171 -- -- 4,501,419 97,962
Payable for Trustees' fees and
expenses (Note 2).................... 2,229 1,529 2,175 1,541 1,626 2,101 789
Other accrued expenses................ 1,860 16,446 3,256 1,302 101 940 902
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total liabilities................... 1,714,121 254,577 823,152 47,235 214,265 5,502,854 2,626,569
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net assets.............................. $50,356,264 $68,186,143 $16,508,757 $8,745,185 $16,709,007 $43,976,824 $16,490,084
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
Shares outstanding...................... 2,706,781 3,705,691 1,426,915 534,970 827,133 2,028,716 1,569,858
Net asset value per share............... $ 18.60 $ 18.40 $ 11.57 $ 16.35 $ 20.20 $ 21.68 $ 10.50
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net assets consist of:
Paid in capital (Note 4).............. $38,305,805 $53,343,304 $17,488,167 $8,207,422 $14,901,974 $33,148,647 $19,282,058
Undistributed/Accumulated net
investment income (loss)............. 643,714 -- 168,757 77,503 -- -- 351,912
Accumulated net realized gain (loss)
on investments and foreign currency
transactions......................... 678,335 5,705,968 537,424 (203,730) 1,919,773 5,933,659 (767,156)
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (13,744) 192,061 (6,388) (1,796) 568 -- 105,326
Net unrealized appreciation
(depreciation) of investments........ 10,742,154 8,944,810 (1,679,203) 665,786 (113,308) 4,894,518 (2,482,056)
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total -- representing net assets
applicable to capital shares
outstanding............................ $50,356,264 $68,186,143 $16,508,757 $8,745,185 $16,709,007 $43,976,824 $16,490,084
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
<CAPTION>
VARIABLE MONEY VARIABLE
EUROPE MARKET INTERNATIONAL
FUND FUND FUND
---------- ---------- -----------
<S> <C> <C> <C>
Assets:
Investments in securities: (Note 1)
At identified cost.................. $24,176,427 $14,102,912 $4,979,064
---------- ---------- -----------
---------- ---------- -----------
At value............................ $28,728,516 $14,102,912 $5,232,398
Repurchase Agreement, at value and
cost (Note 1)........................ 2,694,000 3,413,000 737,000
U.S. currency......................... 829 846 266
Foreign currencies (cost $11,696; $0;
$0; $366,104; $927,628; $5,078;
$144,519; $29,071; $386; $0;
$137,665; $442,937; $0; $129,665,
respectively)........................ 431,337 -- 128,171
Dividends and dividend withholding tax
reclaims receivable.................. 18,956 -- 8,741
Interest and interest withholding tax
reclaims receivable.................. 434 550 119
Receivable for forward foreign
currency contracts -- closed (Note
1)................................... -- -- --
Receivable for Fund shares sold....... 6,680 9,660,958 --
Receivable for open forward foreign
currency contracts, net (Note 1)..... -- -- 37,762
Receivable for securities sold........ 17,598 -- 14,957
Unamortized organizational costs (Note
1)................................... 720 720 --
Miscellaneous receivable.............. -- -- --
---------- ---------- -----------
Total assets........................ 31,899,070 27,178,986 6,159,414
---------- ---------- -----------
Liabilities:
Distribution payable (Note 1)......... -- 122,689 --
Payable for custodian fees............ 4,021 3,495 4,421
Payable for fund accounting fees (Note
2)................................... 420 619 84
Payable for Fund shares repurchased... 3,513,563 74,045 170,125
Payable for investment management and
administration fees (Note 2)......... 2,409 847 71
Payable for open forward foreign
currency contracts, net (Note 1)..... -- -- --
Payable for printing and postage
expenses............................. 9,992 6,519 13,050
Payable for professional fees......... 11,840 5,049 17,293
Payable for registration and filing
fees................................. 1,670 603 793
Payable for securities purchased...... 943,185 -- 21,762
Payable for Trustees' fees and
expenses (Note 2).................... 636 479 1,434
Other accrued expenses................ 1,584 434 1,202
---------- ---------- -----------
Total liabilities................... 4,489,320 214,779 230,235
---------- ---------- -----------
Net assets.............................. $27,409,750 $26,964,207 $5,929,179
---------- ---------- -----------
---------- ---------- -----------
Shares outstanding...................... 1,216,931 26,964,207 466,276
Net asset value per share............... $ 22.52 $ 1.00 $ 12.72
---------- ---------- -----------
---------- ---------- -----------
Net assets consist of:
Paid in capital (Note 4).............. $18,882,870 $26,964,207 $5,176,835
Undistributed/Accumulated net
investment income (loss)............. 60,949 -- 56,757
Accumulated net realized gain (loss)
on investments and foreign currency
transactions......................... 3,916,409 -- 406,239
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (2,567) -- 36,014
Net unrealized appreciation
(depreciation) of investments........ 4,552,089 -- 253,334
---------- ---------- -----------
Total -- representing net assets
applicable to capital shares
outstanding............................ $27,409,750 $26,964,207 $5,929,179
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F65
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
----------------------------------------------
VARIABLE VARIABLE
VARIABLE GLOBAL U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN
INCOME INCOME INCOME AMERICA
FUND FUND FUND FUND
--------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Investment income: * (Note 1)
Dividend income....................... -- -- -- $ 648,017
Interest income....................... $2,424,904 $ 679,758 $ 368,795 131,839
--------- ----------- ----------- ---------
Total investment income............. 2,424,904 679,758 368,795 779,856
--------- ----------- ----------- ---------
Expenses:
Amortization of organization costs
(Note 1)............................. 6,264 6,264 6,264 6,264
Custodian fees........................ 28,036 16,723 1,595 45,522
Fund accounting fees (Note 2)......... 7,516 2,342 1,448 7,491
Investment management and
administration fees (Note 2)......... 224,634 70,010 42,280 298,692
Printing and postage expenses......... 12,717 9,887 9,600 15,520
Professional fees..................... 31,733 29,227 28,677 32,866
Registration and filing fees.......... 718 13 -- --
Trustees' fees and expenses (Note
2)................................... 1,825 1,825 1,325 625
Other expenses (Note 1)............... 7,412 7,203 34 10,295
--------- ----------- ----------- ---------
Total expenses before reimbursements
and reductions..................... 320,855 143,494 91,223 417,275
--------- ----------- ----------- ---------
Expenses reimbursed by [Chancellor
LGT] Asset Management, Inc. (Note
2)............................... (16,129) (43,130) (34,816) (33,765)
Expense reductions (Notes 1 &
5)............................... (36,222) (12,000) -- (8,037)
--------- ----------- ----------- ---------
Total net expenses.................. 268,504 88,364 56,407 375,473
--------- ----------- ----------- ---------
Net investment income (loss)............ 2,156,400 591,394 312,388 404,383
--------- ----------- ----------- ---------
Net realized and unrealized gain (loss)
on investments and foreign currencies:
(Note 1)
Net realized gain (loss) on
investments.......................... 1,498,322 (367,088) (2,569) 3,622,656
Net realized gain (loss) on foreign
currency transactions................ 119,922 (371,086) 1,093 (52,834)
--------- ----------- ----------- ---------
Net realized gain (loss) during the
year............................... 1,618,244 (738,174) (1,476) 3,569,822
--------- ----------- ----------- ---------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities
in foreign currencies................ 271,762 803,351 (2,603) 2,156
Net change in unrealized appreciation
(depreciation) of investments........ (1,968,623) (292,630) 153,207 (244,181)
--------- ----------- ----------- ---------
Net unrealized appreciation
(depreciation) during the year..... (1,696,861) 510,721 150,604 (242,025)
--------- ----------- ----------- ---------
Net realized and unrealized gain
(loss) on investments and foreign
currencies........................... (78,617) (227,453) 149,128 3,327,797
--------- ----------- ----------- ---------
Net increase (decrease) in net assets
resulting from operations.............. $2,077,783 $ 363,941 $ 461,516 $3,732,180
--------- ----------- ----------- ---------
--------- ----------- ----------- ---------
*Net of foreign withholding tax of:.... $ -- $ -- $ -- $ 14,936
--------- ----------- ----------- ---------
--------- ----------- ----------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F66
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF OPERATIONS (cont'd)
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
--------------------------------------------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & TELECOM- EMERGING VARIABLE NATURAL VARIABLE NEW
INCOME MUNICATIONS MARKETS INFRASTRUCTURE RESOURCES AMERICA PACIFIC
FUND FUND FUND FUND FUND FUND FUND
--------- ----------- --------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income: * (Note 1)
Dividend income....................... $ 800,518 $ 330,336 $ 399,980 $ 105,232 $ 120,162 $ 148,233 $ 617,672
Interest income....................... 881,543 371,303 79,108 77,168 69,213 77,101 101,060
--------- ----------- --------- ----------- --------- --------- ----------
Total investment income............. 1,682,061 701,639 479,088 182,400 189,375 225,334 718,732
--------- ----------- --------- ----------- --------- --------- ----------
Expenses:
Amortization of organization costs
(Note 1)............................. 6,264 6,264 -- -- -- 6,264 6,264
Custodian fees........................ 35,997 27,145 36,387 8,467 28,249 17,611 42,871
Fund accounting fees (Note 2)......... 10,587 17,340 5,281 2,161 4,696 10,211 6,939
Investment management and
administration fees (Note 2)......... 421,575 691,109 207,464 84,074 182,720 305,132 276,947
Printing and postage expenses......... 17,157 24,875 12,871 8,831 9,893 17,011 16,811
Professional fees..................... 34,776 34,085 37,323 19,540 27,635 29,664 31,924
Registration and filing fees.......... 711 305 717 13 12 12 711
Trustees' fees and expenses (Note
2)................................... 1,996 1,325 417 417 365 2,190 873
Other expenses (Note 1)............... 5,028 2,568 13,587 1,326 6,706 8,575 13,233
--------- ----------- --------- ----------- --------- --------- ----------
Total expenses before reimbursements
and reductions..................... 534,091 805,016 314,047 124,829 260,276 396,670 396,573
--------- ----------- --------- ----------- --------- --------- ----------
Expenses reimbursed by [Chancellor
LGT] Asset Management, Inc. (Note
2)............................... (5,189) -- (38,322) (19,594) (26,931) -- (39,729)
Expense reductions (Notes 1 &
5)............................... (52,486) (35,043) (18,243) (6,093) (14,139) (28,418) (53,740)
--------- ----------- --------- ----------- --------- --------- ----------
Total net expenses.................. 476,416 769,973 257,482 99,142 219,206 368,252 303,104
--------- ----------- --------- ----------- --------- --------- ----------
Net investment income (loss)............ 1,205,645 (68,334) 221,606 83,258 (29,831) (142,918) 415,628
--------- ----------- --------- ----------- --------- --------- ----------
Net realized and unrealized gain (loss)
on investments and foreign currencies:
(Note 1)
Net realized gain (loss) on
investments.......................... 1,354,147 5,547,017 691,815 (203,137) 2,089,325 6,277,204 (51,464)
Net realized gain (loss) on foreign
currency transactions................ 276,305 259,544 (199,511) (3,279) (55,031) -- (49,256)
--------- ----------- --------- ----------- --------- --------- ----------
Net realized gain (loss) during the
year............................... 1,630,452 5,806,561 492,304 (206,416) 2,034,294 6,277,204 (100,720)
--------- ----------- --------- ----------- --------- --------- ----------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities
in foreign currencies................ (54,835) 167,417 (9,023) (1,800) 2,250 -- 105,422
Net change in unrealized appreciation
(depreciation) of investments........ 3,876,889 2,996,284 (2,699,474) 442,473 (1,935,169) (372,530) (10,613,599)
--------- ----------- --------- ----------- --------- --------- ----------
Net unrealized appreciation
(depreciation) during the year..... 3,822,054 3,163,701 (2,708,497) 440,673 (1,932,919) (372,530) (10,508,177)
--------- ----------- --------- ----------- --------- --------- ----------
Net realized and unrealized gain
(loss) on investments and foreign
currencies........................... 5,452,506 8,970,262 (2,216,193) 234,257 101,375 5,904,674 (10,608,897)
--------- ----------- --------- ----------- --------- --------- ----------
Net increase (decrease) in net assets
resulting from operations.............. $6,658,151 $8,901,928 $(1,994,587) $ 317,515 $ 71,544 $5,761,756 $(10,193,269)
--------- ----------- --------- ----------- --------- --------- ----------
--------- ----------- --------- ----------- --------- --------- ----------
*Net of foreign withholding tax of:.... $ 90,398 $ 26,632 $ 22,039 $ 7,094 $ 14,701 $ -- $ 27,707
--------- ----------- --------- ----------- --------- --------- ----------
--------- ----------- --------- ----------- --------- --------- ----------
<CAPTION>
VARIABLE MONEY VARIABLE
EUROPE MARKET INTERNATIONAL
FUND FUND FUND
--------- --------- -----------
<S> <C> <C> <C>
Investment income: * (Note 1)
Dividend income....................... $ 339,608 -- $ 93,804
Interest income....................... 57,835 $1,196,522 40,255
--------- --------- -----------
Total investment income............. 397,443 1,196,522 134,059
--------- --------- -----------
Expenses:
Amortization of organization costs
(Note 1)............................. 6,264 6,264 --
Custodian fees........................ 32,466 12,482 20,499
Fund accounting fees (Note 2)......... 7,002 5,575 1,421
Investment management and
administration fees (Note 2)......... 279,058 108,454 56,606
Printing and postage expenses......... 13,381 12,099 14,658
Professional fees..................... 33,807 22,907 34,523
Registration and filing fees.......... 711 12 718
Trustees' fees and expenses (Note
2)................................... 1,677 1,825 413
Other expenses (Note 1)............... 19,604 1,721 2,114
--------- --------- -----------
Total expenses before reimbursements
and reductions..................... 393,970 171,339 130,952
--------- --------- -----------
Expenses reimbursed by [Chancellor
LGT] Asset Management, Inc. (Note
2)............................... (27,622) (8,673) (60,092)
Expense reductions (Notes 1 &
5)............................... (31,687) -- (6,300)
--------- --------- -----------
Total net expenses.................. 334,661 162,666 64,560
--------- --------- -----------
Net investment income (loss)............ 62,782 1,033,856 69,499
--------- --------- -----------
Net realized and unrealized gain (loss)
on investments and foreign currencies:
(Note 1)
Net realized gain (loss) on
investments.......................... 4,020,416 -- 452,351
Net realized gain (loss) on foreign
currency transactions................ 64,152 -- 49,164
--------- --------- -----------
Net realized gain (loss) during the
year............................... 4,084,568 -- 501,515
--------- --------- -----------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities
in foreign currencies................ (4,948) -- 19,339
Net change in unrealized appreciation
(depreciation) of investments........ 417,896 -- (52,826)
--------- --------- -----------
Net unrealized appreciation
(depreciation) during the year..... 412,948 -- (33,487)
--------- --------- -----------
Net realized and unrealized gain
(loss) on investments and foreign
currencies........................... 4,497,516 -- 468,028
--------- --------- -----------
Net increase (decrease) in net assets
resulting from operations.............. $4,560,298 $1,033,856 $ 537,527
--------- --------- -----------
--------- --------- -----------
*Net of foreign withholding tax of:.... $ 48,612 $ -- $ 12,924
--------- --------- -----------
--------- --------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F67
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
--------------------------------------------------------
VARIABLE VARIABLE
VARIABLE GLOBAL U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN
INCOME INCOME INCOME AMERICA
FUND FUND FUND FUND
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 2,156,400 $ 591,394 $ 312,388 $ 404,383
Net realized gain (loss) on
investments and foreign currency
transactions......................... 1,618,244 (738,174) (1,476) 3,569,822
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 271,762 803,351 (2,603) 2,156
Net change in unrealized appreciation
(depreciation) of investments........ (1,968,623) (292,630) 153,207 (244,181)
------------- ------------ ------------ -------------
Net increase (decrease) in net
assets resulting from operations... 2,077,783 363,941 461,516 3,732,180
------------- ------------ ------------ -------------
Distributions to shareholders: (Note 1)
From net investment income............ (2,041,389) (616,309) (262,504) --
From net realized gain on
investments.......................... -- -- (42,460) --
In excess of net investment income.... -- -- -- --
------------- ------------ ------------ -------------
Total distributions................. (2,041,389) (616,309) (304,964) --
------------- ------------ ------------ -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 37,352,357 4,845,991 6,057,200 50,446,691
Decrease from capital shares
repurchased.......................... (40,609,980) (6,739,965) (4,324,042) (48,320,307)
------------- ------------ ------------ -------------
Net increase (decrease) from capital
share transactions................. (3,257,623) (1,893,974) 1,733,158 2,126,384
------------- ------------ ------------ -------------
Total increase (decrease) in net
assets................................. (3,221,229) (2,146,342) 1,889,710 5,858,564
Net assets:
Beginning of year..................... 31,717,921 10,397,369 5,482,926 22,927,653
------------- ------------ ------------ -------------
End of year *........................ $ 28,496,692 $ 8,251,027 $ 7,372,636 $ 28,786,217
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
*Includes undistributed/accumulated
net investment income (loss) of:..... $ 397,677 $ 98,996 $ 70,621 $ 304,812
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
</TABLE>
<TABLE>
<CAPTION>
For the year ended December 31, 1996
GT GLOBAL
--------------------------------------------------------
VARIABLE VARIABLE
VARIABLE GLOBAL U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN
INCOME INCOME INCOME AMERICA
FUND FUND FUND FUND
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 2,081,768 $ 683,201 $ 272,902 $ 435,954
Net realized gain (loss) on
investments and foreign currency
transactions......................... 1,924,934 (141,142) 26,233 1,989,181
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 137,267 120,434 2,603 5,649
Net change in unrealized appreciation
(depreciation) of investments........ 1,136,746 (38,711) (183,973) 2,060,350
------------- ------------ ------------ -------------
Net increase in net assets resulting
from operations.................... 5,280,715 623,782 117,765 4,491,134
------------- ------------ ------------ -------------
Distributions to shareholders: (Note 1)
From net investment income............ (1,851,306) (706,141) (262,014) (613,467)
From net realized gain on
investments.......................... (153,457) -- -- --
In excess of net investment income.... -- -- -- (11,459)
------------- ------------ ------------ -------------
Total distributions................. (2,004,763) (706,141) (262,014) (624,926)
------------- ------------ ------------ -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 45,166,146 7,375,614 4,065,030 29,173,781
Decrease from capital shares
repurchased.......................... (42,069,061) (8,839,632) (4,430,300) (29,883,182)
------------- ------------ ------------ -------------
Net increase (decrease) from capital
share transactions................. 3,097,085 (1,464,018) (365,270) (709,401)
------------- ------------ ------------ -------------
Total increase (decrease) in net
assets................................. 6,373,037 (1,546,377) (509,519) 3,156,807
Net assets:
Beginning of year..................... 25,344,884 11,943,746 5,992,445 19,770,846
------------- ------------ ------------ -------------
End of year * *...................... $ 31,717,921 $ 10,397,369 $ 5,482,926 $ 22,927,653
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
* *Includes undistributed/accumulated
net investment income (loss) of:..... $ 461,426 $ 427,910 $ 21,121 $ --
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F68
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (cont'd)
For the year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & TELECOM- EMERGING VARIABLE NATURAL VARIABLE
INCOME MUNICATIONS MARKETS INFRASTRUCTURE RESOURCES AMERICA
FUND FUND FUND FUND FUND FUND
------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 1,205,645 $ (68,334) $ 221,606 $ 83,258 $ (29,831) $ (142,918)
Net realized gain (loss) on
investments and foreign currency
transactions......................... 1,630,452 5,806,561 492,304 (206,416) 2,034,294 6,277,204
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (54,835) 167,417 (9,023) (1,800) 2,250 --
Net change in unrealized appreciation
(depreciation) of investments........ 3,876,889 2,996,284 (2,699,474) 442,473 (1,935,169) (372,530)
------------- ------------- ------------- -------------- ------------- -------------
Net increase in net assets resulting
from operations.................... 6,658,151 8,901,928 (1,994,587) 317,515 71,544 5,761,756
------------- ------------- ------------- -------------- ------------- -------------
Distributions to shareholders: (Note 1)
From net investment income............ (1,300,804) -- (84,900) (47,833) -- (196,399)
From net realized gain on
investments.......................... (90,528) (7,777,355) (1,283,734) (431,226) (762,160) (1,554,377)
In excess of net investment income.... -- -- -- -- -- --
------------- ------------- ------------- -------------- ------------- -------------
Total distributions................. (1,391,332) (7,777,355) (1,368,634) (479,059) (762,160) (1,750,776)
------------- ------------- ------------- -------------- ------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 80,082,075 53,743,901 65,386,565 6,628,609 42,957,139 51,554,136
Decrease from capital shares
repurchased.......................... (71,425,393) (49,940,160) (63,118,511) (3,775,850) (41,865,469) (53,234,901)
------------- ------------- ------------- -------------- ------------- -------------
Net increase (decrease) from capital
share transactions................. 8,656,682 3,803,741 2,268,054 2,852,759 1,091,670 (1,680,765)
------------- ------------- ------------- -------------- ------------- -------------
Total increase (decrease) in net
assets................................. 13,923,501 4,928,314 (1,095,167) 2,691,215 401,054 2,330,215
Net assets:
Beginning of year..................... 36,432,763 63,257,829 17,603,924 6,053,970 16,307,953 41,646,609
------------- ------------- ------------- -------------- ------------- -------------
End of year........................... $ 50,356,264 $ 68,186,143 $ 16,508,757 $ 8,745,185 $ 16,709,007 $ 43,976,824
------------- ------------- ------------- -------------- ------------- -------------
------------- ------------- ------------- -------------- ------------- -------------
*Includes undistributed/accumulated
net investment income (loss) of:..... $ 643,714 $ -- $ 168,757 $ 77,503 $ -- $ --
------------- ------------- ------------- -------------- ------------- -------------
------------- ------------- ------------- -------------- ------------- -------------
<CAPTION>
VARIABLE
NEW VARIABLE MONEY VARIABLE
PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 415,628 $ 62,782 $ 1,033,856 $ 69,499
Net realized gain (loss) on
investments and foreign currency
transactions......................... (100,720) 4,084,568 -- 501,515
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 105,422 (4,948) -- 19,339
Net change in unrealized appreciation
(depreciation) of investments........ (10,613,599) 417,896 -- (52,826)
-------------- ------------- -------------- -------------
Net increase in net assets resulting
from operations.................... (10,193,269) 4,560,298 1,033,856 537,527
-------------- ------------- -------------- -------------
Distributions to shareholders: (Note 1)
From net investment income............ (178,145) (69,048) (1,033,856) (7,912)
From net realized gain on
investments.......................... (128,263) (2,404,127) -- --
In excess of net investment income.... -- -- -- --
-------------- ------------- -------------- -------------
Total distributions................. (306,408) (2,473,175) (1,033,856) (7,912)
-------------- ------------- -------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 181,437,283 147,172,457 524,518,140 35,266,039
Decrease from capital shares
repurchased.......................... (187,117,722) (146,386,879) (517,347,993) (34,648,323)
-------------- ------------- -------------- -------------
Net increase (decrease) from capital
share transactions................. (5,680,439) 785,578 7,170,147 617,716
-------------- ------------- -------------- -------------
Total increase (decrease) in net
assets................................. (16,180,116) 2,872,701 7,170,147 1,147,331
Net assets:
Beginning of year..................... 32,670,200 24,537,049 19,794,060 4,781,848
-------------- ------------- -------------- -------------
End of year........................... $ 16,490,084 $ 27,409,750 $ 26,964,207 $ 5,929,179
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
*Includes undistributed/accumulated
net investment income (loss) of:..... $ 351,912 $ 60,949 $ -- $ 56,757
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
</TABLE>
<TABLE>
<CAPTION>
For the year ended December 31, 1996
GT GLOBAL
----------------------------------------------------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & TELECOM- EMERGING VARIABLE NATURAL VARIABLE
INCOME MUNICATIONS MARKETS INFRASTRUCTURE RESOURCES AMERICA
FUND FUND FUND FUND FUND FUND
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 1,137,133 $ (159,179) $ 132,940 $ 47,274 $ (45,203) $ 201,092
Net realized gain (loss) on
investments and foreign currency
transactions......................... 584,240 8,082,167 2,583,937 432,860 732,622 1,558,532
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 20,456 3,633 2,710 145 (2,282) --
Net change in unrealized appreciation
(depreciation) of investments........ 3,228,349 1,763,783 826,703 211,063 1,760,818 4,688,367
------------- ------------- ------------- ------------- ------------- -------------
Net increase in net assets resulting
from operations.................... 4,970,178 9,690,404 3,546,290 691,342 2,445,955 6,447,991
------------- ------------- ------------- ------------- ------------- -------------
Distributions to shareholders: (Note 1)
From net investment income............ (736,222) (70,025) -- (9,314 ) -- (526,781)
From net realized gain on
investments.......................... (103,267) (6,373,965) -- (17,455 ) -- (4,953,885)
In excess of net investment income.... -- -- -- -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Total distributions................. (839,489) (6,443,990) -- (26,769 ) -- (5,480,666)
------------- ------------- ------------- ------------- ------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 29,950,604 43,828,906 32,771,217 7,252,525 33,416,057 60,951,545
Decrease from capital shares
repurchased.......................... (28,213,931) (34,595,566) (27,696,344) (3,457,346 ) (20,919,006) (57,915,239)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) from capital
share transactions................. 1,736,673 9,233,340 5,074,873 3,795,179 12,497,051 3,036,306
------------- ------------- ------------- ------------- ------------- -------------
Total increase (decrease) in net
assets................................. 5,867,362 12,479,754 8,621,163 4,459,752 14,943,006 4,003,631
Net assets:
Beginning of year..................... 30,565,401 50,778,075 8,982,761 1,594,218 1,364,947 37,642,978
------------- ------------- ------------- ------------- ------------- -------------
End of year * *...................... $ 36,432,763 $ 63,257,829 $ 17,603,924 $ 6,053,970 $ 16,307,953 $ 41,646,609
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
* *Includes undistributed/accumulated
net investment income (loss) of:..... $ 745,652 $ -- $ 83,731 $ 45,357 $ -- $ 196,399
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
<CAPTION>
VARIABLE
NEW VARIABLE MONEY VARIABLE
PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 256,226 $ 71,331 $ 717,755 $ 21,621
Net realized gain (loss) on
investments and foreign currency
transactions......................... 1,248,081 3,075,019 -- 218,360
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (2,246) (10,428) -- 3,152
Net change in unrealized appreciation
(depreciation) of investments........ 7,190,989 2,087,986 -- 130,577
-------------- ------------- -------------- -------------
Net increase in net assets resulting
from operations.................... 8,693,050 5,223,908 717,755 373,710
-------------- ------------- -------------- -------------
Distributions to shareholders: (Note 1)
From net investment income............ (329,817) (155,793) (717,755) (526)
From net realized gain on
investments.......................... -- -- -- (14,157)
In excess of net investment income.... -- -- -- --
-------------- ------------- -------------- -------------
Total distributions................. (329,817) (155,793) (717,755) (14,683)
-------------- ------------- -------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 177,020,035 77,988,956 316,808,464 9,136,580
Decrease from capital shares
repurchased.......................... (175,737,852) (74,160,899) (311,904,996) (8,376,359)
-------------- ------------- -------------- -------------
Net increase (decrease) from capital
share transactions................. 1,282,183 3,828,057 4,903,468 760,221
-------------- ------------- -------------- -------------
Total increase (decrease) in net
assets................................. 9,645,416 8,896,172 4,903,468 1,119,248
Net assets:
Beginning of year..................... 23,024,784 15,640,877 14,890,592 3,662,600
-------------- ------------- -------------- -------------
End of year * *...................... $ 32,670,200 $ 24,537,049 $ 19,794,060 $ 4,781,848
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
* *Includes undistributed/accumulated
net investment income (loss) of:..... $ 163,089 $ 67,215 $ -- $ 6,759
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F69
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------------------------------------
VARIABLE STRATEGIC INCOME FUND
------------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.38 $ 11.86 $ 10.82 $ 14.57 $ 12.00
----------- ----------- ----------- ----------- ----------------
Net investment income (loss).......... 1.00(a) 0.95(b) 1.07(c) 1.71(d) 0.61(e)
Net realized and unrealized gain
(loss) on investments................ (0.07) 1.50 0.93 (4.17) 2.57
----------- ----------- ----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... 0.93 2.45 2.00 (2.46) 3.18
----------- ----------- ----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ (0.92) (0.85) (0.96) (0.79) (0.61)
From net realized gain on
investments.......................... -- (0.08) -- (0.45) --
In excess of net realized gain on
investments.......................... -- -- -- -- --
In excess of net investment income.... -- -- -- -- --
Return of capital..................... -- -- -- (0.05) --
----------- ----------- ----------- ----------- ----------------
Total distributions................. (0.92) (0.93) (0.96) (1.29) (0.61)
----------- ----------- ----------- ----------- ----------------
Net asset value, end of period.......... $ 13.39 $ 13.38 $ 11.86 $ 10.82 $ 14.57
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Total investment return (g) +.......... 7.14% 21.58% 19.50% (17.09)% 27.5%
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 28,497 $ 31,718 $ 25,345 $ 23,367 $ 18,089
Ratio of net investment income (loss) to
average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 7.20% 7.74% 9.59% 7.58% 6.6%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 7.03% 7.59% 9.35% 7.43% 6.3%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 5.2%
Ratio of expenses to average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 0.90% 0.99% 1.00% 1.00% 0.5%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 1.07% 1.14% 1.24% 1.15% 0.9%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 1.9%
Portfolio turnover ++................... 185% 210% 193% 313% 245%
Average commission rate per share paid
on portfolio transactions.............. N/A N/A N/A N/A N/A
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------
VARIABLE LATIN AMERICA FUND
-----------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
---------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
---- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $14.80 $ 12.42 $ 19.17 $ 17.68 $ 12.00
---- ----------- ----------- ----------- --------
Net investment income (loss).......... 0.24(a) 0.27(b) 0.51(c) 0.11(d) 0.04(e)
Net realized and unrealized gain
(loss) on investments................ 1.91 2.49 (5.10) 1.49 5.64
---- ----------- ----------- ----------- --------
Net increase (decrease) resulting
from operations.................... 2.15 2.76 (4.59) 1.60 5.68
---- ----------- ----------- ----------- --------
Distributions to shareholders:
From net investment income............ -- (0.37) (0.16) (0.04) --
From net realized gain on
investments.......................... -- -- (2.00) (0.07) --
In excess of net investment income.... -- (0.01) -- -- --
Return of capital..................... -- -- -- -- --
---- ----------- ----------- ----------- --------
Total distributions................. -- (0.38) (2.16) (0.11) --
---- ----------- ----------- ----------- --------
Net asset value, end of period.......... $16.95 $ 14.80 $ 12.42 $ 19.17 $ 17.68
---- ----------- ----------- ----------- --------
---- ----------- ----------- ----------- --------
Total investment return (g) +.......... 14.53% 22.48% (24.14)% 9.14% 47.3%
---- ----------- ----------- ----------- --------
---- ----------- ----------- ----------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $28,786 $ 22,928 $ 19,771 $ 26,631 $ 8,240
Ratio of net investment income (loss) to
average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 1.36% 1.94% 4.43% 0.82% 1.0%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 1.21% 1.69% 3.92% 0.49% 0.4%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% (2.5)%
Ratio of expenses to average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 1.25% 1.17% 1.18% 1.25% 0.7%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 1.40% 1.42% 1.69% 1.58% 1.3%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 4.2%
Portfolio turnover ++................... 141% 102% 140% 185% 78%
Average commission rate per share paid
on portfolio transactions.............. $0.0004 $ 0.0002 N/A N/A N/A
</TABLE>
- ------------------------
(a) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.01 for the Variable Strategic Income
Fund, $0.06 for the Variable Global Government, $0.06 for Variable
U.S. Government Income Fund, $0.02 for the Variable Latin America
Fund, and $0.00 for the Variable Growth & Income Fund (Note 2).
(b) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.02 for the Variable Strategic Income
Fund, $0.06 for the Variable Global Government Income Fund, $0.08 for
the Variable U.S. Government Income Fund, $0.02 for the Variable Latin
America Fund, and $0.01 for the Variable Growth & Income Fund (Note
2).
(c) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.03 for the Variable Strategic Income
Fund, $0.07 for the Variable Global Government Income Fund, $0.14 for
the Variable U.S. Government Income Fund, $0.06 for the Variable Latin
America Fund, $0.03 for the Variable Growth & Income Fund, and $0.00
for the Variable Telecommunications Fund (Note 2).
(d) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.04 for the Variable Strategic Income
Fund, $0.08 for the Variable Global Government Income Fund, $0.48 for
the Variable U.S. Government Income Fund, $0.04 for the Variable Latin
America Fund, $0.03 for the Variable Growth & Income Fund, and $0.01
for the Variable Telecommunications Fund (Note 2).
The accompanying notes are an integral part of the financial statements.
F70
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------
VARIABLE GLOBAL GOVERNMENT INCOME FUND
-----------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
---------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.43 $ 11.51 $ 10.63 $ 12.53 $ 12.00
----------- ----------- ----------- ---------- --------
Net investment income (loss).......... 0.82(a) 0.72(b) 0.79(c) 0.77(d) 0.57(e)
Net realized and unrealized gain
(loss) on investments................ (0.34) (0.06) 0.84 (1.85) 0.52
----------- ----------- ----------- ---------- --------
Net increase (decrease) resulting
from operations.................... 0.48 0.66 1.63 (1.08) 1.09
----------- ----------- ----------- ---------- --------
Distributions to shareholders:
From net investment income............ (0.74) (0.74) (0.75) (0.73) (0.56)
From net realized gain on
investments.......................... -- -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- -- --
In excess of net investment income.... -- -- -- -- --
Return of capital..................... -- -- -- (0.09) --
----------- ----------- ----------- ---------- --------
Total distributions................. (0.74) (0.74) (0.75) (0.82) (0.56)
----------- ----------- ----------- ---------- --------
Net asset value, end of period.......... $ 11.17 $ 11.43 $ 11.51 $ 10.63 $ 12.53
----------- ----------- ----------- ---------- --------
----------- ----------- ----------- ---------- --------
Total investment return (g) +.......... 4.37% 6.17% 15.85% (8.70)% 9.5%
----------- ----------- ----------- ---------- --------
----------- ----------- ----------- ---------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 8,251 $ 10,397 $ 11,944 $ 9,654 $ 6,136
Ratio of net investment income (loss) to
average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 6.33% 6.32% 7.03% 6.89% 6.1%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 5.74% 5.80% 6.37% 6.21% 5.5%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 2.4%
Ratio of expenses to average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 0.95% 0.95% 1.00% 1.00% 0.5%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 1.54% 1.47% 1.66% 1.68% 1.1%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 4.2%
Portfolio turnover ++................... 235% 235% 394% 350% 298%
Average commission rate per share paid
on portfolio transactions.............. N/A N/A N/A N/A N/A
<CAPTION>
GT GLOBAL
--------------------------------------------------------------------
VARIABLE U.S. GOVERNMENT INCOME FUND
--------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT
OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
-------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.41 $ 11.74 $ 10.79 $ 12.23 $ 12.00
----------- ---------- ---------- ---------- ---------------
Net investment income (loss).......... 0.63(a) 0.60(b) 0.62(c) 0.63(d) 0.53(e)
Net realized and unrealized gain
(loss) on investments................ 0.29 (0.35) 0.93 (1.39) 0.23
----------- ---------- ---------- ---------- ---------------
Net increase (decrease) resulting
from operations.................... 0.92 0.25 1.55 (0.76) 0.76
----------- ---------- ---------- ---------- ---------------
Distributions to shareholders:
From net investment income............ (0.54) (0.58) (0.60) (0.62) (0.53)
From net realized gain on
investments.......................... (0.09) -- -- (0.06) --
In excess of net realized gain on
investments.......................... -- -- -- -- --
In excess of net investment income.... -- -- -- -- --
Return of capital..................... -- -- -- -- --
----------- ---------- ---------- ---------- ---------------
Total distributions................. (0.63) (0.58) (0.60) (0.68) (0.53)
----------- ---------- ---------- ---------- ---------------
Net asset value, end of period.......... $ 11.70 $ 11.41 $ 11.74 $ 10.79 $ 12.23
----------- ---------- ---------- ---------- ---------------
----------- ---------- ---------- ---------- ---------------
Total investment return (g) +.......... 8.30% 2.23% 14.73% (6.27)% 6.4%
----------- ---------- ---------- ---------- ---------------
----------- ---------- ---------- ---------- ---------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 7,373 $ 5,483 $ 5,992 $ 2,415 $ 974
Ratio of net investment income (loss) to
average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 5.54% 5.24% 5.43% 5.53% 5.3%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 4.92% 4.49% 3.87% 1.29% 3.4%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% (6.9)%
Ratio of expenses to average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 1.00% 1.00% 1.00% 0.38% 0.0%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 1.62% 1.75% 2.56% 4.63% 1.9%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 12.3%
Portfolio turnover ++................... 143% 49% 186% 34% 81%
Average commission rate per share paid
on portfolio transactions.............. N/A N/A N/A N/A N/A
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------------------------------------
VARIABLE GROWTH & INCOME FUND
------------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.51 $ 14.57 $ 12.99 $ 13.77 $ 12.00
----------- ----------- ----------- ----------- ----------------
Net investment income (loss).......... 0.41(a) 0.53(b) 0.52(c) 0.46(d) 0.31(e)
Net realized and unrealized gain
(loss) on investments................ 2.23 1.81 1.46 (0.85) 1.79
----------- ----------- ----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... 2.64 2.34 1.98 (0.39) 2.10
----------- ----------- ----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ (0.51) (0.35) (0.40) (0.39) (0.28)
From net realized gain on
investments.......................... (0.04) (0.05) -- -- (0.05)
In excess of net investment income.... -- -- -- -- --
Return of capital..................... -- -- -- -- --
----------- ----------- ----------- ----------- ----------------
Total distributions................. (0.55) (0.40) (0.40) (0.39) (0.33)
----------- ----------- ----------- ----------- ----------------
Net asset value, end of period.......... $ 18.60 $ 16.51 $ 14.57 $ 12.99 $ 13.77
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Total investment return (g) +.......... 16.22% 16.33% 15.49% (2.85)% 17.8%
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 50,356 $ 36,433 $ 30,565 $ 25,580 $ 11,677
Ratio of net investment income (loss) to
average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 2.86% 3.58% 3.87% 3.69% 3.2%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 2.72% 3.48% 3.66% 3.45% 2.7%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 1.1%
Ratio of expenses to average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 1.13% 1.20% 1.23% 1.25% 0.6%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 1.27% 1.30% 1.44% 1.49% 1.2%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 2.8%
Portfolio turnover ++................... 60% 57% 73% 53% 17%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0141 $ 0.0147 N/A N/A N/A
<CAPTION>
GT GLOBAL
------------------------------------------------------------------------
VARIABLE TELECOMMUNICATIONS FUND
------------------------------------------------------------------------
OCTOBER 18, 1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 18.14 $ 16.87 $ 13.98 $ 13.07 $ 12.00
----------- ----------- ----------- ----------- --------
Net investment income (loss).......... (0.02) (0.05) 0.02(c) 0.01(d) 0.04(e)
Net realized and unrealized gain
(loss) on investments................ 2.59 3.31 3.26 0.92 1.03
----------- ----------- ----------- ----------- --------
Net increase (decrease) resulting
from operations.................... 2.57 3.26 3.28 0.93 1.07
----------- ----------- ----------- ----------- --------
Distributions to shareholders:
From net investment income............ -- (0.02) (0.03) (0.02) --
From net realized gain on
investments.......................... (2.31) (1.97) (0.36) -- --
In excess of net investment income.... -- -- -- -- --
Return of capital..................... -- -- -- -- --
----------- ----------- ----------- ----------- --------
Total distributions................. (2.31) (1.99) (0.39) (0.02) --
----------- ----------- ----------- ----------- --------
Net asset value, end of period.......... $ 18.40 $ 18.14 $ 16.87 $ 13.98 $ 13.07
----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- --------
Total investment return (g) +.......... 14.56% 19.34% 23.66% 7.15% 8.9%
----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 68,186 $ 63,258 $ 50,778 $ 36,029 $ 7,903
Ratio of net investment income (loss) to
average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ (0.10)% (0.26)% 0.16% 0.31% 2.5%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... (0.15)% (0.31)% 0.10% 0.07% 2.3%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 1.6%
Ratio of expenses to average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 1.11% 1.12% 1.20% 1.25% 0.9%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 1.16% 1.17% 1.26% 1.49% 1.1%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 1.8%
Portfolio turnover ++................... 91% 77% 70% 81% 20%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0092 $ 0.0068 N/A N/A N/A
</TABLE>
- ------------------------
(e) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.03 for the Variable Strategic Income
Fund, $0.06 for the Variable Global Government Income Fund, $0.19 for
the Variable U.S. Government Income Fund, $0.02 for the Variable Latin
America Fund, $0.05 for the Variable Growth & Income Fund, and $0.00
for the Variable Telecommunications Fund (Note 2).
(f) During the period ended December 31, 1993, [Chancellor LGT] Asset
Management, Inc. voluntarily assumed certain expenses for the Funds
(Note 2).
(g) Total return information does not reflect expenses that apply to the
Separate Accounts or the related insurance contracts, and inclusion of
these charges would reduce the total return figures for all periods
shown.
+ Not annualized for periods of less than one year.
++ Annualized for periods of less than one year.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F71
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
GT GLOBAL
---------------------------------------------------------
VARIABLE EMERGING MARKETS FUND
---------------------------------------------------------
JULY 5, 1994
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
-------------------------------------- DECEMBER 31,
1997 1996 1995 1994
----------- ----------- ---------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.26 $ 10.88 $ 11.89 $ 12.00
----------- ----------- ---------- --------
Net investment income (loss).......... 0.15(a) 0.11(b) 0.14(c) 0.07(d)
Net realized and unrealized gain
(loss) on investments................ (1.89) 3.27 (1.04) (0.05)
----------- ----------- ---------- --------
Net increase (decrease) resulting
from operations.................... (1.74) 3.38 (0.90) 0.02
----------- ----------- ---------- --------
Distributions to shareholders:
From net investment income............ (0.06) -- (0.09) (0.07)
From net realized gain on
investments.......................... (0.89) -- -- --
In excess of net realized gain on
investments.......................... -- -- -- (0.06)
Return of capital..................... -- -- (0.02) --
----------- ----------- ---------- --------
Total distributions................. (0.95) -- (0.11) (0.13)
----------- ----------- ---------- --------
Net asset value, end of period.......... $ 11.57 $ 14.26 $ 10.88 $ 11.89
----------- ----------- ---------- --------
----------- ----------- ---------- --------
Total investment return (g) +.......... (13.76)% 31.07% (7.54)% 0.12%
----------- ----------- ---------- --------
----------- ----------- ---------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 16,509 $ 17,604 $ 8,983 $ 7,267
Ratio of net investment income (loss) to
average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 1.05% 0.89% 1.55% 4.10%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 0.78% 0.39% 0.51% (0.20)%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 1.22% 1.18% 1.18% 0.00%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 1.49% 1.68% 2.22% 4.30%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --%
Portfolio turnover ++................... 212% 216% 210% 117%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0013 $ 0.0021 N/A N/A
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------------------------------------
VARIABLE AMERICA FUND
------------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 19.71 $ 19.46 $ 15.81 $ 13.75 $ 12.00
----------- ----------- ----------- ----------- ----------------
Net investment income (loss).......... (0.07) 0.12(b) 0.21(c) 0.48(d) 1.11(e)
Net realized and unrealized gain
(loss) on investments................ 2.88 3.18 3.80 2.08 0.64
----------- ----------- ----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... 2.81 3.30 4.01 2.56 1.75
----------- ----------- ----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ (0.09) (0.30) (0.07) (0.50) --
From net realized gain on
investments.......................... (0.75) (2.75) (0.29) -- --
In excess of net realized gain on
investments.......................... -- -- -- -- --
Return of capital..................... -- -- -- -- --
----------- ----------- ----------- ----------- ----------------
Total distributions................. (0.84) (3.05) (0.36) (0.50) --
----------- ----------- ----------- ----------- ----------------
Net asset value, end of period.......... $ 21.68 $ 19.71 $ 19.46 $ 15.81 $ 13.75
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Total investment return (g) +.......... 14.88% 18.55% 25.37% 18.88% 14.7%
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 43,977 $ 41,647 $ 37,643 $ 15,257 $ 1,700
Ratio of net investment income (loss) to
average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ (0.35)% 0.52% 1.66% 1.83% 14.1%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... (0.42)% 0.46% 1.60% 0.76% 12.8%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 7.6%
Ratio of expenses to average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 0.91% 0.95% 1.00% 0.98% 0.0%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 0.98% 1.01% 1.06% 2.05% 1.3%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 6.5%
Portfolio turnover ++................... 210% 248% 79% 139% 831%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0552 $ 0.0531 N/A N/A N/A
</TABLE>
- ------------------------
(a) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.03 for the Variable Emerging Markets
Fund, $0.04 for the Variable Infrastructure Fund, $0.03 for the
Variable Natural Resources Fund, $0.02 for the Variable New Pacific
Fund, and $0.02 for the Variable Europe Fund (Note 2).
(b) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.05 for the Variable Emerging Markets
Fund, $0.19 for the Variable Infrastructure Fund, $0.11 for the
Variable Natural Resources Fund, $0.00 for the Variable America Fund,
$0.04 for the Variable New Pacific Fund, and $0.04 for the Variable
Europe Fund (Note 2).
(c) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.09 for the Variable Emerging Markets
Fund, $0.42 for the Variable Infrastructure Fund, $0.47 for the
Variable Natural Resources Fund, $0.01 for the Variable America Fund,
$0.04 for the Variable New Pacific Fund, and $0.08 for the Variable
Europe Fund (Note 2).
(d) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.07 for the Variable Emerging Markets
Fund, $0.28 for the Variable America Fund, $0.03 for the Variable New
Pacific Fund, and $0.04 for the Variable Europe Fund (Note 2).
The accompanying notes are an integral part of the financial statements.
F72
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
--------------------------------------------
VARIABLE INFRASTRUCTURE FUND
--------------------------------------------
JANUARY 31, 1995
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
------------------------- DECEMBER 31,
1997 1996 1995
----------- ----------- ----------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.47 $ 13.27 $ 12.00
----------- ----------- ----------------
Net investment income (loss).......... 0.12(a) 0.11(b) 0.07(c)
Net realized and unrealized gain
(loss) on investments................ 0.74 3.19 1.20
----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... 0.86 3.30 1.27
----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ (0.10) (0.03) --
From net realized gain on
investments.......................... (0.88) (0.07) --
In excess of net realized gain on
investments.......................... -- -- --
Return of capital..................... -- -- --
----------- ----------- ----------------
Total distributions................. (0.98) (0.10) --
----------- ----------- ----------------
Net asset value, end of period.......... $ 16.35 $ 16.47 $ 13.27
----------- ----------- ----------------
----------- ----------- ----------------
Total investment return (g) +.......... 5.00% 24.88% 10.58%
----------- ----------- ----------------
----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 8,745 $ 6,054 $ 1,594
Ratio of net investment income (loss) to
average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 0.99% 1.35% 1.24%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 0.68% 0.03% (6.11)%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --%
Ratio of expenses to average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 1.18% 1.21% 1.22%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 1.49% 2.53% 8.57%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --%
Portfolio turnover ++................... 46% 76% 38%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0077 $ 0.0101 N/A
<CAPTION>
GT GLOBAL
--------------------------------------------
VARIABLE NATURAL RESOURCES FUND
--------------------------------------------
JANUARY 31, 1995
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
------------------------- DECEMBER 31,
1997 1996 1995
----------- ----------- ----------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.98 $ 13.88 $ 12.00
----------- ----------- ----------------
Net investment income (loss).......... (0.03) (a) (0.06) (b) 0.73(c)
Net realized and unrealized gain
(loss) on investments................ 0.18 7.16 1.91
----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... 0.15 7.10 2.64
----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ -- -- (0.71)
From net realized gain on
investments.......................... (0.93) -- --
In excess of net realized gain on
investments.......................... -- -- (0.05)
Return of capital..................... -- -- --
----------- ----------- ----------------
Total distributions................. (0.93) -- (0.76)
----------- ----------- ----------------
Net asset value, end of period.......... $ 20.20 $ 20.98 $ 13.88
----------- ----------- ----------------
----------- ----------- ----------------
Total investment return (g) +.......... 1.29% 51.15% 22.20%
----------- ----------- ----------------
----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 16,709 $ 16,308 $ 1,365
Ratio of net investment income (loss) to
average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ (0.16)% (0.60)% 10.87%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... (0.38)% (1.30)% 2.94%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --%
Ratio of expenses to average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 1.20% 1.19% 1.14%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 1.42% 1.89% 9.07%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --%
Portfolio turnover ++................... 315% 199% 875%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0123 $ 0.0164 N/A
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------------------------------------
VARIABLE NEW PACIFIC FUND
------------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 18.02 $ 13.92 $ 14.01 $ 16.07 $ 12.00
----------- ----------- ----------- ----------- ----------------
Net investment income (loss).......... 0.26(a) 0.13(b) 0.20(c) 0.08(d) 0.04(e)
Net realized and unrealized gain
(loss) on investments................ (7.61) 4.16 (0.23) (2.08) 4.03
----------- ----------- ----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... (7.35) 4.29 (0.03) (2.00) 4.07
----------- ----------- ----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ (0.10) (0.19) (0.06) (0.06) --
From net realized gain on
investments.......................... (0.07) -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- -- --
Return of capital..................... -- -- -- -- --
----------- ----------- ----------- ----------- ----------------
Total distributions................. (0.17) (0.19) (0.06) (0.06) --
----------- ----------- ----------- ----------- ----------------
Net asset value, end of period.......... $ 10.50 $ 18.02 $ 13.92 $ 14.01 $ 16.07
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Total investment return (g) +.......... (41.11)% 30.97% (0.21)% (12.47)% 33.9%
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 16,490 $ 32,670 $ 23,025 $ 19,391 $ 7,945
Ratio of net investment income (loss) to
average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 1.50% 0.88% 1.27% 0.83% 0.9%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 1.16% 0.60% 1.74% 0.48% 0.3%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% (2.0)%
Ratio of expenses to average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 1.09% 1.12% 1.14% 1.25% 0.6%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 1.43% 1.40% 1.61% 1.60% 1.3%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 3.6%
Portfolio turnover ++................... 93% 70% 67% 30% 15%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0064 $ 0.0071 N/A N/A N/A
<CAPTION>
GT GLOBAL
------------------------------------------------------------------------
VARIABLE EUROPE FUND
------------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 21.34 $ 16.52 $ 15.22 $ 15.33 $ 12.00
----------- ----------- ----------- ----------- ----------------
Net investment income (loss).......... 0.05(a) 0.05(b) 0.18(c) 0.16(d) 0.05(e)
Net realized and unrealized gain
(loss) on investments................ 3.10 4.93 1.28 (0.25) 3.28
----------- ----------- ----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... 3.15 4.98 1.46 (0.09) 3.33
----------- ----------- ----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ (0.06) (0.16) (0.16) -- --
From net realized gain on
investments.......................... (1.91) -- -- (0.02) --
In excess of net realized gain on
investments.......................... -- -- -- -- --
Return of capital..................... -- -- -- -- --
----------- ----------- ----------- ----------- ----------------
Total distributions................. (1.97) (0.16) (0.16) (0.02) --
----------- ----------- ----------- ----------- ----------------
Net asset value, end of period.......... $ 22.52 $ 21.34 $ 16.52 $ 15.22 $ 15.33
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Total investment return (g) +.......... 15.15% 30.25% 9.66% (0.59)% 27.8%
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 27,410 $ 24,537 $ 15,641 $ 15,020 $ 5,410
Ratio of net investment income (loss) to
average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 0.22% 0.36% 1.12% 1.48% 1.1%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 0.01% 0.09% 0.60% 1.07% 0.4%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% (2.8)%
Ratio of expenses to average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 1.20% 1.20% 1.20% 1.25% 0.7%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 1.41% 1.47% 1.72% 1.66% 1.4%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 4.6%
Portfolio turnover ++................... 117% 56% 123% 61% 27%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0626 $ 0.0313 N/A N/A N/A
</TABLE>
- ------------------------
(e) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.10 for the Variable America Fund, $0.03
for the Variable New Pacific Fund, and $0.03 for the Variable Europe
Fund (Note 2).
(f) During the period ended December 31, 1993, [Chancellor LGT] Asset
Management, Inc. voluntarily assumed certain expenses for the Funds
(Note 2).
(g) Total return information does not reflect expenses that apply to the
Separate Accounts or the related insurance contracts, and inclusion of
these charges would reduce the total return figures for all periods
shown.
+ Not annualized for periods of less than one year.
++ Annualized for periods of less than one year.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F73
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------------------------------------
MONEY MARKET FUND
------------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- ----------------
Net investment income (loss).......... 0.05(a) 0.05(b) 0.05(c) 0.03(d) 0.03(e)
Net realized and unrealized gain
(loss) on investments................ -- -- -- -- --
----------- ----------- ----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... 0.05 0.05 0.05 0.03 0.03
----------- ----------- ----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ (0.05) (0.05) (0.05) (0.03) (0.03)
From net realized gain on
investments.......................... -- -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- -- --
Return of capital..................... -- -- -- -- --
----------- ----------- ----------- ----------- ----------------
Total distributions................. (0.05) (0.05) (0.05) (0.03) (0.03)
----------- ----------- ----------- ----------- ----------------
Net asset value, end of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Total investment return (g) +.......... 4.96% 4.75% 5.26% 3.48% 2.6%
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 26,964 $ 19,794 $ 14,891 $ 19,474 $ 3,775
Ratio of net investment income (loss) to
average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 4.77% 4.67% 5.15% 3.70% 2.9%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 4.73% 4.57% 4.85% 3.64% 2.1%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% (2.6)%
Ratio of expenses to average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 0.75% 0.75% 0.75% 0.75% 0.2%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 0.79% 0.85% 1.05% 0.81% 1.0%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --% 5.7%
Portfolio turnover ++................... N/A N/A N/A N/A N/A
Average commission rate per share paid
on portfolio transactions.............. N/A N/A N/A N/A N/A
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
---------------------------------------------------------
VARIABLE INTERNATIONAL FUND
---------------------------------------------------------
JULY 5, 1994
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
-------------------------------------- DECEMBER 31,
1997 1996 1995 1994
----------- ----------- ---------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.91 $ 11.01 $ 11.25 $ 12.00
----------- ----------- ---------- --------
Net investment income (loss).......... 0.15(a) 0.05(b) 0.09(c) 0.06(d)
Net realized and unrealized gain
(loss) on investments................ 0.68 0.89 (0.22) (0.76)
----------- ----------- ---------- --------
Net increase (decrease) resulting
from operations.................... 0.83 0.94 (0.13) (0.70)
----------- ----------- ---------- --------
Distributions to shareholders:
From net investment income............ (0.02) -- (0.09) (0.05)
From net realized gain on
investments.......................... -- (0.04) (0.02) --
In excess of net realized gain on
investments.......................... -- -- -- --
Return of capital..................... -- -- -- --
----------- ----------- ---------- --------
Total distributions................. (0.02) (0.04) (0.11) (0.05)
----------- ----------- ---------- --------
Net asset value, end of period.......... $ 12.72 $ 11.91 $ 11.01 $ 11.25
----------- ----------- ---------- --------
----------- ----------- ---------- --------
Total investment return (g) +.......... 6.93% 8.52% (1.14)% (5.81)%
----------- ----------- ---------- --------
----------- ----------- ---------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 5,929 $ 4,782 $ 3,663 $ 2,229
Ratio of net investment income (loss) to
average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 1.22% 0.48% 0.93% 3.33%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 0.05% (0.86)% (1.35)% (2.56)%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by [Chancellor LGT]
and expense reductions (Notes 1, 2, &
5) ++................................ 1.14% 1.15% 1.25% 0.69%
Without reimbursement by [Chancellor
LGT] and expense reductions ++....... 2.31% 2.49% 3.53% 6.58%
Without expenses assumed by
[Chancellor LGT] (f) ++............. --% --% --% --%
Portfolio turnover ++................... 112% 92% 107% 17%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0225 $ 0.0156 N/A N/A
</TABLE>
- ------------------------
(a) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.00 for the Money Market Fund and $0.06
for the Variable International Fund (Note 2).
(b) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.00 for the Money Market Fund and $0.14
for the Variable International Fund (Note 2).
(c) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.00 for the Money Market Fund and $0.22
for the Variable International Fund (Note 2).
(d) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.00 for the Money Market Fund and $0.11
for the Variable International Fund (Note 2).
(e) Includes reimbursement by [Chancellor LGT] Asset Management, Inc. of
Fund operating expenses of $0.01 for the Money Market Fund (Note 2).
(f) During the period ended December 31, 1993, [Chancellor LGT] Asset
Management, Inc. voluntarily assumed certain expenses for the Funds
(Note 2).
(g) Total return information does not reflect expenses that apply to the
Separate Accounts or the related insurance contracts, and inclusion of
these charges would reduce the total return figures for all periods
shown.
+ Not annualized for periods of less than one year.
++ Annualized for periods of less than one year.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F74
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Variable Investment Series and GT Global Variable Investment Trust
("Companies") were organized as Massachusetts business trusts on May 26, 1992
and September 17, 1992, respectively. The Companies are registered under the
Investment Company Act of 1940, as amended ("1940 Act"), as open-end management
investment companies. The GT Global Variable Investment Series operates as a
series company currently issuing five classes of shares of beneficial interest:
GT Global Variable New Pacific Fund, GT Global Variable Europe Fund, GT Global
Variable America Fund, GT Global Variable International Fund and GT Global Money
Market Fund. GT Global Variable Investment Trust operates as a series company
currently issuing nine classes of shares of beneficial interest: GT Global
Variable Latin America Fund, GT Global Variable Growth & Income Fund, GT Global
Variable Strategic Income Fund, GT Global Variable Global Government Income
Fund, GT Global Variable U.S. Government Income Fund, GT Global Variable
Emerging Markets Fund, GT Global Variable Telecommunications Fund, GT Global
Variable Infrastructure Fund, and GT Global Variable Natural Resources Fund.
(The classes of shares of of beneficial interest for the two companies are
referred to herein collectively as the "Funds".) Each of the Funds is classified
as a diversified management investment company, except for GT Global Variable
Latin America Fund, GT Global Variable Growth & Income Fund, GT Global Variable
Strategic Income Fund and GT Global Variable Global Government Income Fund,
which are each registered as a non-diversified management investment company
under the 1940 Act.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by [Chancellor LGT] Asset
Management, Inc. (the "Sub-adviser") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Sub-adviser deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by, or under the direction of, each of
the Companies' Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by, or under the direction of, the Companies' Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Funds are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Funds after translation
to U.S. dollars based on the exchange rates on that day. The cost of each
security is determined using historical exchange rates. Income and withholding
taxes are translated at prevailing exchange rates when earned or incurred.
The Funds do not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Funds' books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
F75
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Funds, it is the
Funds' policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be repaid to the Funds
under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Funds as an unrealized gain or loss. When the
Forward Contract is closed, the Funds record a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amounts shown in the Funds' "Statements of Assets and Liabilities." The Funds
could be exposed to risk if the counterparties are unable to meet the terms of
the contracts or if the value of the currency changes unfavorably. The Funds may
enter into Forward Contracts in connection with planned purchases or sales of
securities or to hedge against adverse fluctuations in exchange rates between
currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When a Fund writes a call or put option, an amount equal to the premium received
is included in the Fund's "Statements of Assets and Liabilities" as an asset and
an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if a Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium received. A Fund can write options only on a covered
basis, which, for a call, requires that the Fund hold the underlying securities
and, for a put, requires the Fund to set aside cash, U.S. government securities
or other liquid securities in an amount not less than the exercise price or
otherwise provide adequate cover at all times while the put option is
outstanding. The Funds may use options to manage their exposure to the stock or
bond markets and to fluctuations in currency values or interest rates.
The premium paid by a Fund for the purchase of a call or put option is included
in the Fund's "Statement of Assets and Liabilities" as an investment and
subsequently "marked-to-market" to reflect the current market value of the
option. If an option which a Fund has purchased expires on the stipulated
expiration date, the Fund would realize a loss in the amount of the cost of the
option. If a Fund enters into a closing sale transaction, the Fund would realize
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract a
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
A Fund may use futures contracts to manage its exposure to the stock or bond
markets and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to the collection of withholding tax rebate,
income is recorded net of all withholding tax with any rebate recorded when
received. A Fund may trade securities on other than normal settlement terms.
This may increase the risk if the other party to the transaction fails to
deliver and causes the Fund to subsequently invest at less advantageous prices.
(H) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by each Fund on the ex-date. For the
Money Market Fund, dividends are declared daily and
F76
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
paid monthly from net investment income. The Variable Strategic Income Fund,
Variable Global Government Income Fund and Variable U.S. Government Income Fund
declare and pay dividends from net investment income, if any, monthly. The
Variable Growth & Income Fund declares and pays dividends from net investment
income, if any, quarterly. The Variable Latin America Fund, Variable
Telecommunications Fund, Variable New Pacific Fund, Variable Europe Fund,
Variable Emerging Markets Fund, Variable International Fund, Variable America
Fund, Variable Infrastructure Fund, and Variable Natural Resources Fund declare
and pay dividends from net investment income, if any, annually. With respect to
each Fund, dividends from net realized capital gains, if any, are normally
declared and paid annually.
Income and capital gain distributions are determined in accordance with Federal
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investment securities held by the Fund and timing
differences.
(I) TAXES
It is the policy of the Funds to continue to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the intention of the Funds to make
distributions sufficient to avoid imposition of any excise tax under Section
4982 of the Code. Therefore, no provision has been made for Federal taxes on
income, capital gains, or unrealized appreciation of securities held, or for
excise tax on income and capital gains. The following funds have capital loss
carryforwards.
<TABLE>
<CAPTION>
CAPITAL LOSS EXPIRES IN
GT GLOBAL FUNDS CARRYFORWARD YEAR
- ------------------------------------------------------------ ------------ ----------
<S> <C> <C>
Variable Strategic Income................................... $ 190,054 2003
Variable Global Government Income........................... 823,063 2002
Variable U.S. Government Income............................. 10,233 2005
Variable Infrastructure..................................... 203,730 2005
Variable New Pacific........................................ 562,115 2003
18,626 2005
</TABLE>
(J) DEFERRED ORGANIZATIONAL EXPENSES
Costs incurred by GT Global Variable Investment Series and Trust in connection
with their organization, which aggregated $125,333 and $188,000, respectively,
are being amortized on a straight-line basis for a five year period. While the
Sub-adviser has advanced certain of the Companies' organizational costs incurred
to date, the Companies may reimburse the Sub-adviser for the amount of these
advances. In the event that the Sub-adviser redeems any of the initial 2,083.333
shares of each of the Variable New Pacific Fund, Variable Europe Fund and
Variable America Fund; or the initial 25,000 shares of Money Market Fund; or the
initial 1,666.667 shares of each of the Variable Strategic Income Fund, Variable
Global Government Income Fund, Variable U.S. Government Income Fund, Variable
Latin America Fund and the Variable Growth & Income Fund; or the initial 1.000
share of the Variable Telecommunications Fund, within the five year amortization
period, the respective Fund's unamortized organizational expenses allocable to
the shares redeemed will be deducted from the Sub-adviser's redemption proceeds.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Funds' investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) INDEXED SECURITIES
The Funds may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(M) RESTRICTED SECURITIES
Certain of the Funds are permitted to invest in a limited amount of privately
placed restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult. At the end of
the year, restricted securities (excluding 144A issues) are shown at the end of
the Portfolio of Investments for each Fund, if any.
(N) SECURITIES PURCHASED ON A WHEN-ISSUED OR FORWARD COMMITMENT BASIS
A Fund may trade securities on a when-issued or forward commitment basis, with
payment and delivery scheduled for a future date. These transactions are subject
to market fluctuations and are subject to the risk that the value at delivery
may be less than the trade date purchase price. Although the Fund will generally
purchase these securities with the intention of acquiring such securities, they
may sell such securities before the settlement date. These securities, if any,
are identified on the accompanying Portfolio of Investments. The Variable
Strategic Income Fund and the Variable U.S. Government Income Fund have set
aside sufficient cash or liquid high grade debt securities as collateral for
these purchase commitments.
F77
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(O) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value listed below were on loan
to brokers. The loans were secured by cash collateral received by the Fund:
<TABLE>
<CAPTION>
YEAR
ENDED
DECEMBER
31,
DECEMBER 31, 1997 1997
---------------------------- --------
AGGREGATE VALUE CASH FEES
GT GLOBAL ON LOAN COLLATERAL RECEIVED
- ------------------------------------------------------------ --------------- ---------- --------
<S> <C> <C> <C>
Variable Strategic Income Fund.............................. $3,371,001 $3,681,498 $36,222
Variable Global Government Income Fund...................... 576,311 641,875 12,000
Variable U.S. Government Income Fund........................ -- -- --
Variable Latin America Fund................................. 369,503 389,106 7,788
Variable Growth & Income Fund............................... 2,325,612 2,530,994 48,450
Variable Telecommunications Fund............................ 4,645,435 4,851,350 31,993
Variable Emerging Markets Fund.............................. 446,562 484,389 11,778
Variable Infrastructure Fund................................ 420,669 440,240 5,851
Variable Natural Resources Fund............................. 529,754 535,011 5,664
Variable America Fund....................................... 3,351,238 3,396,950 22,847
Variable New Pacific Fund................................... 448,248 502,500 28,835
Variable Europe Fund........................................ 514,800 546,000 24,456
Money Market Fund........................................... -- -- --
Variable International Fund................................. 223,510 238,538 5,349
</TABLE>
For international securities, cash collateral is received by the Funds against
loaned securities in an amount at least equal to 105% of the market value of the
loaned securities at the inception of each loan. This collateral must be
maintained at not less than 103% of the market value of the loaned securities
during the period of the loan. For domestic securities, cash collateral is
received by the Funds against loaned securities in an amount at least equal to
102% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 100% of the market value of
the loaned securities during the period of the loan. Fees received from
securities loaned were used to reduce the Funds' custodian and administrative
expenses.
(P) LINE OF CREDIT
Certain Funds, along with other funds ("GT Funds") advised or administered by
the Sub-adviser, have a line of credit with BankBoston and State Street Bank &
Trust Company. The arrangements with the banks allow the Funds and the GT Funds
to borrow an aggregate maximum amount of $250,000,000. The Funds are limited to
borrowing up to 33 1/3% of the value of the Fund's total assets. There were no
outstanding loans at December 31, 1997.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding),
the weighted average interest rate, and interest expense which are included in
"Other expenses" on the Statement of Operations are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
--------------------------------------------------------------------
WEIGHTED AVERAGE
GT GLOBAL OUTSTANDING DAILY BALANCE INTEREST RATE INTEREST EXPENSE
- ------------------------------------------------------------ ------------------------------ --------------- -------------------
<S> <C> <C> <C>
Variable Strategic Income Fund.............................. $ 1,499,059 6.39% $ 4,524
Variable Global Government Income Fund...................... 290,048 6.30% 5,332
Variable U.S. Government Income Fund........................ 19,600 6.26% 34
Variable Latin America Fund................................. 2,142,519 6.25% 10,037
Variable Growth & Income Fund............................... 329,448 6.36% 1,686
Variable Telecommunications Fund............................ -- -- --
Variable Emerging Markets Fund.............................. 453,975 6.31% 9,701
Variable Infrastructure Fund................................ -- -- --
Variable Natural Resources Fund............................. 931,071 6.36% 4,609
Variable America Fund....................................... 567,407 6.35% 5,904
Variable New Pacific Fund................................... 832,551 6.31% 10,075
Variable Europe Fund........................................ 934,061 6.32% 16,243
Money Market Fund........................................... -- -- --
Variable International Fund................................. -- -- --
</TABLE>
F78
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
2. RELATED PARTIES
[Chancellor LGT] Asset Management, Inc. is the Fund's investment manager and
administrator. The Money Market Fund pays the Sub-adviser an investment
management and administration fee at the annualized rate of 0.50% of that Fund's
average daily net assets. The Variable Strategic Income Fund, Variable Global
Government Income Fund, Variable U.S. Government Income Fund and Variable
America Fund each pays the Sub-adviser an investment management and
administration fee at the annualized rate of 0.75% of the Fund's average daily
net assets. The Variable Growth & Income Fund, Variable Latin America Fund,
Variable Telecommunications Fund, Variable New Pacific Fund, Variable Emerging
Markets Fund, Variable International Fund, Variable Europe Fund, Variable
Infrastructure Fund, and Variable Natural Resources Fund each pays the
Sub-adviser 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.
The Sub-adviser has undertaken to limit the total operating expenses (exclusive
of brokerage commissions, interest, taxes and extraordinary items) of each of
the Variable New Pacific Fund, Variable Europe Fund, Variable Latin America
Fund, Variable Telecommunications Fund, Variable Emerging Markets Fund, Variable
International Fund, Variable Infrastructure Fund, Variable Natural Resources
Fund, and the Variable Growth & Income Fund to 1.25% of their respective average
daily net assets. In addition, the Sub-adviser has undertaken to limit the total
operating expenses (exclusive of brokerage commissions, interest, taxes and
extraordinary items) of each of the Variable Strategic Income Fund, The Variable
Global Government Income Fund, the Variable U.S. Government Income Fund, and the
Variable America Fund to 1.00% of their respective average daily net assets.
Likewise, the Sub-adviser 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 average daily net assets. From time to
time, the Sub-adviser in its sole discretion may waive its fees and/or
voluntarily assume certain Fund expenses.
All general expenses of the Companies and joint expenses of the Funds are
allocated among the Funds on a basis deemed fair and equitable.
GT Global, Inc., ("GT Global") an affiliate of the Sub-adviser, is the Funds'
distributor. GT Global Investor Services, Inc.("GT Services"), an affiliate of
the Sub-adviser and GT Global, is the Funds' transfer agent.
GT Global is the principal underwriter of the Variable Annuity Contracts.
Underwriting commissions retained by GT Global are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
GT GLOBAL DECEMBER 31, 1997
- ------------------------------------------------------------ -----------------
<S> <C>
Variable Strategic Income Fund.............................. $13,549
Variable Global Government Income Fund...................... 3,882
Variable U.S. Government Income Fund........................ 4,354
Variable Latin America Fund................................. 11,573
Variable Growth & Income Fund............................... 21,810
Variable Telecommunications Fund............................ 28,956
Variable Emerging Markets Fund.............................. 14,926
Variable Infrastructure Fund................................ 12,446
Variable Natural Resources Fund............................. 21,834
Variable America Fund....................................... 13,032
Variable New Pacific Fund................................... 16,290
Variable Europe Fund........................................ 14,224
Money Market Fund........................................... 71,614
Variable International Fund................................. 4,428
</TABLE>
The Sub-adviser is the pricing and accounting agent for the Funds. The monthly
fee for these services to the Sub-adviser is a percentage, not to exceed 0.03%
annually, of each of the Funds' average daily net assets. The annual fee rate is
derived by applying 0.03% to the first $5 billion of assets of all registered
mutual funds advised by the Sub-adviser 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 Companies pay each of their Trustees who is not an employee, officer or
director of the Sub-adviser, GT Global or GT Services $5,000 per year.
F79
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
3. PURCHASES AND SALES OF SECURITIES
The following summarizes purchases and sales of investment securities, other
than short-term investments, by Fund, for the year ended December 31, 1997:
PURCHASES AND SALES OF SECURITIES
<TABLE>
<CAPTION>
PURCHASES
------------------------------
GT GLOBAL U.S. GOVERNMENT OTHER ISSUES
- ------------------------------------------------------------ --------------- ------------
<S> <C> <C>
Variable Strategic Income Fund.............................. $6,435,577 $ 41,738,763
Variable Global Government Income Fund...................... 3,328,157 15,724,583
Variable U.S. Government Income Fund........................ 8,249,846 64,860
Variable Latin America Fund................................. -- 42,098,900
Variable Growth & Income Fund............................... 8,233,743 24,158,405
Variable Telecommunications Fund............................ -- 56,320,805
Variable Emerging Markets Fund.............................. -- 41,171,271
Variable Infrastructure Fund................................ -- 5,463,341
Variable Natural Resources Fund............................. -- 54,632,416
Variable America Fund....................................... -- 83,753,841
Variable New Pacific Fund................................... -- 22,967,706
Variable Europe Fund........................................ -- 30,630,552
Money Market Fund........................................... -- --
Variable International Fund................................. -- 5,557,105
</TABLE>
<TABLE>
<CAPTION>
SALES
------------------------------
GT GLOBAL U.S. GOVERNMENT OTHER ISSUES
- ------------------------------------------------------------ --------------- ------------
<S> <C> <C>
Variable Strategic Income Fund.............................. $5,727,377 $ 45,079,434
Variable Global Government Income Fund...................... 3,367,455 16,416,966
Variable U.S. Government Income Fund........................ 6,671,306 851,841
Variable Latin America Fund................................. -- 39,537,437
Variable Growth & Income Fund............................... 4,472,480 19,070,750
Variable Telecommunications Fund............................ -- 65,725,114
Variable Emerging Markets Fund.............................. -- 40,343,287
Variable Infrastructure Fund................................ -- 3,170,949
Variable Natural Resources Fund............................. -- 52,541,044
Variable America Fund....................................... -- 83,403,217
Variable New Pacific Fund................................... -- 29,392,630
Variable Europe Fund........................................ -- 31,082,670
Money Market Fund........................................... -- --
Variable International Fund................................. -- 5,333,436
</TABLE>
The Funds' written options activity for the year ended December 31, 1997, was as
follows:
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
COVERED CALL OPTIONS WRITTEN
<TABLE>
<CAPTION>
UNDERLYING
PRINCIPAL AMOUNT PREMIUMS
----------------- --------
<S> <C> <C>
Options outstanding at December 31, 1996.................... $ -- $ --
Options written............................................. 5,070,000 29,339
Options cancelled in closing purchase transactions.......... (400,000) (2,587 )
Options expired prior to exercise........................... (4,670,000) (26,752 )
Options exercised........................................... -- --
----------------- --------
Options outstanding at December 31, 1997.................... $ -- $ --
----------------- --------
----------------- --------
</TABLE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
COVERED CALL OPTIONS WRITTEN
<TABLE>
<CAPTION>
UNDERLYING
PRINCIPAL AMOUNT PREMIUMS
----------------- --------
<S> <C> <C>
Options outstanding at December 31, 1996.................... $ -- $ --
Options written............................................. 348,000 20,149
Options cancelled in closing purchase transactions.......... -- --
Options expired prior to exercise........................... -- --
Options exercised........................................... (348,000) (20,149 )
----------------- --------
Options outstanding at December 31, 1997.................... $ -- $ --
----------------- --------
----------------- --------
</TABLE>
F80
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------------- --------------------------------
GT GLOBAL VARIABLE STRATEGIC INCOME FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 2,611,339 $ 35,310,968 3,455,994 $ 43,161,383
<S> <C> <C> <C> <C>
Shares issued in connection with reinvestment of
distributions............................................. 151,821 2,041,389 161,635 2,004,763
-------------- --------------- --------------- ---------------
2,763,160 37,352,357 3,617,629 45,166,146
Shares repurchased.......................................... (3,005,617) (40,609,980) (3,384,466) (42,069,061)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... (242,457) $ (3,257,623) 233,163 $ 3,097,085
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 380,383 $ 4,229,682 595,260 $ 6,669,492
Shares issued in connection with reinvestment of
distributions............................................. 55,693 616,309 63,372 706,122
-------------- --------------- --------------- ---------------
436,076 4,845,991 658,632 7,375,614
Shares repurchased.......................................... (606,738) (6,739,965) (787,028) (8,839,632)
-------------- --------------- --------------- ---------------
Net decrease................................................ (170,662) $ (1,893,974) (128,396) $ (1,464,018)
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 498,606 $ 5,752,236 333,844 $ 3,803,016
Shares issued in connection with reinvestment of
distributions............................................. 26,692 304,964 23,060 262,014
-------------- --------------- --------------- ---------------
525,298 6,057,200 356,904 4,065,030
Shares repurchased.......................................... (375,888) (4,324,042) (386,658) (4,430,300)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... 149,410 $ 1,733,158 (29,754) $ (365,270)
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>
GT GLOBAL VARIABLE LATIN AMERICA FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 2,970,336 $ 50,446,691 2,062,574 $ 28,548,855
Shares issued in connection with reinvestment of
distributions............................................. -- -- 45,515 624,926
-------------- --------------- --------------- ---------------
2,970,336 50,446,691 2,108,089 29,173,781
Shares repurchased.......................................... (2,821,639) (48,320,307) (2,151,334) (29,883,182)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... 148,697 $ 2,126,384 (43,245) $ (709,401)
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>
GT GLOBAL VARIABLE GROWTH & INCOME FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 4,454,366 $ 78,690,743 1,910,536 $ 29,111,115
Shares issued in connection with reinvestment of
distributions............................................. 78,960 1,391,332 55,274 839,489
-------------- --------------- --------------- ---------------
4,533,326 80,082,075 1,965,810 29,950,604
Shares repurchased.......................................... (4,032,695) (71,425,393) (1,857,484) (28,213,931)
-------------- --------------- --------------- ---------------
Net increase................................................ 500,631 $ 8,656,682 108,326 $ 1,736,673
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 2,426,702 $ 45,966,546 2,031,581 $ 37,384,916
Shares issued in connection with reinvestment of
distributions............................................. 435,369 7,777,355 354,065 6,443,990
-------------- --------------- --------------- ---------------
2,862,071 53,743,901 2,385,646 43,828,906
Shares repurchased.......................................... (2,644,456) (49,940,160) (1,908,080) (34,595,566)
-------------- --------------- --------------- ---------------
Net increase................................................ 217,615 $ 3,803,741 477,566 $ 9,233,340
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>
GT GLOBAL VARIABLE EMERGING MARKETS FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 4,408,199 $ 64,017,931 2,518,560 $ 32,771,217
Shares issued in connection with reinvestment of
distributions............................................. 90,221 1,368,634 -- --
-------------- --------------- --------------- ---------------
4,498,420 65,386,565 2,518,560 32,771,217
Shares repurchased.......................................... (4,305,787) (63,118,511) (2,109,935) (27,696,344)
-------------- --------------- --------------- ---------------
Net increase................................................ 192,633 $ 2,268,054 408,625 $ 5,074,873
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
</TABLE>
F81
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------------- --------------------------------
GT Global Variable Infrastructure Fund Shares Amount Shares Amount
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 361,007 $ 6,149,550 469,810 $ 7,225,756
Shares issued in connection with reinvestment of
distributions............................................. 28,498 479,059 1,715 26,769
-------------- --------------- --------------- ---------------
389,505 6,628,609 471,525 7,252,525
Shares repurchased.......................................... (222,095) (3,775,850) (224,095) (3,457,346)
-------------- --------------- --------------- ---------------
Net increase................................................ 167,410 $ 2,852,759 247,430 $ 3,795,179
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>
GT GLOBAL VARIABLE NATURAL RESOURCES FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 2,023,682 $ 42,194,979 1,819,670 $ 33,416,057
Shares issued in connection with reinvestment of
distributions............................................. 42,776 762,160 -- --
-------------- --------------- --------------- ---------------
2,066,458 42,957,139 1,819,670 33,416,057
Shares repurchased.......................................... (2,016,632) (41,865,469) (1,140,721) (20,919,006)
-------------- --------------- --------------- ---------------
Net increase................................................ 49,826 $ 1,091,670 678,949 $ 12,497,051
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>
GT GLOBAL VARIABLE AMERICA FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 2,483,444 $ 49,803,360 2,859,324 $ 55,470,879
Shares issued in connection with reinvestment of
distributions............................................. 93,176 1,750,776 303,755 5,480,666
-------------- --------------- --------------- ---------------
2,576,620 51,554,136 3,163,079 60,951,545
Shares repurchased.......................................... (2,660,773) (53,234,901) (2,984,751) (57,915,239)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... (84,153) $ (1,680,765) 178,328 $ 3,036,306
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>
GT GLOBAL VARIABLE NEW PACIFIC FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 11,514,400 $ 181,130,875 10,835,385 $ 176,690,218
Shares issued in connection with reinvestment of
distributions............................................. 17,420 306,408 20,259 329,817
-------------- --------------- --------------- ---------------
11,531,820 181,437,283 10,855,644 177,020,035
Shares repurchased.......................................... (11,774,960) (187,117,722) (10,696,698) (175,737,852)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... (243,140) $ (5,680,439) 158,946 $ 1,282,183
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>
GT GLOBAL VARIABLE EUROPE FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 6,563,342 $ 144,699,282 4,041,258 $ 77,833,163
Shares issued in connection with reinvestment of
distributions............................................. 115,031 2,473,175 7,876 155,793
-------------- --------------- --------------- ---------------
6,678,373 147,172,457 4,049,134 77,988,956
Shares repurchased.......................................... (6,610,990) (146,386,879) (3,846,425) (74,160,899)
-------------- --------------- --------------- ---------------
Net increase................................................ 67,383 $ 785,578 202,709 $ 3,828,057
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>
GT GLOBAL MONEY MARKET FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 523,529,726 $ 523,529,726 316,100,021 $ 316,100,051
Shares issued in connection with reinvestment of
distributions............................................. 988,414 988,414 708,413 708,413
-------------- --------------- --------------- ---------------
524,518,140 524,518,140 316,808,434 316,808,464
Shares repurchased.......................................... (517,347,993) (517,347,993) (311,904,996) (311,904,996)
-------------- --------------- --------------- ---------------
Net increase................................................ 7,170,147 $ 7,170,147 4,903,438 $ 4,903,468
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>
GT GLOBAL VARIABLE INTERNATIONAL FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 2,840,820 $ 35,258,127 804,796 $ 9,121,897
Shares issued in connection with reinvestment of
distributions............................................. 621 7,912 1,276 14,683
-------------- --------------- --------------- ---------------
2,841,441 35,266,039 806,072 9,136,580
Shares repurchased.......................................... (2,776,796) (34,648,323) (737,004) (8,376,359)
-------------- --------------- --------------- ---------------
Net increase................................................ 64,645 $ 617,716 69,068 $ 760,221
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
</TABLE>
F82
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
5. EXPENSE REDUCTIONS
The Sub-adviser has directed certain portfolio trades to brokers who paid a
portion of the Funds' expenses. The Funds' expenses were reduced as follows
under these arrangements:
<TABLE>
<CAPTION>
YEAR ENDED
GT GLOBAL DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------- -----------------
<S> <C>
Variable Strategic Income Fund...................................................................... $ --
Variable Global Government Income Fund.............................................................. --
Variable U.S. Government Income Fund................................................................ --
Variable Latin America Fund......................................................................... 249
Variable Growth & Income Fund....................................................................... 4,036
Variable Telecommunications Fund.................................................................... 3,050
Variable Emerging Markets Fund...................................................................... 6,465
Variable Infrastructure Fund........................................................................ 242
Variable Natural Resources Fund..................................................................... 8,475
Variable America Fund............................................................................... 5,571
Variable New Pacific Fund........................................................................... 24,905
Variable Europe Fund................................................................................ 7,231
Money Market Fund................................................................................... --
Variable International Fund......................................................................... 951
</TABLE>
6. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by a Fund
or Portfolio are defined in the Investment Company Act of 1940 as an affiliated
company. There were no investments in affiliated companies at December 31, 1997.
Transactions during the year with companies that were affiliates for the GT
Global Variable Latin America Fund are as follows:
<TABLE>
<CAPTION>
NET REALIZED
PURCHASES COST SALES PROCEEDS GAIN (LOSS) DIVIDEND INCOME
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Industrias J B Duarte S.A. Preferred........................ $ -- $ 33,192 $ (735,270 ) $ --
</TABLE>
7. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("GT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire GT's Asset
Management Division, including [Chancellor LGT] Asset Management, Inc. AMVESCAP
is the holding company of the A I M and INVESCO asset management businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED)
Pursuant to Section 852 of the Internal Revenue Code, the Funds designate the
following amounts as capital gain dividends for the fiscal year ended December
31, 1997:
<TABLE>
<CAPTION>
CAPITAL GAIN
FUND DIVIDEND
- ------------------------------------------------------------ ------------
<S> <C>
GT Global Variable U.S. Government Income Fund.............. $ 6,894
GT Global Variable Growth & Income Fund..................... 90,528
GT Global Variable Telecommunications Fund.................. 5,278,871
GT Global Variable Emerging Markets Fund.................... 158,163
GT Global Variable Infrastructure Fund...................... 130,229
GT Global Variable Natural Resources Fund................... 24,522
GT Global Variable America Fund............................. 1,541,102
GT Global Variable Europe Fund.............................. 1,883,128
</TABLE>
F83
<PAGE>
GT GLOBAL VARIABLE INVESTMENT TRUST
PART C: OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS -- The following audited financial statements as of
December 31, 1997, and for the fiscal year then ended, for the Funds are
included in the Funds' Statement of Additional Information and are filed
herewith:
-- Reports of Independent Accountants
-- Portfolios of Investments
-- Statements of Assets and Liabilities
-- Statements of Operations
-- Statements of Changes in Net Assets
-- Financial Highlights
-- Notes to Financial Statements
(b) EXHIBITS REQUIRED BY PART C, ITEM 24 OF FORM N-1A.
(1) Registrant's Agreement and Declaration of Trust dated May 7,
1998 -- Filed herewith.
(2) Registrant's By-Laws dated May 7, 1998 -- Filed herewith.
(3) Not Applicable.
(4) Provisions of instruments defining the rights of holders of
Registrant's securities are contained in the Agreement and
Declaration of Trust Articles II, VI, VII, VIII and IX and
By-laws Articles IV, V, VI, VII and VIII included as part of
Exhibits (b)(1) and (2) of this Registration Statement.
(5)(a) Form of Investment Management and Administration Contract --
Filed herewith.
(5)(b) Form of Investment Sub-Advisory and Sub-Administration
Contract -- Filed herewith.
(6) Not Applicable.
(7) Not Applicable.
(8)(a) Custodian Agreement between Registrant and State Street Bank
and Trust Company (2).
(8)(b) Letter Agreement assigning Custodian Agreement -- Filed
herewith.
(9)(a) Transfer Agency Contract between Registrant and GT Global
Investor Services, Inc. (1).
(9)(b) Letter Agreement assigning Transfer Agency Contract -- Filed
herewith.
(9)(c) Form of Fund Accounting and Pricing Agent Agreement -- Filed
herewith.
(10)(a) Opinion and Consent of Counsel -- Filed herewith.
(10)(b) Opinion and Consent of Delaware Counsel -- Filed herewith.
(11) Consent of Coopers & Lybrand L.L.P., Independent Accountants
-- Filed herewith.
(12) Not Applicable.
(13) Not Applicable.
C-1
<PAGE>
<TABLE>
<S> <C>
(14)(a) IRA Application -- Filed herewith.
(14)(b) SEP and SARSEP IRA Adoption Agreement -- Filed herewith.
(14)(c) Profit Sharing/Money Purchase Pension Plan -- Filed
herewith.
(14)(d) 403(b) Plan -- Filed herewith.
(14)(e) SIMPLE IRA Application -- Filed herewith.
(14)(f) Roth IRA Application -- Filed herewith.
(15) Not Applicable.
(16) Schedules of Computation of Performance Quotations relating
to the shares of:
</TABLE>
(i) GT Global Variable Strategic Income Fund (5).
(ii) GT Global Variable Global Government Income Fund (5).
(iii) GT Global Variable U.S. Government Income Fund (5).
(iv) GT Global Variable Latin America Fund (5).
(v) GT Global Variable Growth & Income Fund (5).
(vi) GT Global Variable Telecommunications Fund (5).
(vii) GT Global Variable Emerging Markets Fund (5).
(viii) GT Global Variable Infrastructure Fund (5).
(ix) GT Global Variable Natural Resources Fund (5).
(17) Financial Data Schedules (4).
Other Exhibits:
(a) Power of Attorney for Helge K. Lee and Michael A. Silver for
GT Global Variable Investment Trust, a Delaware business
trust -- Filed herewith.
(b) Power of Attorney for Helge K. Lee and Michael A. Silver for
G.T. Global Variable Investment Trust, a Massachusetts
business trust (3).
- ------------------------
(1) 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.
(2) 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.
(3) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 14 to the Registration Statement on Form N-1A,
filed on January 29, 1998.
(4) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 15 to the Registration Statement on Form N-1A,
filed on March 10, 1998.
(5) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A,
filed on July 31, 1995.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT
None.
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<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of May 7, 1998:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
- -------------------------------------------------------------------------- ----------------
<S> <C>
Shares of Beneficial Interest, no par value, of:
GT Global Variable Latin America Fund................................... 8
GT Global Variable Growth & Income Fund................................. 6
GT Global Variable Strategic Income Fund................................ 5
GT Global Variable Global Government Income Fund........................ 4
GT Global Variable U.S. Government Income Fund.......................... 5
GT Global Variable Telecommunications Fund.............................. 6
GT Global Variable Emerging Markets Fund................................ 5
GT Global Variable Infrastructure Fund.................................. 5
GT Global Variable Natural Resources Fund............................... 7
</TABLE>
ITEM 27. INDEMNIFICATION
The Registrant's Agreement and Declaration of Trust dated May 7, 1998,
provides, among other things, (1) that a Trustee shall not be liable for any
act, omission, or obligation of the Registrant or any Trustee (except for
liability to the Registrant or its shareholders by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the Trustee's
duties); (2) that the Trustees and Officers shall be indemnified by the
Registrant to the fullest extent permitted by the Delaware Business Trust Act
and other applicable law; and (3) that the shareholders and former shareholders
of the Registrant shall be held harmless by the Registrant (or applicable
portfolio or class) from personal liability arising from their status as such,
and shall be indemnified by the Registrant (or applicable portfolio or class)
against all loss and expense arising from such personal liability in accordance
with the Registrant's By-Laws and applicable law.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER AND SUB-ADVISER
See the material under the heading "Management" included in Part A
(Prospectus) of this Amendment and the material appearing under the headings
"Trustees and Officers" and "Management" included in Part B (Statement of
Additional Information) of this Amendment. Information as to the Directors and
Officers of A I M Advisors, Inc. and INVESCO (NY), Inc. is included in Schedule
A and Schedule D of Part I of each entity's Form ADV (File No. 801-12313 and
File No. 801-10254, respectively), filed with the Securities and Exchange
Commission, which are incorporated herein by reference thereto.
ITEM 29. PRINCIPAL UNDERWRITER
(a) GT Global, Inc. is also the principal underwriter for the following
other investment company: GT Global Variable Investment Series (which includes
five funds: GT Global Variable New Pacific Fund, GT Global Variable Europe Fund,
GT Global Variable America Fund, GT Global Variable International Fund and GT
Global Money Market Fund).
(b) Directors and Officers of GT Global, Inc.
Unless otherwise indicated, the business address of each person listed is 50
California Street, 27th Floor, 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 Directors
Board and President
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Raymond R. Cunningham Senior Vice President -- Director None
of Sales and Director
Richard W. Healey Senior Vice President -- Director None
of Marketing and Director
David P. Hess Secretary and Director of San Assistant Secretary
Francisco Compliance
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 Gardens, 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
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Donna B. Abrahamson Vice President -- Account None
Management
Jon Burke Vice President None
31 Darlene Drive
Southboro, MA 01772
Phil Christopher Vice President None
3621 59th Avenue, SW
Seattle, WA 98116
Anthony DiBacco Vice President None
30585 Via Lindosa
Laguna Niguel, CA 92677
Stephen Duffy Vice President None
1120 Gables Drive
Atlanta, GA 30319
Glen R. Farinacci Vice President None
86 University Place
Staten Island, NY 10301
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 Las 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 sub-adviser, INVESCO (NY), 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, CA 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, MA 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, GT Global Variable Investment
Trust, a Delaware business trust, hereby certifies that it meets all of the
requirements for effectiveness of this Amendment pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Post-Effective Amendment to
this Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of San Francisco, and the State of
California, on the 28th day of May, 1998.
GT GLOBAL VARIABLE INVESTMENT TRUST
By: William J. Guilfoyle*
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment has been signed below by the following persons in the
capacities indicated on the 28th day of May, 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
*By: /s/ MICHAEL A. SILVER
-----------------------------------
Michael A. Silver
Attorney-in-Fact, pursuant to
Power of Attorney filed herewith
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, G.T. Global Variable Investment
Trust, a Massachusetts business trust, hereby certifies that it meets all of the
requirements for effectiveness of this Amendment pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Post-Effective Amendment to
this Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of San Francisco, and State of California,
on the 28th day of May, 1998.
G.T. GLOBAL VARIABLE INVESTMENT TRUST
By: William J. Guilfoyle*
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment has been signed below by the following persons in the
capacities indicated on the 28th day of May, 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 previously filed
C-8
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
OF
GT GLOBAL VARIABLE INVESTMENT TRUST
WHEREAS, THIS AGREEMENT AND DECLARATION OF TRUST is made and entered into
as of May 7, 1998, among William J. Guilfoyle, C. Derek Anderson, Frank S.
Bayley, Arthur C. Patterson, and Ruth H. Quigley, as Trustees, and each person
who becomes a Shareholder in accordance with the terms hereinafter set forth.
WHEREAS, the parties hereto desire to create a business trust pursuant to
the Delaware Act for the investment and reinvestment of funds contributed
thereto;
NOW, THEREFORE, the Trustees hereby direct that a Certificate of Trust be
filed with the Office of the Secretary of State of Delaware and do hereby
declare that all money and property contributed to the trust hereunder shall be
held and managed in trust under this Agreement for the benefit of the
Shareholders as herein set forth below.
ARTICLE I
NAME, DEFINITIONS, PURPOSE AND CERTIFICATE OF TRUST
Section 1.1. NAME. The name of the business trust created hereby is "GT
Global Variable Investment Trust," and the Trustees may transact the Trust's
affairs in that name. The Trust shall constitute a Delaware business trust in
accordance with the Delaware Act.
Section 1.2. DEFINITIONS. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) "Affiliated Person," "Company," "Person," and "Principal Underwriter"
shall have the meanings given them in the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Commission or any
rules or regulations adopted or interpretive releases of the
Commission thereunder. The term "Commission" shall have the meaning
given it in the 1940 Act;
(b) "Agreement" means this Agreement and Declaration of Trust, as it may
be amended from time to time;
(c) "Bylaws" means the Bylaws referred to in Article IV, Section 4.1(e)
hereof, as from time to time amended;
<PAGE>
(d) "Class" means a portion of Shares of a Portfolio of the Trust
established in accordance with the provisions of Article II,
Section 2.3(b) hereof;
(e) "Covered Person" means every person who is, or has been, a Trustee or
an officer or employee of the Trust;
(f) The "Delaware Act" refers to the Delaware Business Trust Act, 12 Del.
C.Section 3801 et seq., as such Act may be amended from time to time;
(g) "Majority Shareholder Vote" means "the vote of a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the
Trust, Portfolio, or Class, as applicable;
(h) The "1940 Act" refers to the Investment Company Act of 1940, as
amended from time to time;
(i) "Outstanding Shares" means Shares shown on the books of the Trust or
its transfer agent as then issued and outstanding, but does not
include Shares that have been repurchased or redeemed by the Trust;
(j) "Portfolio" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.3(a) hereof;
(k) "Shareholder" means a record owner of Outstanding Shares of the Trust;
(l) "Shares" means, as to a Portfolio or any Class thereof, the equal
proportionate transferable units of beneficial interest into which the
beneficial interest of such Portfolio of the Trust or such Class
thereof shall be divided and may include fractions of Shares as well
as whole Shares;
(m) The "Trust" means GT Global Variable Investment Trust, the Delaware
business trust established hereby, and reference to the Trust, when
applicable to one or more Portfolios, shall refer to each such
Portfolio;
(n) The "Trustees" means the Persons who have signed this Agreement as
trustees so long as they shall continue to serve as trustees of the
Trust in accordance with the terms hereof, and all other Persons who
may from time to time be duly appointed as Trustee in accordance with
the provisions of Article III, Section 3.4 hereof or elected as
Trustee in accordance with the provisions of Article III, Section 3.6
hereof, and reference herein to a Trustee or to the Trustees shall
refer to such Persons in their capacity as Trustees hereunder; and
(o) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account
of the Trust or any Portfolio, or by the Trustees on behalf of the
Trust or any Portfolio.
2
<PAGE>
Section 1.3. PURPOSE. The purpose of the Trust is to conduct, operate and
carry on the business of a management investment company registered under the
1940 Act through one or more Portfolios investing primarily in securities and to
carry on such other business as the Trustees may from time to time determine
pursuant to their authority under this Agreement.
Section 1.4. CERTIFICATE OF TRUST. Immediately upon the execution of this
Agreement, the Trustees shall file a Certificate of Trust with respect to the
Trust in the Office of the Secretary of State of the State of Delaware pursuant
to the Delaware Act.
ARTICLE II
BENEFICIAL INTEREST
Section 2.1. SHARES OF BENEFICIAL INTEREST. The beneficial interest in
the Trust shall be divided into an unlimited number of Shares, with par value of
$0.01 per Share. The Trustees may, from time to time, (a) authorize the
division of the Shares into one or more series, each of which constitutes a
Portfolio, in accordance with Article II, Section 2.3(a) hereof, and (b) may
further authorize the division of the Shares of any Portfolio into one or more
separate and distinct Classes, in accordance with Article II, Section 2.3(b)
hereof. All Shares issued hereunder, including without limitation, Shares
issued in connection with a dividend or other distribution in Shares or a split
or reverse split of Shares, shall be fully paid and nonassessable.
Section 2.2. ISSUANCE OF SHARES. The Trustees in their discretion may,
from time to time, without vote of the Shareholders, issue Shares, in addition
to the then issued and outstanding Shares and Shares held in the treasury, to
such party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with,
the assumption of liabilities) and businesses. In connection with any issuance
of Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares into
a greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or
integral multiples thereof.
Section 2.3. ESTABLISHMENT OF PORTFOLIOS AND CLASSES. (a) The Trust
shall consist of one or more separate and distinct Portfolios, each with an
unlimited number of Shares unless otherwise specified. The Trustees hereby
establish and designate the Portfolios listed on Schedule A attached hereto and
made a part hereof ("Schedule A"). Each additional Portfolio shall be
established by the adoption of a resolution by the Trustees and shall be
effective upon the date stated therein (or, if no such date is stated, upon the
date of such adoption). The Shares of each Portfolio shall have the relative
rights and preferences provided for herein and such rights and preferences as
may be designated by the Trustees. The Trust shall maintain separate and
distinct records for each Portfolio and shall hold and account for the assets
belonging thereto separately from the other Trust Property and the assets
belonging to any other Portfolio. Each Share of a Portfolio shall represent an
equal
3
<PAGE>
beneficial interest in the net assets belonging to that Portfolio, except to the
extent of expenses separately allocated to Classes thereof as permitted herein.
A Portfolio may have exclusive voting rights with respect to matters affecting
only that Portfolio.
(b) The Trustees may divide the Shares of any Portfolio into two or more
Classes, each with an unlimited number of Shares unless otherwise specified.
Each Class so established and designated shall represent a Proportionate
Interest (as defined in Article II, Section 2.3.2(c) hereof) in the net assets
belonging to that Portfolio and shall have identical voting, dividend,
liquidation, and other rights and be subject to the same terms and conditions,
except that (1) expenses, costs, charges, and reserves allocated to a Class in
accordance with Article II, Section 2.3.2(d) hereof may be borne solely by that
Class, (2) dividends declared and payable to a Class pursuant to Article VII,
Section 7.1, shall reflect the items separately allocated thereto pursuant to
the preceding clause, (3) each Class may have separate rights to convert to
another Class, exchange rights, and similar rights, each as determined by the
Trustees, and (4) each Class may have exclusive voting rights with respect to
matters affecting only that Class. The Trustees hereby establish for each
Portfolio listed on Schedule A the Classes listed thereon. Each additional
Class for any or all Portfolios shall be established by the adoption of a
resolution by the Trustees and shall be effective upon the date stated therein
(or, if no such date is stated, upon the date of such adoption).
Section 2.3.1. Subject to Article VI, Section 6.1 of this Agreement, the
Trustees shall have full power and authority, in their sole discretion without
obtaining any prior authorization or vote of the Shareholders of any Portfolio,
or Class thereof, to establish and designate and to change in any manner any
Portfolio of Shares, or any Class or Classes thereof; to fix such preferences,
voting powers, rights, and privileges of any Portfolio, or Classes thereof, as
the Trustees may from time to time determine (but the Trustees may not change
the preferences, voting powers, rights, and privileges of Outstanding Shares in
a manner materially adverse to the Shareholders of such Shares without the prior
approval of the affected Shareholders); to divide or combine the Shares of any
Portfolio, or Classes thereof, into a greater or lesser number; to classify or
reclassify any issued Shares of any Portfolio, or Classes thereof, into one or
more Portfolios or Classes of Shares of a Portfolio; and to take such other
action with respect to the Shares as the Trustees may deem desirable. A
Portfolio and any Class thereof may issue any number of Shares but need not
issue any shares. At any time that there are no Outstanding Shares of any
particular Portfolio or Class previously established and designated, the
Trustees may abolish that Portfolio or Class and the establishment and
designation thereof.
Section 2.3.2. Unless the establishing resolution or any other resolution
adopted pursuant to this Section 2.3 otherwise provides, Shares of each
Portfolio or Class thereof established hereunder shall have the following
relative rights and preferences:
(a) Shareholders shall have no preemptive or other right to subscribe to
any additional Shares or other securities issued by the Trust or the
Trustees, whether of the same or other Portfolio (or Class).
(b) All consideration received by the Trust for the issue or sale of
Shares of a particular Portfolio, together with all assets in which
such consideration is invested or
4
<PAGE>
reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange, or liquidation
of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
be held and accounted for separately from the other assets of the
Trust and of every other Portfolio and may be referred to herein as
"assets belonging to" that Portfolio. The assets belonging to a
particular Portfolio shall belong to that Portfolio for all purposes,
and to no other Portfolio, subject only to the rights of creditors of
that Portfolio. In addition, any assets, income, earnings, profits, or
funds, or payments and proceeds with respect thereto, which are not
readily identifiable as belonging to any particular Portfolio shall be
allocated by the Trustees between and among one or more of the
Portfolios for all purposes and such assets, income, earnings,
profits, or funds, or payments and proceeds with respect thereto,
shall be assets belonging to that Portfolio.
(c) Each Class of a Portfolio shall have a proportionate undivided
interest (as determined by or at the direction of, or pursuant to
authority granted by, the Trustees, consistent with industry practice)
("Proportionate Interest") in the net assets belonging to that
Portfolio. References herein to assets, expenses, charges, costs, and
reserves "allocable" or "allocated" to a particular Class of a
Portfolio shall mean the aggregate amount of such item(s) of the
Portfolio multiplied by the Class's Proportionate Interest.
(d) A particular Portfolio shall be charged with the liabilities of that
Portfolio, and all expenses, costs, charges and reserves attributable
to any particular Portfolio shall be borne by such Portfolio; provided
that the Trustees may, in their sole discretion, allocate or authorize
the allocation of particular expenses, costs, charges and/or reserves
of a Portfolio to less than all the Classes thereof, in which event
payment or other discharge of the expense(s), cost(s), charge(s)
and/or reserve(s) allocated to a particular Class shall be chargeable
first against the assets allocable to that Class and shall be
chargeable against the assets allocable to the other Classes of that
Portfolio only to the extent the amount of the payment or other
discharge exceeds such particular Class's allocable assets. Any
general liabilities, expenses, costs, charges or reserves of the Trust
(or any Portfolio) that are not readily identifiable as chargeable to
or bearable by any particular Portfolio (or any particular Class)
shall be allocated and charged by the Trustees between or among any
one or more of the Portfolios (or Classes) in such manner as the
Trustees in their sole discretion deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of
all Portfolios (or Classes) for all purposes. Without limitation of
the foregoing provisions of this Subsection 2.3.2, the debts,
liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to a particular Portfolio shall be
enforceable against the assets of such Portfolio only, and not against
the assets of the Trust generally or the assets belonging to any other
Portfolio. Notice of this contractual limitation on inter-Portfolio
liabilities shall be set forth in the Certificate of Trust described
in Article I, Section 1.4 of this Agreement (whether originally or by
amendment), and upon the giving of such
5
<PAGE>
notice in the Certificate of Trust, the statutory provisions of
Section 3804 of the Delaware Act relating to limitations on
inter-Portfolio liabilities (and the statutory effect under
Section 3804 of setting forth such notice in the Certificate of Trust)
shall become applicable to the Trust and each Portfolio.
All references to Shares in this Agreement shall be deemed to be shares of
any or all Portfolios, or Classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Portfolio of
the Trust, and each Class thereof, except as the context otherwise requires.
Section 2.4. INVESTMENT IN THE TRUST. Investments may be accepted by the
Trust from such Persons, at such times, on such terms, and for such
consideration, which may consist of cash or tangible or intangible property or a
combination thereof, as the Trustees from time to time may authorize. At the
Trustees' sole discretion, such investments, subject to applicable law, may be
in the form of cash or securities in which the affected Portfolio is authorized
to invest, valued as provided in applicable law. Each such investment shall be
credited to the individual Shareholder's account in the form of full and
fractional Shares of the Trust, in such Portfolio (or Class) as the Shareholder
shall select.
Section 2.5. PERSONAL LIABILITY OF SHAREHOLDERS. As provided by
applicable law, no Shareholder of the Trust shall be personally liable for the
debts, liabilities, obligations, and expenses incurred by, contracted for, or
otherwise existing with respect to, the Trust or any Portfolio (or Class)
thereof. Neither the Trust nor the Trustees, nor any officer, employee, or
agent of the Trust shall have any power to bind personally any Shareholder or,
except as provided herein or by applicable law, to call upon any Shareholder for
the payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay by way of subscription for
any Shares or otherwise. The Shareholders shall be entitled, to the fullest
extent permitted by applicable law, to the same limitation of personal liability
as is extended under the Delaware General Corporation Law to stockholders of
private corporations for profit. Every note, bond, contract, or other
undertaking issued by or on behalf of the Trust or the Trustees relating to the
Trust or to any Portfolio shall include a recitation limiting the obligation
represented thereby to the Trust and its assets or to one or more Portfolios and
the assets belonging thereto (but the omission of such a recitation shall not
operate to bind any Shareholder or Trustee of the Trust).
Section 2.6. ASSENT TO AGREEMENT. Every Shareholder, by virtue of having
purchased a Share, shall be held to have expressly assented to, and agreed to be
bound by, the terms hereof. The death of a Shareholder during the continuance
of the Trust shall not operate to terminate the same nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to
rights of said decedent under this Trust.
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ARTICLE III
THE TRUSTEES
Section 3.1. MANAGEMENT OF THE TRUST. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Agreement. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any and all foreign jurisdictions and to do
all such other things and execute all such instruments as they deem necessary,
proper or desirable in order to promote the interests of the Trust although such
things are not herein specifically mentioned. Any determination as to what is in
the interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of this Agreement, the presumption
shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Agreement shall not be
construed as limiting the aforesaid power. The powers of the Trustees may be
exercised without order of or resort to any court or other authority.
Section 3.2. INITIAL TRUSTEES. The initial Trustees shall be the persons
named herein.
Section 3.3. TERMS OF OFFICE OF TRUSTEES. The Trustees shall hold office
during the lifetime of this Trust, and until its termination as herein provided;
except (a) that any Trustee may resign his trusteeship or may retire by written
instrument signed by him and delivered to the other Trustees, which shall take
effect upon such delivery or upon such later date as is specified therein; (b)
that any Trustee may be removed at any time by written instrument, signed by at
least two-thirds of the number of Trustees prior to such removal, specifying the
date when such removal shall become effective; (c) that any Trustee who has
died, become physically or mentally incapacitated by reason of disease or
otherwise, or is otherwise unable to serve, may be retired by written instrument
signed by a majority of the other Trustees, specifying the date of his
retirement; and (d) that a Trustee may be removed at any meeting of the
Shareholders of the Trust by a vote of the Shareholders owning at least
two-thirds of the Outstanding Shares.
Section 3.4. VACANCIES AND APPOINTMENT OF TRUSTEES. A vacancy shall occur
in case of the declination to serve, death, resignation, retirement or removal
of a Trustee, or a Trustee is otherwise unable to serve, or an increase in the
number of Trustees. Whenever a vacancy in the Board of Trustees shall occur,
until such vacancy is filled, the other Trustees shall have all the powers
hereunder and the certification of the other Trustees of such vacancy shall be
conclusive. In the case of an existing vacancy, the remaining Trustees may fill
such vacancy by appointment of such other person as they in their discretion
shall see fit, or may leave such vacancy unfilled or may reduce the number of
Trustees to not less than two (2) Trustees. Such appointment shall be evidenced
by a written instrument signed by a majority of the Trustees in office or by
resolution of the Trustees,
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duly adopted, which shall be recorded in the minutes of a meeting of the
Trustees, whereupon the appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation, or
removal of a Trustee or an increase in number of Trustees effective at a later
date, provided that said appointment shall become effective only at the time or
after the expected vacancy occurs. As soon as any Trustee appointed pursuant to
this Section 3.4 shall have accepted this appointment in writing and agreed in
writing to be bound by the terms of the Agreement, the Trust estate shall vest
in the new Trustee or Trustees, together with the continuing Trustees, without
any further act or conveyance, and he shall be deemed a Trustee hereunder.
Section 3.5. TEMPORARY ABSENCE OF TRUSTEE. Any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees, provided that in no case shall less than
two Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
Section 3.6. NUMBER OF TRUSTEES. The number of Trustees shall initially
be five (5), and thereafter shall be such number as shall be fixed from time to
time by a majority of the Trustees; provided, however, that the number of
Trustees shall in no event be less than two (2) nor more than twelve (12). The
Shareholders shall elect the Trustees (other than the initial Trustees) on such
dates as the Trustees may fix from time to time.
Section 3.7. EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE. The
declination to serve, death, resignation, retirement, removal, incapacity, or
inability of the Trustees, or any one of them, shall not operate to terminate
the Trust or to revoke any existing agency created pursuant to the terms of this
Trust Agreement.
Section 3.8. OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust
and of each Portfolio thereof shall be held separate and apart from any assets
now or hereafter held in any capacity other than as Trustee hereunder by the
Trustees or any successor Trustees. Legal title in all of the assets of the
Trust and the right to conduct any business shall at all times be considered as
vested in the Trustees on behalf of the Trust, except that the Trustees may
cause legal title to any Trust Property to be held by, or in the name of the
Trust, or in the name of any Person as nominee. No Shareholder shall be deemed
to have a severable ownership in any individual asset of the Trust, or belonging
to any Portfolio, or allocable to any Class thereof, or any right of partition
or possession thereof, but each Shareholder shall have, except as otherwise
provided for herein, a proportionate undivided beneficial interest in the Trust
or in the assets belonging to the Portfolio (or allocable to the Class) in which
the Shareholder holds Shares. The Shares shall be personal property giving only
the rights specifically set forth in this Agreement or the Delaware Act.
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ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.1. POWERS. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. Without
limiting the foregoing and subject to any applicable limitation in this
Agreement or the Bylaws of the Trust, the Trustees shall have power and
authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited
by any present or future law or custom in regard to investments by
Trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate,
write options on, and lease any or all of the assets of the Trust;
(b) To operate as, and to carry on the business of, an investment company,
and exercise all the powers necessary and appropriate to the conduct
of such operations;
(c) To borrow money and in this connection issue notes or other evidence
of indebtedness; to secure borrowings by mortgaging, pledging, or
otherwise subjecting as security the Trust Property; to endorse,
guarantee, or undertake the performance of an obligation or engagement
of any other Person and to lend Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereafter provided for
or by the Trust itself, or both, or otherwise pursuant to a plan of
distribution of any kind;
(e) To adopt Bylaws not inconsistent with this Agreement providing for the
conduct of the business of the Trust and to amend and repeal them to
the extent that they do not reserve such right to the shareholders;
such Bylaws shall be deemed incorporated and included in this
Agreement;
(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;
(g) To employ one or more banks, trust companies or companies that are
members of a national securities exchange, or such other domestic or
foreign entities as custodians of any assets of the Trust subject to
any conditions set forth in this Agreement or in the Bylaws;
(h) To retain one or more transfer agents or Shareholder servicing agents,
or both;
(i) To set record dates in the manner provided herein or in the Bylaws;
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(j) To delegate such authority as they consider desirable to any officers
of the Trust and to any investment adviser, manager, administrator,
custodian, underwriter, or other agent or independent contractor;
(k) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article VI, Section 6.1 hereof;
(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies and powers of attorney to such person or persons as
the Trustees shall deem proper, granting to such person or persons
such power and discretion with relation to securities or property as
the Trustee shall deem proper;
(m) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any trust,
whether in bearer, book entry, unregistered, or other negotiable form;
or either in the name of the Trust or of a Portfolio or of a custodian
or a nominee or nominees, subject in either case to proper safeguards
according to the usual practice of Delaware business trusts or
investment companies;
(o) To establish separate and distinct Portfolios with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish
Classes of such Portfolios having relative rights, powers, and duties
as they may provide consistent with applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities, and expenses of the Trust to a
particular Portfolio or to apportion the same between or among two or
more Portfolios, provided that any liabilities or expenses incurred by
a particular Portfolio shall be payable solely out of the assets
belonging to that Portfolio as provided for in Article II hereof;
(q) To consent to or participate in any plan for the reorganization,
consolidation, or merger of any corporation or concern, any security
of which is held in the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or
concern, and to pay calls or subscriptions with respect to any
security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not
limited to, claims for taxes;
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(s) To declare and pay dividends and make distributions of income and of
capital gains and capital to Shareholders in the manner hereinafter
provided;
(t) To establish, from time to time, a minimum investment for Shareholders
in the Trust or in one or more Portfolios or Classes, and to require
the redemption of the Shares of any Shareholder whose investment is
less than such minimum upon giving notice to such Shareholder;
(u) Subject to the requirements of the 1940 Act, to establish one or more
committees, to delegate any of the powers of the Trustees to said
committees, and to adopt a committee charter providing for such
responsibilities, membership (including Trustees, officers, or other
agents of the Trust therein) and any other characteristics of said
committees as the Trustees may deem proper. Notwithstanding the
provisions of this Article IV, and in addition to such provisions or
any other provision of this Agreement or of the Bylaws, the Trustees
may by resolution appoint a committee consisting of less than the
whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the
acts of such committee were the acts of all the Trustees then in
office, with respect to the institution, prosecution, dismissal,
settlement, review, or investigation of any action, suit, or
proceeding which shall be pending or threatened to be brought before
any court, administrative agency, or other adjudicatory body;
(v) To interpret the investment policies, practices or limitations of any
Portfolios;
(w) To establish a registered office and have a registered agent in the
State of Delaware; and
(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary,
suitable, or proper for the accomplishment of any purpose or the
attainment of any object or the furtherance of any power hereinbefore
set forth, either alone or in association with others, and to do every
other act or thing incidental or appurtenant to or growing out of or
connected with the aforesaid business or purposes, objects, or powers.
The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees. Any action by one or
more of the Trustees in their capacity as such hereunder shall be deemed an
action on behalf of the Trust or the applicable Portfolio, and not an action in
an individual capacity.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.
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No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the application
of any payments made or property transferred to the Trustees or upon their
order.
Section 4.2. ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, and otherwise deal in Shares and, subject to the
provisions set forth in Articles II and VII, to apply to any such repurchase,
redemption, retirement, cancellation, or acquisition of Shares any funds or
property of the Trust, or any assets belonging to the particular Portfolio or
any assets allocable to the particular Class, with respect to which such Shares
are issued.
Section 4.3. ACTION BY THE TRUSTEES. The Trustees shall act by majority
vote of those present at a meeting duly called (including a meeting by
telephonic or other electronic means, unless the 1940 Act requires that a
particular action be taken only at a meeting of the Trustees in person) at which
a quorum is present or by unanimous written consent of the Trustees (or by
written consent of a majority of the Trustees if the President of the Trust
determines that such exceptional circumstances exist, and are of such urgency,
as to make unanimous written consent impossible or impractical, which
determination shall be conclusive and binding on all Trustees and not otherwise
subject to challenge) without a meeting. A majority of the Trustees shall
constitute a quorum at any meeting. Meetings of the Trustees may be called
orally or in writing by the President of the Trust or by any two Trustees.
Notice of the time, date, and place of all meetings of the Trustees shall be
given to each Trustee by telephone, facsimile, electronic-mail, or other
electronic mechanism sent to his or her home or business address at least
twenty-four hours in advance of the meeting or in person at another meeting of
the Trustees or by written notice mailed to his or her home or business address
at least seventy-two hours in advance of the meeting. Notice need not be given
to any Trustee who attends the meeting without objecting to the lack of notice
or who signs a waiver of notice either before or after the meeting. Subject to
the requirements of the 1940 Act, the Trustees by majority vote may delegate to
any Trustee or Trustees authority to approve particular matters or take
particular actions on behalf of the Trust. Any written consent or waiver may be
provided and delivered to the Trust by any means by which notice may be given to
a Trustee.
Section 4.4. PRINCIPAL TRANSACTIONS. The Trustees may, on behalf of the
Trust, buy any securities from or sell any securities to, or lend any assets of
the Trust to, any Trustee or officer of the Trust or any firm of which any such
Trustee or officer is a member acting as principal, or have any such dealings
with any investment adviser, distributor, or transfer agent for the Trust or
with any Affiliated Person of such Person; and the Trust may employ any such
Person, or firm or Company in which such Person is an Affiliated Person, as
broker, legal counsel, registrar, investment adviser, distributor,
administrator, transfer agent, dividend disbursing agent, custodian, or in any
capacity upon customary terms, subject in all cases to applicable laws, rules,
and regulations and orders of regulatory authorities.
Section 4.5. PAYMENT OF EXPENSES BY THE TRUST. The Trustees are
authorized to pay or cause to be paid out of the principal or income of the
Trust or any Portfolio, or partly out of the principal and partly out of income,
and to charge or allocate to, between or among such one or more of the
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Portfolios (or Classes), as they deem fair, all expenses, fees, charges, taxes,
and liabilities incurred or arising in connection with the Trust or Portfolio
(or Class), or in connection with the management thereof, including, but not
limited, to the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, investment adviser and manager,
administrator, principal underwriter, auditors, counsel, custodian, transfer
agent, Shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur.
Section 4.6. TRUSTEE COMPENSATION. The Trustees as such shall be entitled
to reasonable compensation from the Trust. They may fix the amount of their
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, administrative, legal, accounting, investment
banking, underwriting, brokerage, or investment dealer or other services and the
payment for the same by the Trust.
ARTICLE V
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND
TRANSFER AGENT
Section 5.1. INVESTMENT ADVISER. Subject to any vote of the Shareholders
pursuant to Article VI, Section 6.1(3) that is required by the 1940 Act, the
Trustees may in their discretion, from time to time, enter into an investment
advisory or management contract or contracts with respect to the Trust or any
Portfolio whereby the other party or parties to such contract or contracts shall
undertake to furnish the Trustees with such management, investment advisory,
statistical, and research facilities and services and such other facilities and
services, if any, and all upon such terms and conditions, as the Trustees may in
their discretion determine.
The Trustees may authorize the investment adviser to employ, from time to
time, one or more sub-advisers to perform such of the acts and services of the
investment adviser, and upon such terms and conditions, as may be agreed upon
among the Trustees, the investment adviser, and the sub-adviser. Any references
in this Agreement to the investment adviser shall be deemed to include such
sub-advisers, unless the context otherwise requires.
Section 5.2. OTHER SERVICE CONTRACTS. The Trustees may authorize the
engagement of a principal underwriter, transfer agent, administrator, custodian,
and similar service providers.
Section 5.3. PARTIES TO CONTRACT. Any contract of the character described
in Sections 5.1 and 5.2 of this Article V may be entered into with any
corporation, firm, partnership, trust, or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract.
Section 5.4. MISCELLANEOUS. The fact that (i) any of the Shareholders,
Trustees, or officers of the Trust is a shareholder, director, officer, partner,
trustee, employee, manager, adviser, principal underwriter or distributor, or
agent of or for any Company or of or for any parent or affiliate of any Company,
with which an advisory or administration contract, or principal
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underwriter's or distributor's contract, or transfer, shareholder servicing,
custodian, or other agency contract may have been or may hereafter be made, or
that any such Company, or any parent or affiliate thereof, is a Shareholder or
has an interest in the Trust, or that (ii) any Company with which an advisory or
administration contract or principal underwriter's or distributor's contract, or
transfer, shareholder servicing, custodian, or other agency contract may have
been or may hereafter be made also has an advisory or administration contract,
or principal underwriter's or distributor's contract, or transfer, shareholder
servicing, custodian, or other agency contract with one or more other companies,
or has other business or interests shall not affect the validity of any such
contract or disqualify any Shareholder, Trustee, or officer of the Trust from
voting upon or executing the same or create any liability or accountability to
the Trust or its Shareholders.
ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETING
Section 6.1. VOTING POWERS. The Shareholders shall have power to vote
only with respect to (1) the election of Trustees as provided in Article III,
Section 3.6, (2) the removal of a Trustee as provided in Article III,
Section 3.3(d), (3) any investment advisory contract to the extent required by
the 1940 Act, (4) termination of the Trust or a Portfolio or Class thereof as
provided in Article IX, Section 9.3, (5) amendment of this Agreement only as
provided in Article IX, Section 9.7, (6) the sale of all or substantially all
the assets of the Trust or belonging to any Portfolio, unless the primary
purpose of such sale is to change the Trust's domicile or form of organization
or form of business trust; (7) the merger or consolidation of the Trust or any
Portfolio with and into another Company or a series or portfolio thereof, unless
(A) the primary purpose of such merger or consolidation is to change the Trust's
domicile or form of organization or form of business trust, or (B) after giving
effect to such merger or consolidation, based on the number of Outstanding
Shares as of a date selected by the Trustees, the Shareholders of the Trust or
such Portfolio will have a majority of the outstanding shares of the surviving
Company or series or portfolio thereof, as the case may be; and (8) such
additional matters relating to the Trust as may be required by law or as the
Trustees may consider desirable.
Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may make any action required or permitted by law, this
Agreement or any of the Bylaws of the Trust to be taken by Shareholders.
On any matter submitted to a vote of the Shareholders, all Shares shall be
voted together, except when required by applicable law or when the Trustees have
determined that the matter affects the interests of one or more Portfolios (or
Classes), then only the Shareholders of all such Portfolios (or Classes) shall
be entitled to vote thereon. Each whole Share shall be entitled to one vote as
to any matter on which it is entitled to vote, and each fractional Share shall
be entitled to a proportionate fractional vote. The vote necessary to approve
any such matter shall be set forth in this Agreement or in the Bylaws.
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ARTICLE VII
DISTRIBUTIONS AND REDEMPTIONS
Section 7.1. DISTRIBUTIONS. The Trustees may from time to time declare
and pay dividends and make other distributions with respect to any Portfolio, or
Class thereof, which may be from income, capital gains, or capital. The amount
of such dividends or distributions and the payment of them and whether they are
in cash or any other Trust Property shall be wholly in the discretion of the
Trustees. Dividends and other distributions may be paid pursuant to a standing
resolution adopted once or more often as the Trustees determine. All dividends
and other distributions on Shares of a particular Portfolio or Class shall be
distributed pro rata to the Shareholders of that Portfolio or Class, as the case
may be, in proportion to the number of Shares of that Portfolio or Class they
held on the record date established for such payment, provided that such
dividends and other distributions on Shares of a Class shall appropriately
reflect expenses allocated to that Class. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plans, cash distribution payout plans,
or similar plans as the Trustees deem appropriate.
Section 7.2. REDEMPTIONS. Any holder of record of Shares of a particular
Portfolio, or Class thereof, shall have the right to require the Trust to redeem
his Shares, or any portion thereof, subject to such terms and conditions as are
set forth in the Bylaws or are prescribed by the Trustees.
Section 7.3. REDEMPTION OF SHARES BY TRUSTEES. Upon the terms and
conditions set forth in the Bylaws, the Trustees may call for the redemption of
the Shares of any Person or may refuse to transfer or issue Shares to any Person
to the extent that the same is necessary to comply with applicable law or
advisable to further the purposes of which the Trust is formed. To the extent
permitted by law, the Trustees may retain the proceeds of any redemption of
Shares required by them for payment of amounts due and owing by a Shareholder to
the Trust or any Portfolio.
Section 7.4. REDEMPTION OF DE MINIMIS ACCOUNTS. If, at any time, when a
request for transfer or redemption of Shares of any Portfolio is received by the
Trust or its agent, the value of the Shares of such Portfolio in a Shareholder's
account is less than Five Hundred Dollars ($500.00), or such greater amount as
the Trustees in their discretion shall have determined in accordance with
Article IV, Section 4.1(t) hereof, after giving effect to such transfer or
redemption, the Trust may, at any time following such transfer or redemption and
upon giving thirty (30) days' notice to the Shareholder, cause the remaining
Shares of such Portfolio in such Shareholder's account to be redeemed at net
asset value and in accordance with such procedures as are set forth in the
Bylaws.
Section 7.5. SUSPENSION OF RIGHT OF REDEMPTION. Notwithstanding
Section 7.2 of this Article VII, the Trustees may postpone payment of the
redemption price and suspend the Shareholders' right to require any Portfolio or
Class to redeem Shares during any period when and to the extent permissible
under the 1940 Act. Any such postponement and suspension shall take effect at
the time the Trustees shall specify, but not later than the close of business on
the business day next following the declaration thereof, and shall continue
until the Trustees declare the end thereof. If the right of redemption is
suspended, a Shareholder may either withdraw his or her request for redemption
or receive payment based on the net asset value per Share next determined after
the suspension terminates.
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ARTICLE VIII
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 8.1. LIMITATION OF LIABILITY. A Trustee, when acting in such
capacity, shall not be personally liable to any person for any act, omission, or
obligation of the Trust or any Trustee; provided, however, that nothing
contained herein or in the Delaware Act shall protect any Trustee against any
liability to the Trust or to Shareholders to which he would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the office of Trustee
hereunder.
Section 8.2. INDEMNIFICATION OF COVERED PERSONS. Every Covered Person
shall be indemnified by the Trust to the fullest extent permitted by the
Delaware Act and other applicable law.
Section 8.3. INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder or
former Shareholder of the Trust shall be held to be personally liable solely by
reason of his being or having been a Shareholder of the Trust or any Portfolio
or Class and not because of his acts or omissions or for some other reason, the
Shareholder or former Shareholder (or his heirs, executors, administrators, or
other legal representatives, or, in the case of a corporation or other entity,
its corporate or general successor) shall be entitled, out of the assets
belonging to the applicable Portfolio (or allocable to the applicable Class), to
be held harmless from and indemnified against all loss and expense arising from
such liability in accordance with the Bylaws and applicable law. The Trust, on
behalf of the affected Portfolio (or Class), shall, upon request by the
Shareholder, assume the defense of any claim made against the Shareholder for
any act or obligation of that Portfolio (or Class).
ARTICLE IX
MISCELLANEOUS
Section 9.1. TRUST NOT A PARTNERSHIP; TAXATION. It is hereby expressly
declared that a trust and not a partnership is created hereby. No Trustee
hereunder shall have any power to bind personally either the Trust's officers or
any Shareholder. All persons extending credit to, contracting with or having any
claim against the Trust or the Trustees shall look only to the assets of the
appropriate Portfolio or, until the Trustees shall have established any separate
Portfolio, of the Trust for payment under such credit, contract, or claim; and
neither the Shareholders nor the Trustee, nor any of their agents, whether past,
present, or future, shall be personally liable therefor.
It is intended that the Trust, or each Portfolio if there is more than one
Portfolio, be classified for income tax purposes as an association taxable as a
corporation, and the Trustees shall do all things that they, in their sole
discretion, determine are necessary to achieve that objective, including (if
they so determine) electing such classification on Internal Revenue Form 8832.
Any Trustee is hereby authorized to sign such form on behalf of the Trust or any
Portfolio, and the
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Trustees may delegate such authority to any executive officer(s) of any
Portfolio's investment adviser. The Trustees, in their sole discretion and
without the vote or consent of the Shareholders, may amend this Agreement to
ensure that this objective is achieved.
Section 9.2. TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretion hereunder
in good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of
Article VIII hereof and to Section 9.1 of this Article IX, the Trustees shall
not be liable for errors of judgment or mistakes of fact or law. The Trustees
may take advice of counsel or other experts with respect to the meaning and
operation of this Agreement, and subject to the provisions of Article VIII
hereof and Section 9.1 of this Article IX, shall be under no liability for any
act or omission in accordance with such advice or for failing to follow such
advice. The Trustees shall not be required to give any bond as such, nor any
surety if a bond is obtained.
Section 9.3. TERMINATION OF TRUST OR PORTFOLIO OR CLASS. (a) The Trust
or any Portfolio (or Class) may be terminated by (1) a Majority Shareholder Vote
of the Trust or the affected Portfolio (or Class), respectively, or (2) if there
are fewer than 100 Shareholders of record of the Trust or of such terminating
Portfolio (or Class), the Trustees pursuant to written notice to the
Shareholders of the Trust or the affected Portfolio (or Class).
(b) On termination of the Trust or any Portfolio pursuant to paragraph
(a),
(1) the Trust or that Portfolio thereafter shall carry on no business
except for the purpose of winding up its affairs,
(2) the Trustees shall (i) proceed to wind up the affairs of the
Trust or that Portfolio, and all powers of the Trustees under this
Agreement with respect thereto shall continue until such affairs have been
wound up, including the powers to fulfill or discharge the contracts of the
Trust or that Portfolio, (ii) collect its assets or the assets belonging
thereto, (iii) sell, convey, assign, exchange, or otherwise dispose of all
or any part of those assets to one or more persons at public or private
sale for consideration that may consist in whole or in part of cash,
securities, or other property of any kind, (iv) discharge or pay its
liabilities, and (v) do all other acts appropriate to liquidate its
business, and
(3) after paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities, and refunding
agreements as they deem necessary for their protection, the Trustees shall
distribute the remaining assets ratably among the Shareholders of the Trust
or that Portfolio.
(c) On termination of any Class pursuant to paragraph (a),
(1) the Trust thereafter shall carry on no business with respect to
that Class except for the purpose of winding up its affairs,
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(2) the Trustees shall (i) proceed to wind up all affairs respecting
that Class, and all powers of the Trustees under this Agreement with
respect thereto shall continue until such affairs have been wound up,
including the powers to fulfill or discharge the contracts respecting that
Class, and (ii) do all other acts appropriate to liquidate its business
respecting that Class, and
(3) the Trustees shall distribute ratably among the Shareholders of
that Class, in cash or in kind, an amount equal to the net value of the
assets allocable to that Class (after taking into account any fees,
expenses, or charges allocated thereto), and in connection with any such
distribution in cash the Trustees are authorized to sell, convey, assign,
exchange, or otherwise dispose of such assets of the Portfolio of which
that Class is a part as they deem necessary.
(d) On completion of distribution of the remaining assets pursuant to
paragraph (b)(3) (or the net value of allocable assets pursuant to paragraph
(c)(3)), the Trust or the affected Portfolio (or Class) shall terminate and the
Trustees and the Trust shall be discharged from all further liabilities and
duties hereunder with respect thereto and the rights and interests of all
parties therein shall be canceled and discharged. On termination of the Trust,
following completion of winding up of its business, the Trustees shall cause a
Certificate of Cancellation of the Trust's Certificate of Trust to be filed in
accordance with the Delaware Act, which Certificate may be signed by any one
Trustee.
Section 9.4. SALE OF ASSETS; MERGER AND CONSOLIDATION. Subject to Article
VI, Section 6.1 of this Agreement, the Trustees may cause (i) the Trust or one
or more of its Portfolios to the extent consistent with applicable law to sell
all or substantially all of its assets, or be merged into or consolidated with
another business trust or Company, (ii) the Shares of the Trust or any Portfolio
(or Class) to be converted into beneficial interests in another business trust
(or series thereof) created pursuant to this Section 9.4 of Article IX, or
(iii) the Shares to be exchanged under or pursuant to any state or federal
statute to the extent permitted by law. In all respects not governed by statute
or applicable law, the Trustees shall have power to prescribe the procedure
necessary or appropriate to accomplish a sale of assets, merger or consolidation
including the power to create one or more separate business trusts to which all
or any part of the assets, liabilities, profits or losses of the Trust may be
transferred and to provide for the conversion of Shares of the Trust or any
Portfolio (or Class) into beneficial interests in such separate business trust
or trusts (or series or class thereof).
Section 9.5. FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this Agreement or any amendment hereto or any supplemental Agreement
shall be kept at the office of the Trust where it may be inspected by any
Shareholder. In this Agreement or in any such amendment or supplemental
Agreement, references to this Agreement, and all expressions like "herein,"
"hereof," and "hereunder," shall be deemed to refer to this Agreement as amended
or affected by any such supplemental Agreement. All expressions like "his,"
"he," and "him," shall be deemed to include the feminine and neuter, as well as
masculine, genders. Headings are placed herein for convenience of reference only
and in case of any conflict, the text of this Agreement,
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rather than the headings, shall control. This Agreement may be executed in any
number of counterparts each of which shall be deemed an original.
Section 9.6. GOVERNING LAW. The Trust and this Agreement, and the rights,
obligations and remedies of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
other laws of the State of Delaware; provided, however, that there shall not be
applicable to the Trust, the Trustees, the Shareholders or this Trust Agreement
(a) the provisions of Section 3540 of Title 12 of the Delaware Code or (b) any
provisions of the laws (statutory or common) of the State of Delaware (other
than the Delaware Act) pertaining to trusts which relate to or regulate (i) the
filing with any court or governmental body or agency of trustee accounts or
schedules of trustee fees and charges, (ii) affirmative requirements to post
bonds for trustees, officers, agents, or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding, or disposition of real or personal property, (iv) fees or
other sums payable to trustees, officers, agents, or employees of a trust,
(v) the allocation of receipts and expenditures to income or principal,
(vi) restrictions or limitations on the permissible nature, amount, or
concentration of trust investments or requirements relating to the titling,
storage, or other manner of holding of trust assets, or (vii) the establishment
of fiduciary or other standards or responsibilities or limitations on the
indemnification, acts or powers of trustees or other Persons, which are
inconsistent with the limitations of liabilities or authorities and powers of
the Trustees or officers of the Trust set forth or referenced in this Agreement.
The Trust shall be of the type commonly called a "business trust," and
without limiting the provisions hereof, the Trust may exercise all powers which
are ordinarily exercised by such a trust under Delaware law. The Trust
specifically reserves the right to exercise any of the powers or privileges
afforded to trusts or actions that may be engaged in by trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege, or action shall not imply that the Trust may not exercise such power
or privilege or take such actions, provided, however, that the exercise of any
such power, privilege, or action shall not otherwise violate applicable law.
Section 9.7. AMENDMENTS. Except as specifically provided herein, the
Trustees may, without any Shareholder vote, amend this Agreement by making an
amendment, an Agreement supplemental hereto, or an amended and restated trust
instrument. Any amendment submitted to Shareholders that the Trustees determine
would affect the Shareholders of less than all Portfolios (or less than all
Classes thereof) shall be authorized by vote of only the Shareholders of the
affected Portfolio(s) (or Class(es)), and no vote shall be required of
Shareholders of any Portfolio (or Class) that is not affected. Notwithstanding
anything else herein to the contrary, any amendment to Article VIII that would
have the effect of reducing the indemnification provided thereby to Covered
Persons or to Shareholders or former Shareholders, and any repeal or amendment
of this sentence shall each require the affirmative vote of Shareholders owning
at least two-thirds of the Outstanding Shares entitled to vote thereon. A
certification signed by a majority of the Trustees setting forth an amendment to
this Agreement and reciting that it was duly adopted by the Shareholders or by
the Trustees as aforesaid, or a copy of this Agreement, as amended, executed by
a majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
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Section 9.8. PROVISIONS IN CONFLICT WITH LAW. The provisions of this
Agreement are severable, and the Trustees shall determine, with the advice of
counsel, that any of such provisions is in conflict with applicable law the
conflicting provision shall be deemed never to have constituted a part of this
Agreement; provided, however, that such determination shall not affect any of
the remaining provisions of this Agreement or render invalid or improper any
action taken or omitted prior to such determination. If any provision of this
Agreement shall be held invalid or enforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provisions in any other
jurisdiction or any other provision of this Agreement in any jurisdiction.
Section 9.9. SHAREHOLDERS' RIGHT TO INSPECT SHAREHOLDER LIST. One or more
Persons who together and for at least six months have been Shareholders of at
least five percent (5%) of the Outstanding Shares of any Class may present to
any officer or resident agent of the Trust a written request for a list of its
Shareholders. Within twenty (20) days after such request is made, the Trust
shall prepare and have available on file at its principal office a list verified
under oath by one of its officers or its transfer agent or registrar which sets
forth the name and address of each Shareholder and the number of Shares of each
Class which the Shareholder holds. The rights provided for herein shall not
extend to any Person who is a beneficial owner but not also a record owner of
Shares of the Trust.
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IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument this 7th day of May, 1998.
-------------------------------------
William J. Guilfoyle, as Trustee
-------------------------------------
C. Derek Anderson, as Trustee
-------------------------------------
Frank S. Bayley, as Trustee
-------------------------------------
Ruth H. Quigley, as Trustee
-------------------------------------
Arthur C. Patterson, as Trustee
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SCHEDULE A
GT Global Variable Investment Trust shall be divided into the
following Portfolios:
GT Global Variable Emerging Markets Fund
GT Global Variable Global Government Income Fund
GT Global Variable Global Growth & Income Fund
GT Global Variable Infrastructure Fund
GT Global Variable Latin American Growth Fund
GT Global Variable Natural Resources Fund
GT Global Variable Strategic Income Fund
GT Global Variable Telecommunications Fund
GT Global Variable U.S. Government Income
Date: May 7, 1998
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BYLAWS
OF
GT GLOBAL VARIABLE INVESTMENT SERIES,
A DELAWARE BUSINESS TRUST
ADOPTED EFFECTIVE MAY 7, 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1. REGISTERED OFFICE . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 2. OTHER OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II TRUSTEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1. NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 2. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 3. VACANCY.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 4. DELEGATION OF POWER . . . . . . . . . . . . . . . . . . . . . . . .2
Section 5. INABILITY TO SERVE FULL TERM. . . . . . . . . . . . . . . . . . . .2
Section 6. POWERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 7. MEETINGS OF THE TRUSTEES. . . . . . . . . . . . . . . . . . . . . .2
Section 8. REGULAR MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . .3
Section 9. QUORUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Section 10. ACTION WITHOUT MEETING.. . . . . . . . . . . . . . . . . . . . . .3
Section 11. DESIGNATION, POWERS, AND NAME OF COMMITTEES. . . . . . . . . . . .3
Section 12. MINUTES OF Committee . . . . . . . . . . . . . . . . . . . . . . .3
Section 13. COMPENSATION OF TRUSTEES.. . . . . . . . . . . . . . . . . . . . .4
ARTICLE III OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 1. EXECUTIVE OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . .4
Section 2. TERM OF OFFICE. . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 3. PRESIDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 4. CHAIRMAN OF THE BOARD.. . . . . . . . . . . . . . . . . . . . . . .4
Section 5. OTHER OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 6. SECRETARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 7. TREASURER . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 8. SURETY BOND . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
ARTICLE IV MEETINGS OF SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . .5
Section 1. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 2. NOMINATIONS OF TRUSTEES . . . . . . . . . . . . . . . . . . . . . .6
Section 3. ELECTION OF TRUSTEES. . . . . . . . . . . . . . . . . . . . . . . .6
Section 4. NOTICE OF MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . .6
Section 5. SPECIAL MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . .6
Section 6. NOTICE OF SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . .6
Section 7. CONDUCT OF SPECIAL MEETING. . . . . . . . . . . . . . . . . . . . .6
Section 8. QUORUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 9. ORGANIZATION OF MEETINGS. . . . . . . . . . . . . . . . . . . . . .7
Section 10. VOTING STANDARD. . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 11. VOTING PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 12. ACTION WITHOUT MEETING . . . . . . . . . . . . . . . . . . . . . .8
</TABLE>
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<TABLE>
<S> <C>
ARTICLE V NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 1. METHODS OF GIVING NOTICE. . . . . . . . . . . . . . . . . . . . . .8
Section 2. WRITTEN WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . .8
ARTICLE VI CERTIFICATES OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 1. ISSUANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 2. COUNTERSIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 3. LOST CERTIFICATES.. . . . . . . . . . . . . . . . . . . . . . . . .9
Section 4. TRANSFER OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . .9
Section 5. FIXING RECORD DATE. . . . . . . . . . . . . . . . . . . . . . . . .9
Section 6. REGISTERED SHAREHOLDERS.. . . . . . . . . . . . . . . . . . . . . .9
ARTICLE VII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1. DIVIDENDS AND DISTRIBUTIONS.. . . . . . . . . . . . . . . . . . . 10
Section 2. REDEMPTIONS.. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3. INDEMNIFICATION.. . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4. ADVANCE PAYMENTS OF INDEMNIFIABLE EXPENSES. . . . . . . . . . . . 10
Section 5. SEAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VIII AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1. AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
ii
<PAGE>
BYLAWS
OF
GT GLOBAL VARIABLE INVESTMENT SERIES,
A DELAWARE BUSINESS TRUST
Capitalized terms not specifically defined herein
shall have the meanings ascribed to them in the Trust's
Agreement and Declaration of Trust ("Agreement").
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The registered office of GT Global Variable
Investment Series (the "Trust") shall be in the County of New Castle, State of
Delaware.
Section 2. OTHER OFFICES. The Trust may also have offices at such other
places both within and without the State of Delaware as the Trustees may from
time to time determine or the business of the Trust may require.
ARTICLE II
TRUSTEES
Section 1. NUMBER. The number of Trustees shall initially be five, and
thereafter shall be such number as shall be fixed from time to time by
resolution of the Board of Trustees; provided, however, that the number of
Trustees shall in no event be less than two nor more than twelve.
Section 2. TERM. The Trustees shall hold office during the lifetime of
the Trust, except (a) that any Trustee may resign his trusteeship or may retire
by written instrument signed by him and delivered to the other Trustees, which
shall take effect upon such delivery or upon such later date as is specified
therein; (b) that any Trustee may be removed at any time by written instrument,
signed by at least two-thirds of the number of Trustees prior to such removal,
specifying the date when such removal shall become effective; (c) that any
Trustee who has died, become physically or mentally incapacitated by reason of
disease or otherwise, or is otherwise unable to serve, may be retired by written
instrument signed by a majority of the other Trustees, specifying the date of
his retirement; and (d) that a Trustee may be removed at any meeting of the
shareholders of the Trust.
Section 3. VACANCY. In case of the declination to serve, death,
resignation, retirement or removal of a Trustee, or a Trustee is otherwise
unable to serve, or an increase in the number of Trustees, a vacancy shall
occur. Whenever a vacancy in the Trustees shall occur, until such vacancy is
filled, the other Trustees shall have all the powers hereunder and the
certification of
1
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the other Trustees of such vacancy shall be conclusive. In the case of an
existing vacancy, the remaining Trustees may fill such vacancy by appointing
such other person as they in their discretion shall see fit, or may leave such
vacancy unfilled or may reduce the number of Trustees to not less than two
Trustees. Such appointment shall be evidenced by a written instrument signed by
a majority of the Trustees in office or by resolution of the Trustees, duly
adopted, which shall be recorded in the minutes of a meeting of the Trustees,
whereupon the appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee appointed pursuant to Sections 2 and 3 of Article II of these Bylaws, or
elected pursuant to Section 3 of Article IV, and the Agreement shall have
accepted this appointment in writing and agreed in writing to be bound by the
terms of the Trust Agreement, the Trust estate shall vest in the new Trustee or
Trustees, together with the continuing Trustees, without any further act or
conveyance, and he shall be deemed a Trustee hereunder.
Section 4. DELEGATION OF POWER. Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any one time to any
other Trustee or Trustees, provided that in no case shall less than two Trustees
personally exercise the other powers hereunder except as herein otherwise
expressly provided.
Section 5. INABILITY TO SERVE FULL TERM. The declination to serve, death,
resignation, retirement, removal, incapacity, or inability of the Trustees, or
any one of them, shall not operate to terminate the Trust or to revoke any
existing agency created pursuant to the terms of the Agreement.
Section 6. POWERS. The Trustees shall have exclusive and absolute control
over the trust property and over the business of the Trust to the same extent as
if the Trustees were the sole owners of the trust property and business in their
own right, but with such powers of delegation as may be permitted by the
Agreement. The Trustees shall have power to conduct the business of the Trust
and carry on its operations in any and all of its branches and maintain offices
both within and without the State of Delaware, in any and all states of the
United States of America, in the District of Columbia, in any and all
commonwealths, territories, dependencies, colonies, or possessions of the United
States of America, and in any foreign jurisdiction and to do all such other
things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of these Bylaws and the Agreement, the presumption
shall be in favor of a grant of power to the Trustees.
Section 7. MEETINGS OF THE TRUSTEES. The Trustees of the Trust may hold
meetings, both regular and special, either within or without the State of
Delaware.
2
<PAGE>
Section 8. REGULAR MEETINGS. Regular meetings of the Board of Trustees
shall be held each year, at such time and place as the Board of Trustees may
determine.
Section 9. NOTICE OF MEETINGS. Notice of the time, date, and place of all
meetings of the Trustees shall be given to each Trustee by telephone, facsimile,
electronic-mail, or other electronic mechanism sent to his or her home or
business address at least twenty-four hours in advance of the meeting or in
person at another meeting of the Trustees or by written notice mailed to his or
her home or business address at least seventy-two hours in advance of the
meeting.
Section 10. QUORUM. At all meetings of the Trustees, a majority of the
Trustees then in office (but in no event less than two Trustees) shall
constitute a quorum for the transaction of business and the act of a majority of
the Trustees present at any meeting at which there is a quorum shall be the act
of the Board of Trustees, except as may be otherwise specifically provided by
applicable law or by the Agreement or these Bylaws. If a quorum shall not be
present at any meeting of the Board of Trustees, the Trustees present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 11. ACTION WITHOUT MEETING. Unless otherwise restricted by the
Agreement or these Bylaws, any action required or permitted to be taken at any
meeting of the Board of Trustees or of any committee thereof may be taken
without a meeting by unanimous written consent of the Trustees or committee
members (or by written consent of a majority of the Trustees if the President of
the Trust determines that such exceptional circumstances exist, and are of such
urgency, as to make unanimous written consent impossible or impractical, which
determination shall be conclusive and binding on all Trustees and not otherwise
subject to challenge) and the writing or writings are filed with the minutes of
proceedings of the board or committee.
Section 12. DESIGNATION, POWERS, AND NAME OF COMMITTEES. The Board of
Trustees may, by resolution passed by a majority of the whole Board, designate
one or more committees, each committee to consist of two or more of the Trustees
of the Trust. The Board may designate one or more Trustee as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of such committee. Each committee, to the extent provided in the
resolution, shall have and may exercise the powers of the Board of Trustees in
the management of the business and affairs of the Trust; provided, however, that
in the absence or disqualification of any member of such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such members constitute a quorum, may
unanimously appoint another member of the Board of Trustees to act at the
meeting in the place of any such absent or disqualified member. Such committee
or committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board of Trustees.
Section 13. MINUTES OF COMMITTEE. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Trustees when
required.
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<PAGE>
Section 14. COMPENSATION OF TRUSTEES. The Trustees as such shall be
entitled to reasonable compensation for their services as determined from time
to time by the Board of Trustees. Nothing herein shall in any way prevent the
employment of any Trustee for advisory, management, administrative, legal,
accounting, investment banking, underwriting, brokerage, or investment dealer or
other services and the payment for the same by the Trust.
ARTICLE III
OFFICERS
Section 1. EXECUTIVE OFFICERS. The initial executive officers of the
Trust shall be elected by the Board of Trustees as soon as practicable after the
organization of the Trust. The executive officers may include a Chairman of the
Board, and shall include a President, one or more Vice Presidents (the number
thereof to be determined by the Board of Trustees), a Secretary and a Treasurer.
The Chairman of the Board, if any, shall be selected from among the Trustees.
The Board of Trustees may also in its discretion appoint Assistant Vice
Presidents, Assistant Secretaries, Assistant Treasurers, and other officers,
agents and employees, who shall have such authority and perform such duties as
the Board may determine. The Board of Trustees may fill any vacancy which may
occur in any office. Any two offices, except for those of President and Vice
President, may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument on behalf of the Trust in more than one
capacity, if such instrument is required by law or by these Bylaws to be
executed, acknowledged or verified by two or more officers.
Section 2. TERM OF OFFICE. Unless otherwise specifically determined by
the Board of Trustees, the officers shall serve at the pleasure of the Board of
Trustees. If the Board of Trustees in its judgment finds that the best interests
of the Trust will be served, the Board of Trustees may remove any officer of the
Trust at any time with or without cause. The Trustees may delegate this power
to the President with respect to any other officer. Such removal shall be
without prejudice to the contract rights, if any, of the person so removed. Any
officer may resign from office at any time by delivering a written resignation
to the Trustees or the President. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
Section 3. PRESIDENT. The President shall be the chief executive officer
of the Trust and, subject to the Board of Trustees, shall generally manage the
business and affairs of the Trust. If there is no Chairman of the Board, or if
the Chairman of the Board has been appointed but is absent, the President shall,
if present, preside at all meetings of the shareholders and the Board of
Trustees.
Section 4. CHAIRMAN OF THE BOARD. The Chairman of the Board, if any,
shall preside at all meetings of the shareholders and the Board of Trustees, if
the Chairman of the Board is present. The Chairman of the Board shall have such
other powers and duties as shall be determined by the Board of Trustees, and
shall undertake such other assignments as may be requested by the President.
4
<PAGE>
Section 5. OTHER OFFICERS. The Chairman of the Board or one or more Vice
Presidents shall have and exercise such powers and duties of the President in
the absence or inability to act of the President, as may be assigned to them,
respectively, by the Board of Trustees or, to the extent not so assigned, by the
President. In the absence or inability to act of the President, the powers and
duties of the President not otherwise assigned by the Board of Trustees or the
President shall devolve upon the Chairman of the Board, or in the Chairman's
absence, the Vice Presidents in the order of their election.
Section 6. SECRETARY. The Secretary shall (a) have custody of the seal of
the Trust; (b) attend meetings of the shareholders, the Board of Trustees, and
any committees of Trustees and keep the minutes of such meetings of
shareholders, Board of Trustees and any committees thereof; and (c) issue all
notices of the Trust. The Secretary shall have charge of the shareholder records
and such other books and papers as the Board may direct, and shall perform such
other duties as may be incidental to the office or which are assigned by the
Board of Trustees. The Secretary shall also keep or cause to be kept a
shareholder book, which may be maintained by means of computer systems,
containing the names, alphabetically arranged, of all persons who are
shareholders of the Trust, showing their places of residence, the number and
class or series of any class of shares of beneficial interest held by them,
respectively, and the dates when they became the record owners thereof, and such
book shall be open for inspection as prescribed by the laws of the State of
Delaware.
Section 7. TREASURER. The Treasurer shall have the care and custody of
the funds and securities of the Trust and shall deposit the same in the name of
the Trust in such bank or banks or other depositories, subject to withdrawal in
such manner as these Bylaws or the Board of Trustees may determine. The
Treasurer shall, if required by the Board of Trustees, give such bond for the
faithful discharge of duties in such form as the Board of Trustees may require.
Section 8. SURETY BOND. The Trustees may require any officer or agent of
the Trust to execute a bond (including, without limitation, any bond required by
the Investment Company Act of 1940, as amended ("1940 Act") and the rules and
regulations of the Securities and Exchange Commission ("Commission") to the
Trust in such sum and with such surety or sureties as the Trustees may
determine, conditioned upon the faithful performance of his or her duties to the
Trust, including responsibility for negligence and for the accounting of any of
the Trust's property, funds, or securities that may come into his or her hands.
ARTICLE IV
MEETINGS OF SHAREHOLDERS
Section 1. PURPOSE. All meetings of the shareholders for the election of
Trustees shall be held at such place as may be fixed from time to time by the
Trustees, or at such other place either within or without the State of Delaware
as shall be designated from time to time by the Trustees and stated in the
notice indicating that a meeting has been called for such purpose. Meetings of
shareholders may be held for any purpose determined by the Trustees and may be
held at such time and place, within or without the State of Delaware as shall be
stated in the notice of the
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meeting or in a duly executed waiver of notice thereof. At all meetings of the
shareholders, every shareholder of record entitled to vote thereat shall be
entitled to vote at such meeting either in person or by written proxy signed by
the shareholder or by his duly authorized attorney in fact. A shareholder may
duly authorize such attorney in fact through written, electronic, telephonic,
computerized, facsimile, telecommunication, telex or oral communication or by
any other form of communication. Unless a proxy provides otherwise, such proxy
is not valid more than eleven months after its date. A proxy with respect to
shares held in the name of two or more persons shall be valid if executed by any
one of them unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them. A proxy purporting
to be executed 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.
Section 2. NOMINATIONS OF TRUSTEES. Nominations of individuals for
election to the board of trustees shall be made by the Board of Trustees or a
nominating committee of the Board of Trustees, if one has been established (the
"Nominating Committee"). Any shareholder of the Trust may submit names of
individuals to be considered by the Nominating Committee or the Board of
Trustees, as applicable, provided, however, (i) that such person was a
shareholder of record at the time of submission of such names and is entitled to
vote at the meeting, and (ii) that the Nominating Committee or the Board of
Trustees, as applicable, shall make the final determination of persons to be
nominated.
Section 3. ELECTION OF TRUSTEES. All meetings of shareholders for the
purpose of electing Trustees shall be held on such date and at such time as
shall be designated from time to time by the Trustees and stated in the notice
of the meeting, at which the shareholders shall elect by a plurality vote any
number of Trustees as the notice for such meeting shall state are to be elected,
and transact such other business as may properly be brought before the meeting
in accordance with Section 1 of this Article IV.
Section 4. NOTICE OF MEETINGS. Written notice of any meeting stating the
place, date, and hour of the meeting shall be given to each shareholder entitled
to vote at such meeting not less than ten days before the date of the meeting in
accordance with Article V hereof.
Section 5. SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by applicable law or by the
Agreement, may be called by any Trustee; provided, however, that the Trustees
shall promptly call a meeting of the shareholders solely for the purpose of
removing one or more Trustees, when requested in writing so to do by the record
holders of not less than ten percent of the outstanding shares of the Trust.
Section 6. NOTICE OF SPECIAL MEETING. Written notice of a special meeting
stating the place, date, and hour of the meeting and the purpose of purposes for
which the meeting is called, shall be given not less than ten days before the
date of the meeting, to each shareholder entitled to vote at such meeting.
Section 7. CONDUCT OF SPECIAL MEETING. Business transacted at any special
meeting of shareholders shall be limited to the purpose stated in the notice.
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Section 8. QUORUM. The holders of one-third of the shares of beneficial
interests that are issued and outstanding and entitled to vote thereat, present
in person or represented by proxy, shall constitute a quorum at all meetings of
the shareholders for the transaction of business except as otherwise provided by
applicable law or by the Agreement. If, however, such quorum shall not be
present or represented at any meeting of the shareholders, the vote of the
holders of a majority of shares cast shall have power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present or represented. At such adjourned meeting, at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified.
Section 9. ORGANIZATION OF MEETINGS.
(a) The Chairman of the Board of Trustees shall preside at each
meeting of shareholders. In the absence of the Chairman of the Board, the
meeting shall be chaired by the President, or if the President shall not be
present, by a Vice President. In the absence of all such officers, the meeting
shall be chaired by a person elected for such purpose at the meeting. The
Secretary of the Trust, if present, shall act as Secretary of such meetings, or
if the Secretary is not present, an Assistant Secretary of the Trust shall so
act, and if no Assistant Secretary is present, then a person designated by the
Secretary of the Trust shall so act, and if the Secretary has not designated a
person, then the meeting shall elect a secretary for the meeting.
(b) The Board of Trustees of the Trust shall be entitled to make
such rules and regulations for the conduct of meetings of shareholders as it
shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Trustees, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing: an agenda or order of business for the
meeting; rules and procedures for maintaining order at the meeting and the
safety of those present; limitations on participation in such meeting to
shareholders of record of the Trust and their duly authorized and constituted
proxies, and such other persons as the chairman shall permit; restrictions on
entry to the meeting after the time fixed for the commencement thereof;
limitations on the time allotted to questions or comments by participants; and
regulation of the opening and closing of the polls for balloting on matters
which are to be voted on by ballot, unless and to the extent the Board of
Trustees or the chairman of the meeting determines that meetings of shareholders
shall not be required to be held in accordance with the rules of parliamentary
procedure.
Section 10. VOTING STANDARD. When a quorum is present at any meeting, the
vote of the holders of a majority of the shares cast shall decide any question
brought before such meeting, unless the question is one on which, by express
provision of applicable law, the Agreement, these Bylaws, or applicable
contract, a different vote is required, in which case such express provision
shall govern and control the decision of such question.
Section 11. VOTING PROCEDURE. Each whole share shall be entitled to one
vote, and each fractional share shall be entitled to a proportionate fractional
vote. On any matter submitted to a
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vote of the shareholders, all shares shall be voted together, except when
required by applicable law or when the Trustees have determined that the matter
affects the interests of one or more Portfolios (or Classes), then only the
shareholders of such Portfolios (or Classes) shall be entitled to vote thereon.
Section 12. ACTION WITHOUT MEETING. Unless otherwise provided in the
Agreement or applicable law, any action required to be taken at any meeting of
shareholders of the Trust, or any action which may be taken at any meeting of
such shareholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of any such action without a meeting by less
than unanimous written consent shall be given to those shareholders who have not
consented in writing.
ARTICLE V
NOTICES
Section 1. METHODS OF GIVING NOTICE. Whenever, under the provisions of
applicable law or of the Agreement or of these Bylaws, notice is required to be
given to any Trustee or shareholder, it shall not, unless otherwise provided
herein, be construed to mean personal notice, but such notice may be given
orally in person, or by telephone (promptly confirmed in writing) or in writing,
by mail addressed to such Trustee or shareholder, at his address as it appears
on the records of the Trust, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to Trustees or members of a committee may also be given by
telex, telegram, telecopier or via overnight courier. If sent by telex or
telecopier, notice to a Trustee or member of a committee shall be deemed to be
given upon transmittal; if sent by telegram, notice to a Trustee or member of a
committee shall be deemed to be given when the telegram, so addressed, is
delivered to the telegraph company, and if sent via overnight courier, notice to
a Trustee or member of a committee shall be deemed to be given when delivered
against a receipt therefor.
Section 2. WRITTEN WAIVER. Whenever any notice is required to be given
under the provisions of applicable law or of the Agreement or of these Bylaws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE VI
CERTIFICATES OF SHARES
Section 1. ISSUANCE. Upon request, every holder of shares in the Trust
shall be entitled to have a certificate, signed by, or in the name of the Trust
by, a Trustee, certifying the number of shares owned by him in the Trust.
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Section 2. COUNTERSIGNATURE. Where a certificate is countersigned (1) by
a transfer agent other than the Trust or its employee, or, (2) by a registrar
other than the Trust or its employee, the signature of the Trustee may be a
facsimile.
Section 3. LOST CERTIFICATES. The Board of Trustees may direct a new
certificate or certificates to be issued in place of any certificate or
certificates therefore issued by the Trust alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of the fact by the person claiming
the certificate to be lost, stolen or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Trustees may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require and/or
to give the Trust a bond in such sum as it may direct as indemnity against any
claim that may be made against the Trust with respect to the certificate alleged
to have been lost, stolen or destroyed.
Section 4. TRANSFER OF SHARES. The Trustees shall make such rules as they
consider appropriate for the transfer of shares and similar matters. To the
extent certificates are issued in accordance with Section 1 of this Article VI,
upon surrender to the Trust or the transfer agent of the Trust of such
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Trust to issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
Section 5. FIXING RECORD DATE. In order that the Trustees may determine
the shareholders entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or to express consent to action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution of
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of beneficial interests or for the purpose of any
other lawful action, the Board of Trustees may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Trustees, and which record date shall not be more
than ninety nor less than ten days before the date of such meeting, nor more
than ten days after the date upon which the resolution fixing the record date is
adopted by the Board of Trustees for action by shareholder consent in writing
without a meeting, nor more than ninety days prior to any other action. A
determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Trustees may fix a new record date for the adjourned
meeting.
Section 6. REGISTERED SHAREHOLDERS. The Trust shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice hereof, except as otherwise provided by
the laws of Delaware.
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ARTICLE VII
GENERAL PROVISIONS
Section 1. DIVIDENDS AND OTHER DISTRIBUTIONS. The Trustees may from time
to time declare and pay dividends and make other distributions with respect to
any Portfolio, or Class thereof, which may be from income, capital gains or
capital. The amount of such dividends or other distributions and the payment of
them and whether they are in cash or any other Trust Property shall be wholly in
the discretion of the Trustees.
Section 2. REDEMPTIONS. Any holder of record of shares of a particular
Portfolio, or Class thereof, shall have the right to require the Trust to redeem
his shares, or any portion thereof, subject to the terms and conditions set
forth in the registration statement in effect from time to time. The redemption
price may in any case or cases be paid wholly or partly in kind if the Trustees
determine that such payment is advisable in the interest of the remaining
shareholders of the Portfolio or Class thereof for which the shares are being
redeemed. Subject to the foregoing, the fair value, selection and quantity of
securities or other property so paid or delivered as all or part of the
redemption price may be determined by or under authority of the Trustees. In no
case shall the Trust be liable for any delay of any Person in transferring
securities selected for delivery as all or part of any payment in kind.
The Trustees may, at their option, and at any time, have the right to
redeem shares of any shareholder of a particular Portfolio or Class thereof in
accordance with Section 2 of this Article VII. The Trustees may refuse to
transfer or issue shares to any person to the extent that the same is necessary
to comply with applicable law or advisable to further the purposes for which the
Trust is formed.
If, at any time when a request for transfer or redemption of Shares of any
Portfolio is received by the Trust or its agent, the value of the shares of such
Portfolio in a Shareholder's account is less than Five Hundred Dollars
($500.00), after giving effect to such transfer or redemption, the Trust may, at
any time following such transfer or redemption and upon giving thirty (30) days'
notice to the Shareholder, cause the remaining Shares of such Portfolio in such
Shareholder's account to be redeemed at net asset value in accordance with such
procedures set forth above.
Section 3. INDEMNIFICATION. Every person who is, or has been, a Trustee
or officer of the Trust shall be indemnified by the Trust to the fullest extent
permitted by the Delaware Business Trust Act, these Bylaws and other applicable
law.
Section 4. ADVANCE PAYMENTS OF INDEMNIFIABLE EXPENSES. To the maximum
extent permitted by the Delaware Act and other applicable law, the Trust or
applicable Portfolio may advance to a Covered Person, in connection with the
preparation and presentation of a defense to any claim, action, suit, or
proceeding, expenses for which the Covered Person would ultimately be entitled
to indemnification; provided that the Trust or applicable Portfolio has received
an undertaking by or on behalf of such Covered Person that such amount will be
paid over by him to the Trust or applicable Portfolio if it is ultimately
determined that he is not entitled to
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indemnification for such expenses, and further provided that (i) such Covered
Person shall have provided appropriate security for such undertaking, (ii) the
Trust is insured against losses arising out of any such advance payments, or
(iii) either a majority of the Trustees who are not interested persons (as
defined in the 1940 Act) of the Trust nor parties to the matter, or independent
legal counsel in a written opinion shall have determined, based upon a review of
readily available facts (as opposed to a full trial-type inquiry) that there is
reason to believe that such Covered Person will not be disqualified from
indemnification for such expenses.
Section 5. SEAL. The business seal shall have inscribed thereon the name
of the business trust, the year of its organization and the word "Business Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced. Any officer or Trustee of the
Trust shall have authority to affix the corporate seal of the Trust to any
document requiring the same.
Section 6. SEVERABILITY. The provisions of these Bylaws are severable.
If the Board of Trustees determines, with the advice of counsel, that any
provision hereof conflicts with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code, or other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of these Bylaws; provided, however, that such determination shall not
affect any of the remaining provisions of these Bylaws or render invalid or
improper any action taken or omitted prior to such determination. If any
provision hereof shall be held invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall attach only to such provision only in
such jurisdiction and shall not affect any other provision of these Bylaws.
Section 7. HEADINGS. Headings are placed in these Bylaws for convenience
of reference only and in case of any conflict, the text of these Bylaws rather
than the headings shall control.
ARTICLE VIII
AMENDMENTS
Section 1. AMENDMENTS. These Bylaws may be altered or repealed at any
regular or special meeting of the Board of Trustees without prior notice. These
Bylaws may also be altered or repealed at any special meeting of the
shareholders, but only if the Board of Trustees resolves to put a proposed
alteration or repealer to the vote of the shareholders and notice of such
alteration or repealer is contained in a notice of the special meeting being
held for such purpose.
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GT GLOBAL VARIABLE INVESTMENT TRUST
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN GT GLOBAL VARIABLE INVESTMENT TRUST
AND
AIM ADVISORS, INC.
Contract made as of May 29, 1998, between GT Global Variable Investment
Trust, a Delaware business trust ("Company"), and AIM Advisors, Inc. (the
"Adviser"), a Delaware corporation.
WHEREAS the Company is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company, and
intends to offer for public sale shares of GT Global Variable Latin America
Fund, GT Global Variable Telecommunications Fund, GT Global Variable Growth &
Income Fund, GT Global Variable Strategic Income Fund, GT Global Variable
Emerging Markets Fund, GT Global Variable Global Government Income Fund, GT
Global Variable U.S. Government Fund, GT Global Variable Infrastructure Fund and
GT Global Variable Natural Resources Fund, each being a series of the Company's
shares of beneficial interest; and
WHEREAS the Company hereafter may establish additional series of its shares
of beneficial interest (any such additional series, together with the series
named in the paragraph immediately preceding, are collectively referred to
herein as the "Funds," and singly may be referred to as a "Fund"); and
WHEREAS the Company desires to retain Adviser as investment manager and
administrator to furnish certain administrative, investment advisory and
portfolio management services to the Company and the Funds, and Adviser is
willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Company hereby appoints Adviser as investment manager and
administrator of each Fund for the period and on the terms set forth in this
Contract. Adviser accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. DUTIES AS INVESTMENT MANAGER.
(a) Subject to the supervision of the Company's Board of Trustees
("Board"), Adviser will provide a continuous investment program for each Fund,
including investment research and management with respect to all securities and
investments and cash equivalents of the Fund. Adviser will determine from time
to time what securities and
<PAGE>
other investments will be purchased, retained or sold by each Fund, and the
brokers and dealers through whom trades will be executed.
(b) Adviser agrees that in placing orders with brokers and dealers it will
attempt to obtain the best net results in terms of price and execution.
Consistent with this obligation Adviser may, in its discretion, purchase and
sell portfolio securities to and from brokers and dealers who sell shares of the
Funds or provide the Funds or Adviser's other clients with research, analysis,
advice and similar services. Adviser may pay to brokers and dealers, in return
for research and analysis, a higher commission or spread than may be charged by
other brokers and dealers, subject to Adviser's determining in good faith that
such commission or spread is reasonable in terms either of the particular
transaction or of the overall responsibility of Adviser to the Funds and its
other clients and that the total commissions or spreads paid by each Fund will
be reasonable in relation to the benefits to the Fund over the long term. In no
instance will portfolio securities be purchased from or sold to Adviser or any
affiliated person thereof except in accordance with the federal securities laws
and the rules and regulations thereunder and any exemptive orders currently in
effect. Whenever Adviser simultaneously places orders to purchase or sell the
same security on behalf of a Fund and one or more other accounts advised by
Adviser, such orders will be allocated as to price and amount among all such
accounts in a manner believed to be equitable to each account. The Company
recognizes that in some cases this procedure may adversely affect the results
obtained for each Fund.
(c) Adviser will oversee the maintenance of all books and records with
respect to the securities transactions of the Funds, and will furnish the Board
with such periodic and special reports as the Board reasonably may request. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, Adviser
hereby agrees that all records which it maintains for the Company are the
property of the Company, agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act any records which it maintains for the Company and
which are required to be maintained by Rule 31a-1 under the 1940 Act, and
further agrees to surrender promptly to the Company any records which it
maintains for the Company upon request by the Company.
3. DUTIES AS ADMINISTRATOR. Adviser will administer the affairs of each Fund
subject to the supervision of the Board and the following understandings:
(a) Adviser will supervise all aspects of the operations of each Fund,
including the oversight of transfer agency and custodial services, except as
hereinafter set forth; provided, however, that nothing herein contained shall be
deemed to relieve or deprive the Board of its responsibility for control of the
conduct of the affairs of the Funds.
(b) At Adviser's expense, Adviser will provide the Company and the Funds
with such corporate, administrative and clerical personnel (including officers
of the Company) and services as are reasonably deemed necessary or advisable by
the Board.
<PAGE>
(c) Adviser will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination (as applicable) of each Fund's prospectus,
statement of additional information, proxy material, tax returns and required
reports with or to the Fund's shareholders, the Securities and Exchange
Commission and other appropriate federal or state regulatory authorities.
(d) Adviser will provide the Company and the Funds with, or obtain for
them, adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and similar
items.
4. FURTHER DUTIES. In all matters relating to the performance of this
Contract, Adviser will act in conformity with the Agreement and Declaration of
Trust, By-Laws and Registration Statement of the Company and with the
instructions and directions of the Board and will comply with the requirements
of the 1940 Act, the rules thereunder, and all other applicable federal and
state laws and regulations.
5. DELEGATION OF ADVISER'S DUTIES AS INVESTMENT MANAGER AND ADMINISTRATOR.
With respect to one or more of the Funds, Adviser may enter into one or more
contracts ("Sub-Advisory or Sub-Administration Contract") with a Sub-adviser or
Sub-administrator in which Adviser delegates to such sub-adviser or
sub-administrator the performance of any or all of the services specified in
Paragraph 2 and 3 of this Contract, provided that: (i) each Sub-Advisory and
Sub-Administration Contract imposes on the sub-adviser or sub-administrator
bound thereby all the duties and conditions to which Adviser is subject with
respect to the services under Paragraphs 2, 3 and 4 of this Contract; (ii) each
Sub-Advisory and Sub-Administration Contract meets all requirements of the 1940
Act and rules thereunder, and (iii) Adviser shall not enter into a Sub- Advisory
or Sub-Administration Contract unless it is approved by the Board prior to
implementation.
6. SERVICES NOT EXCLUSIVE. The services furnished by Adviser hereunder are
not to be deemed exclusive and Adviser shall be free to furnish similar services
to others so long as its services under this Contract are not impaired thereby.
Nothing in this Contract shall limit or restrict the right of any director,
officer or employee of Adviser, who may also be a Trustee, officer or employee
of the Company, to engage in any other business or to devote his or her time and
attention in part to the management or other aspects of any other business,
whether of a similar nature or a dissimilar nature.
7. EXPENSES.
(a) During the term of this Contract, each Fund will bear all expenses,
not specifically assumed by Adviser, incurred in its operations and the offering
of its shares.
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or
<PAGE>
sold by the Fund and any losses incurred in connection therewith; (ii) fees
payable to and expenses incurred on behalf of the Fund by Adviser under this
Contract; (iii) investment consulting fees and related costs; (iv) expenses of
organizing the Company and the Fund; (v) expenses of preparing and filing
reports and other documents with governmental and regulatory agencies;
(vi) filing fees and expenses relating to the registration and qualification of
the Fund's shares and the Company under federal and/or state securities laws and
maintaining such registrations and qualifications; (vii) costs incurred in
connection with the issuance, sale, or repurchase of the Fund's shares of
beneficial interest; (viii) fees and salaries payable to the Company's Trustees
who are not parties to this Contract or interested persons of any such party
("Independent Trustees"); (ix) all expenses incurred in connection with the
Independent Trustees' services, including travel expenses; (x) taxes (including
any income or franchise taxes) and governmental fees; (xi) costs of any
liability, uncollectible items of deposit and other insurance and fidelity
bonds; (xii) any costs, expenses or losses arising out of a liability of or
claim for damages or other relief asserted against the Company or the Fund for
violation of any law; (xiii) interest charges; (xiv) legal, accounting and
auditing expenses, including legal fees of special counsel for the Independent
Trustees; (xv) charges of custodians, transfer agents, pricing agents and other
agents; (xvi) expenses of disbursing dividends and distributions; (xvii) costs
of preparing share certificates; (xviii) expenses of setting in type, printing
and mailing prospectuses and supplements thereto, statements of additional
information and supplements thereto, reports and proxy materials for existing
shareholders; (xix) any extraordinary expenses (including fees and disbursements
of counsel, costs of actions, suits or proceedings to which the Company is a
party and the expenses the Company may incur as a result of its legal obligation
to provide indemnification to its officers, Trustees, employees and agents)
incurred by the Company or the Fund; (xx) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (xxi) costs of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xxii) the cost
of investment company literature and other publications provided by the Company
to its Trustees and officers; and (xxiii) costs of mailing, stationery and
communications equipment.
(c) All general expenses of the Company and joint expenses of the Funds
shall be allocated among each Fund on a basis deemed fair and equitable by
Adviser, subject to the Board's supervision.
(d) Adviser will assume the cost of any compensation for services provided
to the Company received by the officers of the Company and by the Trustees of
the Company who are not Independent Trustees.
(e) The payment or assumption by Adviser of any expense of the Company or
any Fund that Adviser is not required by this Contract to pay or assume shall
not obligate Adviser to pay or assume the same or any similar expense of the
Company or any Fund on any subsequent occasion.
<PAGE>
8. COMPENSATION.
(a) For the services provided to a Fund under this Contract, the Company
shall pay the Adviser an annual fee, payable monthly, based upon the average
daily net assets of such Fund as forth in Appendix A attached hereto. Such
compensation shall be paid solely from the assets of such Fund.
(b) For the services provided under this Contract, each Fund as hereafter
may be established will pay to Adviser a fee in an amount to be agreed upon in a
written Appendix to this Contract executed by the Company on behalf of such Fund
and by Adviser.
(c) The fee shall be computed daily and paid monthly to Adviser on or
before the last business day of the next succeeding calendar month.
(d) If this Contract becomes effective or terminates before the end of any
month, the fee for the period from the effective date to the end of the month or
from the beginning of such month to the date of termination, as the case may be,
shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
9. LIMITATION OF LIABILITY OF ADVISER AND INDEMNIFICATION. Adviser shall not
be liable and each Fund shall indemnify Adviser and its directors, officers and
employees, for any costs or liabilities arising from any error of judgment or
mistake of law or any loss suffered by the Fund or the Company in connection
with the matters to which this Contract relates except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Adviser in the
performance by Adviser of its duties or from reckless disregard by Adviser of
its obligations and duties under this Contract. Any person, even though also an
officer, partner, employee, or agent of Adviser, who may be or become an
officer, Trustee, employee or agent of the Company shall be deemed, when
rendering services to a Fund or the Company or acting with respect to any
business of a Fund or the Company, to be rendering such service to or acting
solely for the Fund or the Company and not as an officer, partner, employee, or
agent or one under the control or direction of Adviser even though paid by it.
10. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date hereabove written,
provided that this Contract shall not take effect with respect to any Fund
unless it has first been approved (i) by a vote of a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by vote of a majority of that Fund's outstanding voting
securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, with
<PAGE>
respect to each Fund this Contract shall continue automatically for successive
periods not to exceed twelve months each, provided that such continuance is
specifically approved at least annually (i) by a vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Board or by vote of a majority of the
outstanding voting securities of that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund this Contract
may be terminated at any time, without the payment of any penalty, by vote of
the Board or by a vote of a majority of the outstanding voting securities of the
Fund on sixty days' written notice to Adviser or by Adviser at any time, without
the payment of any penalty, on sixty days' written notice to the Company.
Termination of this Contract with respect to one Fund shall not affect the
continued effectiveness of this Contract with respect to any other Fund. This
Contract will automatically terminate in the event of its assignment.
11. AMENDMENT OF THIS CONTRACT. No provision of this Contract may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought, and no amendment of this Contract shall be effective
until approved by vote of a majority of the Fund's outstanding voting
securities, when required by the 1940 Act.
12. GOVERNING LAW. This Contract shall be construed in accordance with the
laws of the State of Delaware (without regard to Delaware conflict or choice of
law provisions) and the 1940 Act. To the extent that the applicable laws of the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
13. LICENSE AGREEMENT. The Company shall have the non-exclusive right to use
the name "AIM" to designate the Company or any current or future series of
shares only so long as AIM Advisors, Inc. serves as investment manager or
adviser to the Company with respect to such series of shares.
14. LIMITATION OF SHAREHOLDER LIABILITY. It is expressly agreed that the
obligations of the Company hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Company
personally, but shall only bind the assets and property of the Funds, as
provided in the Company's Agreement and Declaration of Trust. The execution and
delivery of this Contract have been authorized by the Trustees of the Company
and shareholders of the Funds, and this Contract has been executed and delivered
by an authorized officer of the Company acting as such; neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
assets and property of the Funds, as provided in the Company's Agreement and
Declaration of Trust.
15. MISCELLANEOUS. The captions in this Contract are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this Contract
shall be held or made
<PAGE>
invalid by a court decision, statute, rule or otherwise, the remainder of this
Contract shall not be affected thereby. This Contract shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors. As used in this Contract, the terms "majority of the outstanding
voting securities," "interested person," "assignment," "broker," "dealer,"
"investment adviser," "national securities exchange," "net assets,"
"prospectus," "sale," "sell" and "security" shall have the same meaning as such
terms have in the 1940 Act, subject to such exemption as may be granted by the
Securities and Exchange Commission by any rule, regulation or order. Where the
effect of a requirement of the 1940 Act reflected in any provision of this
Contract is made less restrictive by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
Attest: GT GLOBAL VARIABLE INVESTMENT TRUST
By:
Name:
Title:
Attest: AIM ADVISORS, INC.
By:
Name:
Title:
<PAGE>
APPENDIX A
TO
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
OF
GT GLOBAL VARIABLE INVESTMENT TRUST
The Company shall pay the Adviser, out of the assets of a Fund, as
full compensation for all services rendered and all facilities furnished
hereunder, a management fee for such Fund set forth below. Such fee shall be
calculated by applying the following annual rates to the average daily net
assets of such Fund for the calendar year computed in the manner used for the
determination of the net asset value of shares of such Fund.
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND, GT GLOBAL VARIABLE EMERGING
MARKETS FUND, GT GLOBAL VARIABLE INFRASTRUCTURE FUND, GT GLOBAL VARIABLE
LATIN AMERICA FUND, GT GLOBAL VARIABLE GROWTH & INCOME FUND, GT GLOBAL
VARIABLE NATURAL RESOURCES FUND
ANNUAL RATE
1.00%
GT GLOBAL VARIABLE STRATEGIC INCOME FUND, GT GLOBAL VARIABLE GLOBAL
GOVERNMENT INCOME FUND, GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
ANNUAL RATE
.75%
<PAGE>
GT GLOBAL VARIABLE INVESTMENT TRUST
SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
BETWEEN
AIM ADVISORS, INC.
AND
INVESCO (NY) INC.
Contract made as of May 29, 1998, between AIM Advisors, Inc., a Delaware
corporation ("Adviser"), and INVESCO (NY) Inc., a California corporation
("Sub-Adviser").
WHEREAS Adviser has entered into an Investment Management and
Administration Contract with GT Global Variable Investment Trust ("Company"), an
open-end management investment company registered under the Investment Company
Act of 1940, as amended ("1940 Act"), with respect to GT Global Variable Latin
America Fund, GT Global Variable Telecommunications Fund, GT Global Variable
Growth & Income Fund, GT Global Variable Strategic Income Fund, GT Global
Variable Emerging Markets Fund, GT Global Variable Global Government Income
Fund, GT Global Variable U.S. Government Fund, GT Global Variable Infrastructure
Fund and GT Global Variable Natural Resources Fund, each Fund being a series of
the Company's shares of beneficial interest; and
WHEREAS Adviser desires to retain Sub-Adviser as sub-adviser and
sub-administrator to furnish certain advisory and administrative services to the
Funds, and Sub-Adviser is willing to furnish such services;
NOW THEREFORE, in consideration of the promises and the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. Adviser hereby appoints Sub-Adviser as sub-adviser and
sub-administrator of each Fund for the period and on the terms set forth in this
Contract. Sub-Adviser accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. DUTIES AS SUB-ADVISER.
(a) Subject to the supervision of the Company's Board of Trustees
("Board") and Adviser, the Sub-Adviser will provide a continuous investment
program for each Fund, including investment research and management, with
respect to all securities and investments and cash equivalents of the Fund. The
Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold with respect to each Fund., and
the brokers and dealers through whom trades will be executed.
(b) The Sub-Adviser agrees that, in placing orders with brokers, it will
attempt to obtain the best net result in terms of price and execution.
Consistent with this
<PAGE>
obligation, the Sub-Adviser may, in its discretion, purchase and sell portfolio
securities from and to brokers and dealers who sell shares of the Funds or
provide the Funds, Adviser's other clients, or Sub-Adviser's other clients with
research, analysis, advice and similar services. The Sub-Adviser may pay to
brokers and dealers, in return for such research and analysis, a higher
commission or spread than may be charged by other brokers and dealers, subject
to the Sub-Adviser's determining in good faith that such commission or spread is
reasonable in terms either of the particular transaction or of the overall
responsibility of the Adviser and Sub-Adviser to the Funds and their other
clients and that the total commissions or spreads paid by each Fund will be
reasonable in relation to the benefits to the Fund over the long term. In no
instance will portfolio securities be purchased from or sold to the Sub-Adviser,
or any affiliated person thereof, except in accordance with the federal
securities laws and the rules and regulations thereunder and any exemptive
orders currently in effect. Whenever the Sub-Adviser simultaneously places
orders to purchase or sell the same security on behalf of a Fund and one or more
other accounts advised by the Sub-Adviser, such orders will be allocated as to
price and amount among all such accounts in a manner believed to be equitable to
each account. The Company recognizes that in some cases this procedure may
adversely affect the results attained for each Fund.
(c) The Sub-Adviser will maintain all books and records with respect to
the securities transactions of the Funds, and will furnish the Board and Adviser
with such periodic and special reports as the Board or Adviser reasonably may
request. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Sub-Adviser hereby agrees that all records which it maintains for the
Company are the property of the Company, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records which it maintains for
the Company and which are required to be maintained by Rule 31a-1 under the
1940 Act, and further agrees to surrender promptly to the Company any records
which it maintains for the Company upon request by the Company.
3. DUTIES AS SUB-ADMINISTRATOR. Sub-Adviser will administer the affairs of
each Fund subject to the supervision of the Company's Board of Trustees
("Board"), the Adviser, and the following understandings:
(a) Sub-Adviser will supervise all aspects of the operations of each Fund,
including the oversight of transfer agency and custodial services except as
hereinafter set forth; provided, however, that nothing herein contained shall be
deemed to relieve or deprive the Board of its responsibility for control of the
conduct of the affairs of the Funds.
(b) At Sub-Adviser's expense, Sub-Adviser will provide the Company and the
Funds with such corporate, administrative and clerical personnel (including
officers of the Company) and services as are reasonably deemed necessary or
advisable by the Board.
(c) Sub-Adviser will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination (as applicable) of each Fund's prospectus,
statement of
<PAGE>
additional information, proxy material, tax returns and required reports with or
to the Fund's shareholders, the Securities and Exchange Commission and other
appropriate federal or state regulatory authorities.
(d) Sub-Adviser will provide the Company and the Funds with, or obtain for
them, adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and similar
items.
4. FURTHER DUTIES. In all matters relating to the performance of this
Contract, Sub-Adviser will act in conformity with the Agreement and Declaration
of Trust, By- Laws and Registration Statement of the Company and with the
instructions and directions of the Board and will comply with the requirements
of the 1940 Act, the rules thereunder, and all other applicable federal and
state laws and regulations.
5. SERVICES NOT EXCLUSIVE. The services furnished by Sub-Adviser hereunder
are not to be deemed exclusive and Sub-Adviser shall be free to furnish similar
services to others so long as its services under this Contract are not impaired
thereby. Nothing in this Contract shall limit or restrict the right of any
director, officer or employee of Sub-Adviser, who may also be a Trustee, officer
or employee of the Company, to engage in any other business or to devote his or
her time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature.
6. EXPENSES.
(a) During the term of this Contract, each Fund will bear all expenses,
not specifically assumed by Sub-Adviser, incurred in its operations and the
offering of its shares.
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therewith; (ii) fees payable to and expenses incurred on behalf of the Fund by
Adviser under this Contract; (iii) investment consulting fees and related costs;
(iv) expenses of organizing the Company and the Fund; (v) expenses of preparing
and filing reports and other documents with governmental and regulatory
agencies; (vi) filing fees and expenses relating to the registration and
qualification of the Fund's shares and the Company under federal and/or state
securities laws and maintaining such registrations and qualifications;
(vii) costs incurred in connection with the issuance, sale, or repurchase of the
Fund's shares of beneficial interest; (viii) fees and salaries payable to the
Company's Trustees who are not parties to this Contract or interested persons of
any such party ("Independent Trustees"); (ix) all expenses incurred in
connection with the Independent Trustees' services, including travel expenses;
(x) taxes (including any income or franchise taxes) and governmental fees;
(xi) costs of any liability, uncollectible items of deposit and other insurance
and fidelity bonds; (xii) any costs, expenses or losses arising out of a
liability of or claim for damages
<PAGE>
or other relief asserted against the Company or the Fund for violation of any
law; (xiii) interest charges; (xiv) legal, accounting and auditing expenses,
including legal fees of special counsel for the Independent Trustees;
(xv) charges of custodians, transfer agents, pricing agents and other agents;
(xvi) expenses of disbursing dividends and distributions; (xvii) costs of
preparing share certificates; (xviii) expenses of setting in type, printing and
mailing prospectuses and supplements thereto, statements of additional
information and supplements thereto, reports and proxy materials for existing
shareholders; (xix) any extraordinary expenses (including fees and disbursements
of counsel, costs of actions, suits or proceedings to which the Company is a
party and the expenses the Company may incur as a result of its legal obligation
to provide indemnification to its officers, Trustees, employees and agents)
incurred by the Company or the Fund; (xx) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (xxi) costs of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xxii) the cost
of investment company literature and other publications provided by the Company
to its Trustees and officers; and (xxiii) costs of mailing, stationery and
communications equipment.
(c) All general expenses of the Company and joint expenses of the Funds
shall be allocated among each Fund on a basis deemed fair and equitable by Sub-
Adviser, subject to Adviser's and the Board's supervision.
(d) Sub-Adviser will assume the cost of any compensation for services
provided to the Company received by the officers of the Company and by the
Trustees of the Company who are not Independent Trustees.
(e) The payment or assumption by Sub-Adviser of any expense of the Company
or any Fund that Sub-Adviser is not required by this Contract to pay or assume
shall not obligate Sub-Adviser to pay or assume the same or any similar expense
of the Company or any Fund on any subsequent occasion.
7. COMPENSATION.
(a) For the services provided to a Fund under this Contract, Adviser will
pay Sub-Adviser an annual fee, payable monthly, based upon the average daily net
assets of such Fund as set forth in Appendix A hereto.
(b) For the services provided under this Contract to each Fund as
hereafter may be established, Adviser will pay to Sub-Adviser a fee in an amount
to be agreed upon in a written Appendix to this Contract executed by Adviser and
by Sub-Adviser.
(c) The fee shall be computed daily and paid monthly to Sub-Adviser on or
before the last business day of the next succeeding calendar month.
(d) If this Contract becomes effective or terminates before the end of any
month, the fee for the period from the effective date to the end of the month or
from the
<PAGE>
beginning of such month to the date of termination, as the case may be, shall be
prorated according to the proportion which such period bears to the full month
in which such effectiveness or termination occurs.
8. LIMITATION OF LIABILITY OF SUB-ADVISER AND INDEMNIFICATION. Sub-Adviser
shall not be liable for any costs or liabilities arising from any error of
judgment or mistake of law or any loss suffered by the Fund or the Company in
connection with the matters to which this Contract relates except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
Sub-Adviser in the performance by Sub-Adviser of its duties or from reckless
disregard by Sub-Adviser of its obligations and duties under this Contract. Any
person, even though also an officer, partner, employee, or agent of Sub-Adviser,
who may be or become a Trustee, officer, employee or agent of the Company, shall
be deemed, when rendering services to a Fund or the Company or acting with
respect to any business of a Fund or the Company to be rendering such service to
or acting solely for the Fund or the Company and not as an officer, partner,
employee, or agent or one under the control or direction of Sub-Adviser even
though paid by it.
9. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date hereabove written,
provided that this Contract shall not take effect with respect to any Fund
unless it has first been approved (i) by a vote of a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by vote of a majority of that Fund's outstanding voting
securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, with respect to each Fund, this Contract shall continue
automatically for successive periods not to exceed twelve months each, provided
that such continuance is specifically approved at least annually (i) by a vote
of a majority of the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board or by vote of
a majority of the outstanding voting securities of that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund this Contract
may be terminated at any time, without the payment of any penalty, by vote of
the Board or by a vote of a majority of the outstanding voting securities of the
Fund on sixty days' written notice to Sub-Adviser or by Sub-Adviser at any time,
without the payment of any penalty, on sixty days' written notice to the
Company. Termination of this Contract with respect to one Fund shall not affect
the continued effectiveness of this Contract with respect to any other Fund.
This Contract will automatically terminate in the event of its assignment.
10. AMENDMENT. No provision of this Contract may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment
<PAGE>
of this Contract shall be effective until approved by vote of a majority of the
Fund's outstanding voting securities, when required by the 1940 Act.
11. GOVERNING LAW. This Contract shall be construed in accordance with the
laws of the State of Delaware (without regard to Delaware conflict or choice of
law provisions) and the 1940 Act. To the extent that the applicable laws of the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
12. MISCELLANEOUS. The captions in this Contract are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. If any provision of this
Contract shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Contract shall not be affected thereby. This
Contract shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors. As used in this Contract, the terms
"majority of the outstanding voting securities," "interested person,"
"assignment," "broker," "dealer," "investment adviser," "national securities
exchange," "net assets," "prospectus," "sale," "sell" and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the Securities and Exchange Commission by any rule,
regulation or order. Where the effect of a requirement of the 1940 Act reflected
in any provision of this Contract is made less restrictive by a rule, regulation
or order of the Securities and Exchange Commission, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
Attest: AIM ADVISORS, INC.
By:
Name:
Title:
Attest: INVESCO (NY) INC.
By:
Name:
Title:
<PAGE>
APPENDIX A
TO
SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
The Adviser shall pay the Sub-Adviser, as full compensation for all
services rendered and all facilities furnished hereunder, a fee related to each
Fund set forth below. Such fee shall be calculated by applying the following
annual rates to the average daily net assets of such Fund for the calendar year
computed in the manner used for the determination of the net asset value of
Shares of such Fund.
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND, GT GLOBAL VARIABLE EMERGING
MARKETS FUND, GT GLOBAL VARIABLE INFRASTRUCTURE FUND, GT GLOBAL VARIABLE
LATIN AMERICA FUND, GT GLOBAL VARIABLE GROWTH & INCOME FUND, GT GLOBAL
VARIABLE NATURAL RESOURCES FUND
ANNUAL RATE
0.40%
GT GLOBAL VARIABLE STRATEGIC INCOME FUND, GT GLOBAL VARIABLE GLOBAL
GOVERNMENT INCOME FUND, GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
ANNUAL RATE
0.30%
<PAGE>
___________________,1998
Mr. Scott Corrick
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Dear Scott:
We are writing to inform you about the proposed reorganization of G.T.
Global Variable Investment Trust (the "Company") into a newly organized Delaware
business trust, GT Global Variable Investment Trust (the "Trust"). In
connection with this transaction, which is scheduled to close on _____________,
1998, it is anticipated that each series of the Company listed on Schedule A to
this letter (each an "Old Fund") will transfer all of its assets to the
corresponding series listed on Schedule A (each a "New Fund") in exchange solely
for shares of beneficial interest in such New Fund and such New Fund's
assumption of such Old Fund's liabilities.
Consistent with the "Effective Period, Termination and Amendment" provision
in Section 16 of the Custodian Contract of February 3, 1993, as amended from
time to time (the "Contract"), between the Company and State Street Bank and
Trust Company, the Company hereby requests that, as of the close of business on
___________, 1998, you act under the terms of the Contract, including the fee
schedule relating thereto, as Custodian for each New Fund, which shall be deemed
to have succeeded to the corresponding Old Fund's obligations, rights, and
duties under the Contract.
The Company hereby further requests that you agree that the obligations of
the Trust under the Contract shall not be binding upon any of the Trust's
trustees, shareholders, nominees, officers, agents, or employees of the Trust
personally, but shall be binding only upon the assets and property of the New
Fund or New Funds to which such obligations relate.
Please indicate your acceptance of the foregoing by executing two copies of
this Letter Agreement, returning one copy to the Company and retaining one for
your records.
Sincerely,
G.T. Global Variable Investment Trust
By:
--------------------------
Helge K. Lee
Vice President and Secretary
Acknowledged and Accepted:
State Street Bank and Trust Company
By:
--------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT TRUST GT GLOBAL VARIABLE INVESTMENT TRUST
- ---------------------------------------------------------------------------------------------------
GT Global Variable Emerging Markets Fund GT Global Variable Emerging Markets Fund
- ---------------------------------------------------------------------------------------------------
GT Global Variable Global Government Income GT Global Variable Global Government Income
Fund Fund
- ---------------------------------------------------------------------------------------------------
GT Global Variable Growth & Income Fund GT Global Variable Growth & Income Fund
- ---------------------------------------------------------------------------------------------------
GT Global Variable Infrastructure Fund GT Global Variable Infrastructure Fund
- ---------------------------------------------------------------------------------------------------
GT Global Variable Latin America Fund GT Global Variable Latin America Fund
- ---------------------------------------------------------------------------------------------------
GT Global Variable Natural Resources Fund GT Global Variable Natural Resources Fund
- ---------------------------------------------------------------------------------------------------
GT Global Variable Strategic Income Fund GT Global Variable Strategic Income Fund
- ---------------------------------------------------------------------------------------------------
GT Global Variable Telecommunications Fund GT Global Variable Telecommunications Fund
- ---------------------------------------------------------------------------------------------------
GT Global Variable U.S. Government Income Fund GT Global Variable U.S. Government Income Fund
</TABLE>
<PAGE>
GT Global Investor Services, Inc. ("GT Services")
Attn: Earle A. Malm II
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, CA 94596
Re: Transfer Agency Agreement for GT Global Variable Investment Trust
(the "Company")
Dear Earle:
We are writing to inform you about the proposed reorganization of G.T.
Global Variable Investment Trust (the "Company") into a newly organized Delaware
business trust, GT Global Variable Investment Trust (the "Trust"). In
connection with this transaction, which is scheduled to close on May 29, 1998,
it is anticipated that each series of the Company listed on Schedule A to this
letter (each an "Old Fund") will transfer all of its assets to the corresponding
series listed on Schedule A (each a "New Fund") in exchange solely for shares of
beneficial interest in such New Fund and such New Fund's assumption of such Old
Fund's liabilities.
Consistent with the "Amendments" provision in Section XXIII of the Transfer
Agency Contract of February 10, 1993, as amended from time to time (the
"Contract"), between the Company and GT Global Investor Services, Inc., the
Company hereby requests that, as of the close of business on May 29, 1998, you
act under the terms of the Contract, including the fee schedule relating
thereto, as Transfer Agent for each New Fund, which shall be deemed to have
succeeded to the corresponding Old Fund's obligations, rights, and duties under
the Contract.
The Company hereby further requests that you agree that the obligations of
the Trust under the Contract shall not be binding upon any of the Trust's
trustees, shareholders, nominees, officers, agents, or employees of the Trust
personally, but shall be binding only upon the assets and property of the New
Fund or New Funds to which such obligations relate.
Please indicate your acceptance of the foregoing by executing two copies of
this Letter Agreement, returning one copy to the Company and retaining one for
your records.
Sincerely,
G.T. GLOBAL VARIABLE INVESTMENT TRUST
-------------------------------------
William J. Guilfoyle
President
<PAGE>
Accepted by GT Global Investor Services, Inc.
- -------------------------------------
Earle A. Malm II
Chief Operating Officer
<PAGE>
SCHEDULE A
- --------------------------------------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT TRUST GT GLOBAL VARIABLE INVESTMENT TRUST
- --------------------------------------------------------------------------------
GT Global Variable Emerging Markets GT Global Variable Emerging Markets Fund
Fund
- --------------------------------------------------------------------------------
GT Global Variable Global Government GT Global Variable Global Government
Income Fund Income Fund
- --------------------------------------------------------------------------------
GT Global Variable Growth & Income GT Global Variable Growth & Income Fund
Fund
- --------------------------------------------------------------------------------
GT Global Variable Infrastructure Fund GT Global Variable Infrastructure Fund
- --------------------------------------------------------------------------------
GT Global Variable Latin America Fund GT Global Variable Latin America Fund
- --------------------------------------------------------------------------------
GT Global Variable Natural Resources GT Global Variable Natural Resources
Fund Fund
- --------------------------------------------------------------------------------
GT Global Variable Strategic Income GT Global Variable Strategic Income Fund
Fund
- --------------------------------------------------------------------------------
GT Global Variable Telecommunications GT Global Variable Telecommunications
Fund Fund
- --------------------------------------------------------------------------------
GT Global Variable U.S. Government GT Global Variable U.S. Government
Income Fund Income Fund
- --------------------------------------------------------------------------------
<PAGE>
FUND ACCOUNTING AND PRICING AGENT AGREEMENT
This Fund Accounting and Pricing Agent Agreement (the "Agreement") is made
as of May 29 , 1998, by and between GT Global Variable Investment Series (the
"Company") and INVESCO (NY) Inc. ("INVESCO (NY)").
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company;
WHEREAS, the Company currently operates five separate mutual funds, each
organized as a separate and distinct series consisting of shares of beneficial
interest (such existing funds and such funds as may hereafter be established
being referred to in this Agreement as the "Funds" and singly as a "Fund");
WHEREAS, the Company is part of a complex of investment companies that are
sub-advised and/or sub-administered by INVESCO (NY) and with which INVESCO (NY)
has entered into Fund Accounting and Pricing Agent Agreements (the "INVESCO (NY)
Funds");
WHEREAS, the Company desires to retain INVESCO (NY) to act as its
accounting and pricing agent, and INVESCO (NY) is willing to act in such
capacities.
NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions hereinafter set forth, the Company and INVESCO (NY) hereby agree as
follows:
SECTION 1. APPOINTMENT. The Company hereby appoints INVESCO (NY) to
act as the accounting and pricing agent for each Fund for the period and on the
terms and conditions set forth in this Agreement. INVESCO (NY) hereby accepts
such appointment and agrees to render the services set forth for the
compensation herein provided.
SECTION 2. DEFINITIONS. As used in this Agreement and in addition to
the terms defined elsewhere herein, the following terms shall have the meanings
assigned to them in this Section:
(a) "Authorized Person" means any officer of the Company and any
other person, whether or not any such person is an officer or employee of
the Company, duly authorized by the Board of Trustees (the "Board"), the
President or any Vice President of the Fund to give Oral and/or Written
Instructions on behalf of the Company or any Fund.
(b) "Commission" means the Securities and Exchange Commission.
(c) "Custodian" means the custodian or custodians employed by
the Company to maintain custody of the Fund's assets.
(d) "Governing Documents" means the Declaration of Trust,
By-Laws and other applicable charter documents of the Company, all as they
may be amended from time to time.
(e) "Oral Instruction" means oral instructions actually received
by
<PAGE>
INVESCO (NY) from an Authorized Person or from a person reasonably believed
by INVESCO (NY) to be an Authorized Person, provided that, any Oral
Instruction shall be promptly confirmed by Written Instructions.
(f) "Prospectus" means the current prospectus and statement of
additional information of a Fund, taken together.
(g) "Shares" means shares of beneficial interest of any of the
Funds.
(h) "Shareholder" means any owner of Shares.
(i) "Written Instructions" means written instructions delivered
by hand, mail, tested telegram or telex, cable or facsimile sending device
received by INVESCO (NY) and signed by an Authorized Person.
SECTION 3. COMPLIANCE WITH LAWS, ETC. In performing its
responsibilities hereunder, INVESCO (NY) shall comply with all terms and
provisions of the Governing Documents, the Prospectus and all applicable state
and federal laws including, without limitation, the 1940 Act and the rules and
regulations promulgated by the Commission thereunder.
SECTION 4. SERVICES. In consideration of the compensation payable
hereunder and subject to the supervision and control of the Company's Boards,
INVESCO (NY) shall provide the following services to the Funds:
(a) PRICING AGENT. As pricing agent, INVESCO (NY) shall:
(1) Obtain security market quotes from services approved by the
investment manager of the Funds or, if such quotes are unavailable,
then obtain such prices from the investment manager of the Funds or
from such sources as the investment manager may direct, and, in either
case, calculate the market value of the Funds' investments; and
(2) Value the assets of the Funds and compute the net asset
value per Share of the Funds at such dates and times and in the manner
specified in the then currently effective Prospectus and transmit to
the Funds' investment manager.
(b) ACCOUNTING AGENT. As fund accounting agent, INVESCO (NY) shall:
(1) Calculate the net income of each Fund;
(2) Calculate capital gains or losses for each Fund from the
sale or disposition of assets, if any;
(3) Maintain the general ledger and other accounts, books and
financial records of the Company, as required under Section 31(a) of
the 1940 Act and the rules promulgated by the Commission thereunder in
connection with the services provided by INVESCO (NY);
-2-
<PAGE>
(4) Perform the following functions on a daily basis:
(A) journalize each Fund's investment, capital share
and income and expense activities;
(B) reconcile cash and investment balances of each Fund
with the Custodian and provide the Funds' investment manager with
the beginning cash balance available for investment purposes and
update the cash availability throughout the day as required by
the investment manager;
(C) verify investment buy/sell trade tickets received from
a Fund's investment manager and transmit trades to a Fund's
Custodian for proper settlement;
(D) maintain individual ledgers for investment securities;
(E) maintain historical tax lots for investment securities;
(F) calculate various contractual expenses (e.g., advisory
and custody fees);
(G) post to and prepare the Funds' statement of assets and
liabilities and statement of operations; and
(H) monitor expense accruals and notify an Authorized
Person of any proposed adjustments;
(5) Receive and act upon notices, Oral and Written Instructions,
certificates, instruments or other communications from a Fund's
shareholder servicing and transfer agent;
(6) Assist in the preparation of financial statements
semiannually which will include the following items:
(A) schedule of investments;
(B) statement of assets and liabilities;
(C) statement of operations;
(D) changes in net assets;
(E) cash statement; and
(F) schedule of capital gains and losses;
(7) Prepare monthly security transaction listings;
(8) Prepare quarterly broker security transactions summaries;
and
-3-
<PAGE>
(9) At the reasonable request of the Company, assist in the
preparation of various reports or other financial documents required
by federal, state and other appropriate laws and regulations.
SECTION 5. COMPENSATION. As compensation for the services rendered
by INVESCO (NY) hereunder during the term of the Agreement, each Fund shall pay
to INVESCO (NY) monthly such fees as shall be agreed to from time to time by the
Company and INVESCO (NY), in writing and attached hereto as Schedule A. In
addition, as may be agreed to from time to time in writing by the Company and
INVESCO (NY), each Fund shall reimburse INVESCO (NY) for certain expenses that
it incurs in rendering services with respect to that Fund under this Agreement.
SECTION 6. RELIANCE BY INVESCO (NY) ON INSTRUCTIONS. Unless
otherwise provided in this Agreement, INVESCO (NY) shall act only upon Oral or
Written Instructions. INVESCO (NY) shall be entitled to rely upon any such
Instructions actually received by it under this Agreement. The Company agrees
that INVESCO (NY) shall incur no liability to the Company or any of the Funds in
acting upon Oral or Written Instructions given to INVESCO (NY) hereunder,
provided that, such Instructions reasonably appear to have been received from an
Authorized Person.
SECTION 7. COOPERATION WITH AGENTS OF THE COMPANY. INVESCO (NY)
shall cooperate with the Company's agents and employees, including, without
limitation, their independent accountants, and shall take all reasonable action
in the performance of its obligations under this Agreement to assure that all
necessary information is made available to such agents to the extent necessary
in the performance of their duties to the Company.
SECTION 8. CONFIDENTIALITY. INVESCO (NY), on behalf of itself and
its employees, agrees to treat confidentially all records and other information
relating to the Company and the Funds except when requested to divulge such
information by duly constituted authorities provided that notification and prior
approval is obtained from the Company, which approval shall not be unreasonably
withheld and may not be withheld if INVESCO (NY), in its judgment, may be
subject to civil or criminal contempt proceedings for failure to comply.
SECTION 9. STANDARD OF CARE. In the performance of its
responsibilities hereunder, INVESCO (NY) shall exercise care and diligence in
the performance of its duties and act in good faith and use its best efforts to
ensure the accuracy and completeness of all services under this Agreement. In
performing services hereunder, INVESCO (NY):
(a) shall be under no duty to take any action on behalf of the
Company or the Funds except as specifically set forth herein or as may be
specifically agreed to by INVESCO (NY) in writing, and in computing the net
asset value per Share of a Fund, INVESCO (NY) may rely upon any information
furnished to it including, without limitation, information (1) as to the
accrual of liabilities of a Fund and as to liabilities of a Fund not
appearing on the books of account kept by INVESCO (NY), (2) as to the
existence, status and proper treatment of reserves, if any, authorized by a
Fund, (3) as to the sources of quotations to be used in computing net asset
value, (4) as to the fair value to be assigned to any securities or other
property for which price quotations are not readily available and (5) as to
the sources of information with respect to "corporate
-4-
<PAGE>
actions" affecting portfolio securities of a Fund (information as to
"corporate actions" shall include information as to dividends,
distributions, interest payments, prepayments, stock splits, stock
dividends, rights offerings, conversions, exchanges, recapitalizations,
mergers, redemptions, calls, maturity dates and similar actions, including
ex-dividend and record dates and the amounts and terms thereof);
(b) shall be responsible and liable for all losses, damages and
costs (including reasonable attorneys' fees) incurred by the Company or any
Fund which is due to or caused by INVESCO (NY)'s negligence in the
performance of its duties under this Agreement or for INVESCO (NY)'s
negligent failure to perform such duties as are specifically assumed by
INVESCO (NY) in this Agreement, provided that, to the extend that duties,
obligations and responsibilities are not expressly set forth in this
Agreement, INVESCO (NY) shall not be liable for any act or omission that
does not constitute willful misfeasance, bad faith or negligence on the
part of INVESCO (NY) or reckless disregard by INVESCO (NY) of such duties,
obligations and responsibilities; and
(c) without limiting the generality of the foregoing, INVESCO
(NY) shall not, in connection with INVESCO (NY)'s duties under this
Agreement, be under any duty or obligation to inquire into and shall not be
liable for or in respect of:
(1) the validity or invalidity or authority or lack of
authority of any Oral or Written Instruction, notice or other
instrument which conforms to the applicable requirements of this
Agreement, if any and that INVESCO (NY) reasonably believes to be
genuine; and
(2) delays or errors or loss of data occurring by reason of
circumstances beyond INVESCO (NY)'s control including, without
limitation, acts of civil or military authorities, national
emergencies, labor difficulties, fire, mechanical breakdown,
denial of access, earthquake, flood or catastrophe, acts of God,
insurrection, war, riots, or failure of the mails,
transportation, communication or power supply.
Notwithstanding any other provisions of this Agreement, the following provisions
shall apply with respect to INVESCO (NY)'s computation of a Fund's net asset
value: INVESCO (NY) shall be held to the exercise of reasonable care in
computing and determining net asset value as provided in Section 4(a), above,
but shall not be held accountable or liable for any losses, damages or expenses
of a Fund or any Shareholder or former Shareholder may incur arising from or
based upon errors or delays in the determination of such net asset value unless
such error or delay was due to INVESCO (NY)'s negligence or willful misfeasance
in the computation and determination of such net asset value. The parties
hereto acknowledge, however, that INVESCO (NY) causing an error or delay in the
determination of net asset value may, but does not in an of itself, constitute
negligence or willful misfeasance. In no event shall INVESCO (NY) be liable or
responsible to the Company or a Fund or any other party for any error or delay
which continued or was undetected after the date of an audit of the Company or
any Fund performed by the certified public accountants employed by the Company
if, in the exercise of reasonable care in accordance with generally accepted
accounting principles, such accountants should have become aware of such error
or delay in the course of performing such audit. INVESCO (NY)'s liability for
any such negligence or willful misfeasance which results in an error in
determination of such net asset value be limited to the direct out-of-pocket
loss a Fund and/or any Shareholder or
-5-
<PAGE>
former Shareholder shall actually incur.
Without limiting the generality of the foregoing, INVESCO (NY) shall
not be held accountable or liable to a Fund a Shareholder or former Shareholder
or any other person for any delays or losses, damages or expenses any of them
may suffer or incur resulting from (1) INVESCO (NY)'s failure to receive timely
and suitable notification concerning quotations, corporate actions or similar
matters relating to or affecting portfolio securities of a Fund or (2) any
errors in the computation of a net asset value based upon or arising out of
quotations or information as to corporate actions if received by INVESCO (NY)
from a source that INVESCO (NY) was authorized to rely upon. Nevertheless,
INVESCO (NY) will use its best judgment in determining whether to verify through
other sources any information that it has received as to quotations or corporate
actions if INVESCO (NY) has reason to believe that any such information is
incorrect.
SECTION 10. RECEIPT OF ADVICE. If INVESCO (NY) is in doubt as to any
action to be taken or omitted by it, INVESCO (NY) may request, and shall be
entitled to rely upon, directions and advice from the Company, including Oral or
Written Instructions where appropriate, or from counsel of its own choosing (who
may also be counsel for the Company or any Fund), with respect to any question
of law. In case of conflict between directions, advice or Oral and Written
Instructions received by INVESCO (NY) pursuant to this Section, INVESCO (NY)
shall be entitled to rely on and follow the advice received from counsel as
described above. INVESCO (NY) shall be protected in any action or in action
that it takes in reliance on any directions, advice or Oral or Written
Instructions received pursuant to this Section that INVESCO (NY), after the
receipt of the same, in good faith believes to be consistent with such
directions, advice or Oral or Written Instructions, as the case may be.
Notwithstanding the foregoing, nothing in this Section shall be construed as
imposing on INVESCO (NY) any obligation to seek such directions, advice or Oral
or Written Instruction, or to act in accordance with them when received, unless
the same is a condition to INVESCO (NY)'s properly taking or omitting to take
such action under the terms of this Agreement.
SECTION 11. INDEMNIFICATION OF INVESCO (NY). The Company agrees to
indemnify and hold harmless INVESCO (NY) and its officers, directors, employees,
nominees and subcontractors, if any, from all taxes, charges, expenses,
assessments, claims and liabilities, including, without limitation, liabilities
arising under the 1940 Act, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the Commodities Exchange Act and
any state or foreign securities or blue sky laws, and expenses, including,
without limitation, reasonable attorneys' fees and disbursements, arising
directly or indirectly from any action or thing that INVESCO (NY) takes or omits
to take or do:
(a) at the request or on the direction of or in reliance upon
the advice of the Company;
(b) upon Oral or Written Instructions; or
(c) in the performance by INVESCO (NY) of its responsibilities
under this Agreement;
provided that, INVESCO (NY) shall not be indemnified against any liability to
the Company or the Funds, or any expenses incident thereto, arising out of
INVESCO (NY)'s own willful
-6-
<PAGE>
misfeasance, bad faith or negligence or reckless disregard of its duties in
connection with the performance of its duties and obligations specifically
described in this Agreement.
SECTION 12. INDEMNIFICATION OF THE COMPANY. INVESCO (NY) agrees to
indemnify and hold harmless the Company and its officers, trustees, directors
and employees, from all taxes, charges, expenses, assessments, claims and
liabilities, including, without limitation, liabilities arising under the 1940
Act, the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, the Commodities Exchange Act and any state or foreign
securities or blue sky laws, and expenses, including, without limitation,
reasonable attorneys' fees and disbursements, arising directly or indirectly
from any action or omission of INVESCO (NY) that does not meet the standard of
care to which INVESCO (NY) is subject under Section 9, above.
SECTION 13. LIMITATION OF LIABILITY OF SHAREHOLDERS AND TRUSTEES OF
THE COMPANY. It is expressly agreed that the obligations of the Company
hereunder shall not be binding upon any of the shareholders, trustees,
directors, officers, nominees, agents or employees of the Company personally,
but shall only bind the assets and property of the applicable Funds, as provided
in the Governing Documents. The execution and delivery of this Agreement has
been authorized by the Board of the Company, and this Agreement has been
executed and delivered by an authorized officer of the Company acting as such,
and neither such authorization by the Board nor such execution and delivery by
such officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the assets
and property of the applicable Fund as provided in the Governing Documents.
SECTION 14. DURATION AND TERMINATION. This Agreement shall continue
with respect to the Company and each Fund until termination with respect to the
Company, or with respect to one or more Funds, is effected by the Company or
INVESCO (NY) upon sixty days' prior written notice to the other. In the event
of the "assignment" of this Agreement within the meaning of the 1940 Act, this
Agreement shall terminate automatically.
SECTION 15. NOTICES. All notices and other communications hereunder,
including Written Instructions, shall be in writing or by confirming telegram,
cable, telex or facsimile sending device. Notices with respect to a party shall
be directed to such address as may from time to time be designated by that party
to the other.
SECTION 16. FURTHER ACTIONS. The Company and INVESCO (NY) agree to
perform such further acts and to execute such further documents as may be
necessary or appropriate to effect the purposes of this Agreement.
SECTION 17. AMENDMENTS. This Agreement, or any part thereof, may be
amended only by an instrument in writing signed by the Company and INVESCO (NY).
SECTION 18. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
SECTION 19. SHAREHOLDER LIABILITY. It is expressly agreed that the
obligations of the Company hereunder shall not be binding upon any of the
Trustees,
-7-
<PAGE>
Shareholders, nominees, officers, agents or employees of the Company personally,
but shall only bind the assets and property of the Funds, as provided in the
Company's Agreement and Declaration of Trust. The execution and delivery of
this Agreement has been authorized by the Trustees of the Company and this
Agreement has been executed and delivered by an authorized officer of the
Company acting as such; neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Funds, as provided in the
Company's Agreement and Declaration of Trust.
SECTION 20. MISCELLANEOUS. This Agreement embodies the entire
agreement and understanding between the Company and INVESCO (NY) and supersedes
all prior agreements and understandings relating to the subject matter hereof,
provided that the Company and INVESCO (NY) may embody in one or more separate
documents their agreement or agreements with respect to such matters that this
Agreement provides may be later agreed to by and between the Company and INVESCO
(NY) from time to time. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement shall be governed by and construed in accordance with California law.
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding upon and shall inure to
the benefit of the Company and INVESCO (NY) and their respective successors.
IN WITNESS WHEREOF, the Company and INVESCO (NY) have caused this
Agreement to be executed by their officers designated below as of this day,
month and year first above written.
GT GLOBAL VARIABLE INVESTMENT SERIES
By: ____________________________
Attest: _______________________
INVESCO (NY) INC.
By: ____________________________
Attest: _______________________
-8-
<PAGE>
SCHEDULE A
FUND ACCOUNTING AND PRICING AGENT FEES
The Fund shall pay a Fee to INVESCO (NY) determined as a percentage of the
Fund's net assets. The annualized rate at which the fee is paid (the Fee Rate)
and the Fee shall be calculated as set forth below:
- - An ASSET MULTIPLIER is determined by multiplying .0003 times the first $5
billion in average net assets of the INVESCO (NY) Funds plus .0002 times
the net assets over $5 billion.
- - The FEE RATE is determined by dividing the Asset Multiplier by the net
assets of the INVESCO (NY) Funds.
- - The MONTHLY FEE is determined then by multiplying the average daily Fee
Rate by the number of days in the month and by the Fund's average daily net
assets then dividing by 365/or 366
Example: For Fund X having $100 million in average net assets during December
1997, in which the INVESCO (NY) Funds have average net assets of $8 billion:
Asset Multiplier = (.0003) ($5 billion) + (.0002) ($3 billion) = $2.1
million
Fee Rate = $2.1 million = .0002625
------------
$8 billion
Monthly Fee = ( 31 ) (.0002625) ($100 million) = $2,229.45
---------
( 365 )
-9-
<PAGE>
--------------------------
KIRKPATRICK & LOCKHART LLP
--------------------------
1800 MASSACHUSETTS AVENUE, N.W.
2ND FLOOR
WASHINGTON, D.C. 20036-1800
TELEPHONE (202) 778-9000
FACSIMILE (202) 778-9100
THEODORE L. PRESS
(202) 778-9025
[email protected]
May 29, 1998
GT Global Variable Investment Trust
50 California Street, 27th Floor
San Francisco, California 94111
Ladies and Gentlemen:
You have requested our opinion, as counsel to GT Global Variable Investment
Trust ("Trust"), as to certain matters regarding the issuance of Shares of
Trust. (As used in this letter, the term "Shares" means the shares of
beneficial interest in each series of Trust listed in Schedule A attached to
this opinion (each, a "Portfolio").)
As such counsel, we have examined certified or other copies, believed by us
to be genuine, of Trust's Agreement and Declaration of Trust dated as of May 7,
1998 ("Agreement"), and Bylaws and such other documents relating to its
organization and operation as we have deemed relevant to our opinion, as set
forth herein. Our opinion is limited to the laws and facts in existence on the
date hereof, and it is further limited to the laws (other than the conflict of
law rules) of the State of Delaware that in our experience are normally
applicable to the issuance of shares of beneficial interest by business trusts
and to the Securities Act of 1933 ("1933 Act"), the Investment Company Act of
1940 ("1940 Act") and the regulations of the Securities and Exchange Commission
("SEC") thereunder. With respect to matters governed by the laws of the State
of Delaware (excluding the securities laws thereof), we have relied solely on
the opinion of Potter Anderson & Corroon, LLP, Delaware counsel to the Trust, an
executed copy of which is appended hereto as Exhibit A.
Based on the foregoing, we are of the opinion that Trust has been duly
organized as a business trust under the laws of the State of Delaware and is
validly existing thereunder; that the issuance of the Shares has been duly
authorized by Trust; and that, when sold in accordance with the terms
contemplated by Trust's registration statement on Form N-1A (File No. 33-52036)
("Registration Statement"), including receipt by Trust of full payment for the
Shares and compliance with the 1933 Act and the 1940 Act, the Shares will have
been legally issued, fully paid, and non-assessable.
We note, however, that Trust is an entity of the type commonly known as a
"Delaware business trust." The Delaware Business Trust Act, 12 Del. C., Section
3801 et seq. ("Delaware Act"), provides that shareholders of a Delaware
business trust are entitled to the same limitation of personal liability
extended to stockholders of a Delaware corporation. Thus, under Delaware law,
shareholders will not be personally liable for the obligations of Trust. This
limitation of
<PAGE>
- --------------------------
KIRKPATRICK & LOCKHART LLP
- --------------------------
GT Global Variable Investment Trust
May 29, 1998
Page 2
liability may not be absolute, however, as it is possible that a non-Delaware
court would not uphold this provision of the Delaware Act.
Consistent with the Delaware Act, the Agreement includes an express
disclaimer of shareholder liability for the debts, liabilities, obligations, and
expenses incurred by, contracted for, or otherwise existing with respect to
Trust or any Portfolio (or class) thereof. The Agreement also requires that
every note, bond, contract, or other undertaking issued by or on behalf of Trust
or its trustees relating to Trust or to any Portfolio include a recitation
limiting the obligation represented thereby to Trust and its assets or to one or
more Portfolios and the assets belonging thereto (but provides that the omission
of such a recitation shall not operate to bind any shareholder or trustee of
Trust). Furthermore, the Agreement states that the debts, liabilities,
obligations, and expenses incurred by, contracted for, or otherwise existing
with respect to a particular Portfolio shall be enforceable against the assets
of such Portfolio only, and not against the assets of Trust generally or the
assets belonging to any other Portfolio. Finally, the Agreement further
provides (1) for indemnification from the assets belonging to the applicable
Portfolio (or allocable to the applicable class) for all loss and expense of any
shareholder held personally liable for the obligations of Trust or any Portfolio
(or class) by virtue of ownership of Shares of Trust or such Portfolio (or
class), and (2) for Trust, on behalf of the affected Portfolio (or class), to
assume the defense of any claim against the shareholder for any act or
obligation of that Portfolio (or class). Thus, the risk of a shareholder's
incurring financial loss because of shareholder liability is limited to
circumstances in which (a) a court refused to apply Delaware law or otherwise
failed to give full effect to the Agreement or contractual provisions limiting
shareholder liability and (b) Trust was unable to meet its obligations.
We hereby consent to this opinion accompanying Post-Effective Amendment No.
17 to the Registration Statement when it is filed with the SEC and to the
reference to our firm in the prospectus that is being filed as part of such
amendment.
Very truly yours,
KIRKPATRICK & LOCKHART LLP
By: /s/ Theodore L. Press
---------------------------
<PAGE>
SCHEDULE A
GT GLOBAL VARIABLE INVESTMENT TRUST
GT Global Variable Emerging Markets Fund
GT Global Variable Global Government Income Fund
GT Global Variable Growth & Income Fund
GT Global Variable Infrastructure Fund
GT Global Variable Latin America Fund
GT Global Variable Natural Resources Fund
GT Global Variable Strategic Income Fund
GT Global Variable Telecommunications Fund
GT Global Variable U.S. Government Income Fund
<PAGE>
Exhibit A
POTTER ANDERSON & CORROON LLP
CHARLES S. CROMPTON, JR. JOHN P. SINCLAIR
ROBERT K. PAYSON HERCULES PLAZA BLAINE T. PHILLIPS
LEONARD S. TOGMAN HUGH CORROON
RICHARD E. POOLE P.O. BOX 951 JOSEPH H. GEOGHEGAN
MICHAEL D. GOLDMAN RICHARD L. McMAHON
JAMES F. BURNETT WILMINGTON, DELAWARE 19899 OF COUNSEL
DANIEL F. WOLCOTT, JR. ROBERT P. BARNETT
CHARLES S. McDOWELL (302) 984-6000 MICHAEL B. KEEHAN
DAVID B. BROWN W. LAIRD STABLER, JR.
SOMERS S. PRICE, JR. FACSIMILE (302) 658-1192 COUNSEL
DONALD J. WOLFE, JR.
GREGORY A. INSKIP HOME PAGE: ATTYS.PACDELAWARE.COM FREDERICK H. ALTERGOTT
DAVID J. BALDWIN PETER L. TRACEY
JOHN E. JAMES JENNIFER GIMLER BRADY
W. HARDING DRANE, JR. E-MAIL: @pacdelaware.com SCOTT E. WAXMAN
MARY E. COPPER DIRECT DIAL: (302) JOANNE CEBALLOS
W. LAIRD STABLER, III WENDY K. VOSS
RICHARD L. HORWITZ KEVIN R. SHANNON
WILLIAM J. MARSDEN, JR. TODD L. GOODMAN
MICHAEL B. TUMAS MICHAEL A. PITTENGER
KATHLEEN FUREY McDONOUGH COLLEEN E. HICKS
LAURIE SELBER SILVERSTEIN MICHAEL S. McGINNISS
PETER J. WALSH, JR. May 29, 1998 MATTHEW E. FISCHER
STEPHEN C. NORMAN WILLIAM A. HAZELTINE
ARTHUR L. DENT EILEEN M. FILLIBEN
HAROLD I. SALMONS, III EMILIE R. NINAN
WILLIAM R. DENNY BARRY J. BENZING*
PHILIP A. ROVNER DEBORAH A. CUOCO
ANDREW T. O'NEILL
GREGORY M. JOHNSON
ROGER D. ANDERSON
STEVEN L. CAPONI
JOHN J. QUINN, III
_________
*admitted in NY and PA only
[DRAFT FOR DISCUSSION PURPOSES ONLY]
To Each of the Persons Listed
on Schedule I Attached Hereto
Re: GT GLOBAL VARIABLE INVESTMENT TRUST
-----------------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for GT Global Variable Investment
Trust, a Delaware business trust (the "Trust") in connection with the proposed
issuance of shares (collectively the "Shares") of GT Global Variable Emerging
Markets Fund, GT Global Variable Global Government Income Fund, GT Global
Variable Global Growth & Income Fund, GT Global Variable Infrastructure Fund, GT
Global Variable Latin American Growth Fund, GT Global Variable Natural Resources
Fund, GT Global Variable Strategic Income Fund, GT Global Variable
Telecommunications Fund, and GT Global Variable U.S. Government Income
(collectively, the "Portfolios") as designated on Schedule A to that certain
Agreement and Declaration of Trust dated as of May 7, 1998, entered into among
William J. Guilfoyle, C. Derek Anderson, Frank S. Bayley, Arthur C. Patterson,
and Ruth H. Quigley, as Trustees, and the Shareholders of the Trust (the
"Declaration"). Initially capitalized terms used herein and not otherwise
defined are used herein as defined in the Declaration.
For purposes of giving the opinions hereinafter set forth, we have examined
only the following documents and have conducted no independent factual
investigation of our own:
<PAGE>
To each of the persons on
Schedule I attached hereto
May 29, 1998
Page 2
1. The Certificate of Trust for the Trust, dated as of May 7, 1998, as
filed in the Office of the Secretary of State of the State of Delaware (the
"Secretary of State") on May 7, 1998;
2. The Declaration;
3. The By-laws of the Trust;
4. Resolutions of the Trustees (the "Reorganization Resolutions")
approving that certain plan of reorganization (the "Plan of Reorganization") by
and between the Trust and GT Global Variable Investment Trust (the "Old Trust");
5. The Plan of Reorganization;
6. Resolutions of the Trustees (the "18f-3 Resolutions" and together with
the Reorganization Resolutions, the "Resolutions") adopting that certain plan
pursuant to Rule 18f-3 of the Investment Company Act of 1940 (the "18f-3 Plan");
7. A Certificate of Good Standing for the Trust, dated May 29, 1998
obtained from the Secretary of State; and
8. The registration statement on Form N-1A filed with the Securities and
Exchange Commission on May 29, 1998, pursuant to the Securities Act of 1933, as
amended, covering the Shares (the "Registration Statement").
As to certain facts material to the opinions expressed herein, we have
relied upon the representations and warranties contained in the documents
examined by us.
Based upon the foregoing, and upon an examination of such questions of law
of the State of Delaware as we have considered necessary or appropriate, and
subject to the assumptions, qualifications, limitations and exceptions set forth
herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Act.
2. The Portfolios have been duly created and are validly existing as
series under Section 3804 of the Delaware Act.
<PAGE>
To each of the persons on
Schedule I attached hereto
May 29, 1998
Page 3
3. The Declaration constitutes the legal, valid and binding obligation of
the Trustees, enforceable against the Trustees, in accordance with its terms.
4. Subject to the other qualifications set forth herein (including,
without limitation, paragraph 5 below), the Shares have been duly authorized and
when (a) the actions referred to in the Plan of Reorganization shall have
occurred, and (b) the Shares shall have been otherwise issued and sold in
accordance with the Declaration, the Resolutions, the Plan of Reorganization,
the 18f-3 Plan, and the By-laws, such Shares will be validly issued, fully paid,
and non-assessable undivided beneficial interests in the assets of the
respective Portfolios of which such Shares form a part, as the case may be.
5. When and if the actions referred to in paragraph 4 have occurred, the
holders of the Shares as beneficial owners of the Shares will be entitled to the
same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware, except that such holders of Shares may be obligated to provide
indemnity and/or security in connection with the issuance of replacement
certificates for lost or destroyed certificates, if any, representing such
Shares, if such holders request certificates in accordance with the By-laws and
such certificates are lost.
In addition to the assumptions and qualifications set forth above, all of
the foregoing opinions contained herein are subject to the following
assumptions, qualifications, limitations and exceptions:
a. The foregoing opinions are limited to the laws of the State of
Delaware presently in effect, excluding the securities laws thereof. We have
not considered and express no opinion on the laws of any other jurisdiction,
including, without limitation, federal laws and rules and regulations relating
thereto.
b. We have assumed the due execution and delivery by each party
listed as a party to the Plan of Reorganization. We have further assumed the
due authorization by the Old Trust of the Plan of Reorganization. We have
assumed further that the Old Trust has the full trust power, authority, and
legal right to execute, deliver and perform the
<PAGE>
To each of the persons on
Schedule I attached hereto
May 29, 1998
Page 4
Plan of Reorganization. We also have assumed that the Old Trust is a trust
validly existing and in good standing under the laws of its jurisdiction of
organization. We have also assumed that the Plan of Reorganization does not
result in the breach of the terms of, and does not contravene the Old Trust's
constituent documents, any contractual restriction binding on any party to
the Plan of Reorganization, or any law, rule or regulation applicable to such
parties (exclusive of the Trust, but only to the extent of any Delaware law,
rule or regulation). In addition, we have assumed the legal capacity of any
natural persons who are parties to any of the documents examined by us.
c. The foregoing opinion regarding the enforceability of the
Declaration is subject to (i) applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, fraudulent transfer and similar laws relating to or
affecting creditors rights generally including, without limitation, the Delaware
Uniform Fraudulent Conveyance Act, the provisions of the United States
Bankruptcy Code and the Delaware insolvency statutes, (ii) principles of equity
including, without limitation, concepts of materiality, good faith, fair
dealing, conscionability and reasonableness (regardless of whether such
enforceability is considered in a proceeding in equity or at law), (iii)
applicable law relating to fiduciary duties, and (iv) public policy limitations
with respect to exculpation, contribution and indemnity provisions.
d. We have assumed that all signatures on documents examined by us
are genuine, that all documents submitted to us as originals are authentic and
that all documents submitted to us as copies conform with the originals.
e. We have assumed that the Declaration, the By-laws, the Plan of
Reorganization, the Resolutions and the 18f-3 Plan collectively, constitute the
entire agreement with respect to the subject matter thereof, including (i) with
respect to the creation, dissolution and winding up of the Trust and each
Portfolio, (ii) the terms applicable to the Shares, and (iii) the power and
authority of the Trustees.
f. We have assumed that to the extent any additional rights and/or
preferences are stated in the 18f-3 Plan, such additional rights and/or
preferences (x) are enforceable in accordance with their terms, and (y) do not
conflict with the Certificate of Trust, the Declaration, the
<PAGE>
To each of the persons on
Schedule I attached hereto
May 29, 1998
Page 5
By-laws, the Plan of Reorganization, or any statute, rule or regulation
applicable to the Trust or any Portfolio thereof.
g. We have assumed that the Plan of Reorganization is the legal,
valid and binding obligation of the parties thereto, enforceable against such
parties in accordance with its terms.
h. We have assumed that no event set forth in Section 9.3(a) of the
Declaration has occurred with respect to the Trust or any Portfolio thereof.
i. Notwithstanding any provision in the Declaration to the contrary,
we note that upon the occurrence of an event set forth in Section 9.3(a)
thereof, with respect to the Trust or a Portfolio as the case may be, the Trust
or such Portfolio, as applicable, cannot make any payments or distributions to
the Shareholders thereof until their respective creditors' claims are either
paid in full or reasonable provision for payment thereof has been made.
j. With respect to the enforceability of any provision of the
Declaration wherein the parties provide for the appointment of a liquidator, we
note that upon the application of any beneficial owner, the Delaware Court of
Chancery has the power, upon cause shown, to wind up the affairs of a Delaware
business trust or Portfolio thereof and in connection therewith to appoint a
liquidating trustee other than the one agreed to by the beneficial owners
thereof.
k. We have assumed that none of the By-laws, the Resolutions, the
Plan of Reorganization, or the 18f-3 Plan has been amended, modified, or revoked
in any manner from the date of its adoption, and that each of the By-laws, the
Resolutions, the Plan of Reorganization, and the 18f-3 Plan remains in full
force and effect on the date hereof.
l. We have assumed that the Trust maintains separate and distinct
records for each Portfolio and that the Trust and the Trustees hold and account
for the assets belonging to each such Portfolio separately from the other assets
of any other Portfolio and the assets of the Trust generally, if any.
m. We note that we do not assume responsibility for the contents of
the Registration Statement.
<PAGE>
To each of the persons on
Schedule I attached hereto
May 29, 1998
Page 6
This opinion is rendered solely for your benefit in connection with the
matters set forth herein and, without our prior written consent, may not be
furnished (except that it may be furnished to any federal, state or local
regulatory agencies or regulators having appropriate jurisdiction and entitled
to such disclosure) or quoted to, or relied upon by, any other person or entity
for any purpose. Kirkpatrick & Lockhart LLP may rely on this opinion with
respect to the matters set forth herein in connection with its opinion being
delivered on even date herewith.
We consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement. In giving the foregoing
consents, we do not thereby admit that we come within the category of Persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
PA&C-305424
<PAGE>
Schedule I
GT Global Variable Investment Trust
50 California St., 27th Floor
San Francisco, CA 94111
G.T. Global Variable Investment Trust
50 California St., 27th Floor
San Francisco, CA 94111
<PAGE>
[LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of GT Global Variable Investment Trust:
Re: GT Global Variable Strategic Income Fund
GT Global Variable Global Government Income Fund
GT Global Variable U.S. Government Income Fund
GT Global Variable Latin America Fund
GT Global Variable Growth & Income Fund
GT Global Variable Telecommunications Fund
GT Global Variable Emerging Markets Fund
GT Global Variable Infrastructure Fund
GT Global Variable Natural Resources Fund
We hereby consent to the inclusion of our report dated February 17, 1998 on
our audits of the financial statements and financial highlights of the above
referenced funds as of December 31, 1997 in the Statement of Additional
Information with respect to the Post-Effective Amendments to the Registration
Statements on Form N-1A under the Securities Act of 1933, as amended, of the GT
Global Variable Investment Trust. We further consent to the reference to our
Firm under the captions "Financial Highlights" and "Other Information" in the
Prospectus and "Independent Accountants" in the Statement of Additional
Information.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 1, 1998
<PAGE>
EXHIBIT 14(a)
[AIM LOGO APPEARS HERE]
IRA APPLICATION
To open your AIM IRA account.
Complete Sections 1-11.
Return completed application and check to: A I M Fund Services, Inc., P.O. Box
4739, Houston, TX 77210-4739. Phone: 800-959-4246.
Make check payable to INVESCO Trust Company.
Please Note: To establish an IRA for your spouse, please copy and submit a
separate application.
Minors cannot open an AIM IRA account.
- --------------------------------------------------------------------------------
1. INVESTOR INFORMATION (Please print or type.)
Name
-----------------------------------------------------------------------
First Name Middle Last Name
Address
--------------------------------------------------------------------
Street
----------------------------------------------------------------------------
City State Zip Code
Social Security Number Birth Date / /
---------------------- -------------------
(Required to Open Account) Month Day Year
Home Telephone ( ) Work Telephone ( )
--- ----------------- --- -----------------
- --------------------------------------------------------------------------------
2. DEALER INFORMATION (To be completed by securities dealer.)
Name of Broker/Dealer Firm
-------------------------------------------------
Main Office Address
--------------------------------------------------------
Representative Name and Number
---------------------------------------------
Authorized Signature of Dealer
---------------------------------------------
Branch Address
-------------------------------------------------------------
Branch Telephone
-----------------------------------------------------------
[ ] Investor is authorized for NAV purchase. (If authorized for NAV
purchase, other than the Broker, please attach NAV Certification
Form.)
- --------------------------------------------------------------------------------
3. ACCOUNT TYPE (Choose one only.)
[ ] IRA [ ] Rollover IRA [ ] SEP IRA* [ ] SARSEP IRA* (No new
SARSEP plans after
12/31/96)
*Employer (for SEP & SARSEP plans only)
-------------------------------------
- --------------------------------------------------------------------------------
4. CONTRIBUTION (Indicate type of contribution.)
[ ] REGULAR - Contribution for tax year 19___.
[ ] ROLLOVER - Represents a rollover from an employer's pension, profit
sharing or 401(k) plan, another IRA or a 403(b) custodial account or
annuity. Please complete a Direct Rollover Form, unless coming from
another IRA.
[ ] TRANSFER - Transfer from another IRA account. Please complete an IRA
Asset-Transfer Form.
[ ] SEP - Employer sponsored. Complete separate application for each
employee.
[ ] SARSEP - Employee salary-reduction SEP. Complete separate application
for each employee. (No new SARSEP plans after 12/31/96.)
13
<PAGE>
- --------------------------------------------------------------------------------
5. FUND INVESTMENT
Indicate Fund(s) and contribution amount(s).
MAKE CHECK PAYABLE TO INVESCO TRUST COMPANY. Minimum purchase to open an
IRA is $250.
<TABLE>
<CAPTION>
Fund $ or % of Assets Class of Shares (Check one)
<S> <C> <C>
[ ]AIM Advisor Flex Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Advisor International Value Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Advisor Large Cap Value Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Advisor MultiFlex Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Advisor Real Estate Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Balanced Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Blue Chip Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Capital Development Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Cash Reserve Shares $ [ ]Class C
------------------------
[ ]AIM Charter Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Constellation Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Global Aggressive Growth Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Global Growth Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Global Income Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Global Utilities Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Intermediate Government Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Growth Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM High Yield Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Income Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM International Equity Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Limited Maturity Treasury Shares $ [ ]Class A
------------------------
[ ]AIM Money Market Fund $ [ ]Class A [ ]Class B
------------------------
[ ]AIM Value Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Weingarten Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
Total $
------------------------
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, AIM Cash Reserve Shares will be
purchased. If you are funding your retirement account through a transfer,
please indicate the contribution amounts both in this section and in Section
3 of the Asset-Transfer Form.
- --------------------------------------------------------------------------------
6. ACCOUNT OPTIONS
Please indicate options you desire:
TELEPHONE EXCHANGE PRIVILEGE
Unless indicated below, I authorize the Transfer Agent to accept
instructions from any person to exchange shares in my account(s) by
telephone in accordance with the procedures and conditions set forth in the
Fund's current prospectus.
[ ] I DO NOT want the Telephone Exchange Privilege.
DOLLAR-COST AVERAGING PLAN (Must be under the same registration and class of
shares.)
I have at least $5,000 in shares in my __________________________ Fund, for
which no certificates have been issued, and I would like to exchange:
$ into the Fund, Account #
---------------- ------------ -----------------
($50 minimum)
$ into the Fund, Account #
---------------- ------------ -----------------
($50 minimum)
$ into the Fund, Account #
---------------- ------------ -----------------
($50 minimum)
on a [ ] monthly [ ] quarterly basis starting in the month of_____________
on the [ ] 10th or [ ] 25th of the month.
14
<PAGE>
DIVIDENDS AND CAPITAL GAINS (For clients over 59 1/2)
All distributions are subject to income tax.
[ ] Reinvest dividends and capital gains (Automatic for clients under
59 1/2.)
[ ] Mail dividends and capital gains to home address
[ ] Mail dividends to my bank
Name of Bank
---------------------------------------------------------------
Address Account #
-------------------------------------- ---------------------
- --------------------------------------------------------------------------------
7. WITHHOLDING ELECTION
Distributions from your IRA will be subject to an automatic federal income
tax withholding of 10%, unless otherwise noted below:
[ ] I do not want any federal income tax withheld from my distribution.
[ ] Withhold federal income tax at a rate of _________% (NOTE: The
percentage indicated must be a whole percentage and higher than 10%).
- --------------------------------------------------------------------------------
8. REDUCED SALES CHARGE (optional)
RIGHT OF ACCUMULATION (This option is for Class A shares only.)
I apply for Right of Accumulation reduced sales charges based on the
following accounts in The AIM Family of Funds--Registered Trademark--:
Fund(s) Account No(s).
------------------------------ ------------------------
------------------------------ ------------------------
------------------------------ ------------------------
LETTER OF INTENT
I agree to the Letter of Intent provisions in the Application Instructions. I
plan to invest during a 13-month period a dollar amount of at least: [ ]$25,000
[ ]$50,000 [ ]$100,000 [ ]$250,000 [ ]$500,000 [ ]$1,000,000
- --------------------------------------------------------------------------------
9. BENEFICIARY INFORMATION
I hereby designate the following beneficiary(ies) to receive the balance in
my IRA custodial account upon my death. To be effective, the designation of
beneficiary and any subsequent change in designation of beneficiary must be
filed with the Custodian prior to my death. The balance of my account shall
be distributed in equal amounts to the beneficiary(ies) who survives me. If
no beneficiary is designated or no designated beneficiary or contingent
beneficiary survives me, the balance in my IRA will be distributed to the
legal representatives of my estate. This designation revokes any prior
designations. I retain the right to revoke this designation at any time. I
hereby certify that there is no legal impediment to the designation of this
beneficiary.
PRIMARY BENEFICIARY(IES)
Name % Relationship
------------------------------------- --------------------
Address
--------------------------------------------------------------------
Street City State Zip Code
Beneficiary's Social Security Number Birth Date / /
-------------- -- -- --
Month Day Year
Name % Relationship
------------------------------ ------ --------------------
Address
--------------------------------------------------------------------
Street City State Zip Code
Beneficiary's Social Security Number Birth Date / /
-------------- -- -- --
Month Day Year
15
<PAGE>
CONTINGENT BENEFICIARIES
In the event that I die and no primary beneficiary listed above is alive,
distribute all Fund accounts in my IRA to the following contingent
beneficiary(ies) who survives me, in equal amounts unless otherwise
indicated.
Name % Relationship
------------------------------ ------ --------------------
Address
--------------------------------------------------------------------
Street City State Zip Code
Beneficiary's Social Security Number Birth Date / /
-------------- -- -- ----
Month Day Year
Name % Relationship
------------------------------ ------ --------------------
Address
--------------------------------------------------------------------
Street City State Zip Code
Beneficiary's Social Security Number Birth Date / /
-------------- -- -- ----
Month Day Year
- --------------------------------------------------------------------------------
10. AUTHORIZATION AND SIGNATURE
I hereby establish the A I M Distributors, Inc. Individual Retirement
Account (IRA) appointing INVESCO Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the IRA custodial
agreement and disclosure statement and consent to the custodial account
fees as specified. I understand that a $10 annual AIM Fund IRA Maintenance
Fee will be deducted in early December from my AIM IRA.
WITHHOLDING INFORMATION (SUBSTITUTE FORM W-9)
Under the Interest and Dividend Tax Compliance Act of 1983, the Fund
is required to have the following certification: Under the penalties
of perjury I certify by signing this Application as provided below
that:
1. The number shown in Section 1 of this Application is my correct
Social Security (or Tax Identification) Number, and
2. I am not subject to backup withholding either because (a) I have
not been notified by the Internal Revenue Service (the "IRS") that I
am subject to backup withholding as a result of a failure to report
all interest or dividends or (b) the IRS has notified me that I am no
longer subject to backup withholding. (This paragraph (2) does not
apply to real estate transactions, mortgage interest paid, the
acquisition or abandonment of secured property, contributions to an
individual retirement arrangement and payments other than interest and
dividends.)
You must cross out paragraph (2) above if you have been notified by
the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return.
In addition, the Fund hereby incorporates by reference into this
section of the Application either the IRS instructions for Form W-9 or
the substance of those instructions whichever is attached to this
Application.
SIGNATURE PROVISIONS
I, the undersigned Depositor, have read and understand the foregoing
Application and the attached material included herein by reference. In
addition, I certify that the information which I have provided and the
information which is included within the Application and the attached
material included herein by reference is accurate including but not limited
to the representations contained in the Withholding Information section of
this Application above. (The Internal Revenue Service does not require your
consent to any provision of this document other than the certifications to
avoid backup withholding.)
Dated / /
--- --- ---
Signature of IRA Shareholder
-----------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
11. MAILING INSTRUCTIONS
Make check payable to INVESCO Trust Company.
Return Application to:
REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY
AIM Fund Services, Inc. AIM Fund Services, Inc.
P.O. Box 4739 11 Greenway Plaza, Suite 763
Houston, TX 77210-4739 Houston, TX 77046
- --------------------------------------------------------------------------------
12. SERVICE ASSISTANCE
Our knowledgeable Client Service Representatives are available to assist you
between 7:30 a.m. and 6:00 p.m. Central time at 800-959-4246.
17 [AIM LOGO APPEARS HERE]
<PAGE>
INSTRUCTIONS FOR IRA ASSET-TRANSFER FORM
The IRA Asset-Transfer Form is used to transfer assets from an
existing IRA to an AIM Prototype IRA.
NOTE: It is not necessary to complete this form if the check
representing the transfer of assets has been attached to the
application.
1. Complete Sections 1 through 6 of the IRA Asset Transfer Form (on
pages 19 through 20 of this booklet).
2. Be sure that you have included your bank account or mutual fund
account number in Section 2 of the form, as well as the complete
mailing address for your existing custodian. You should contact
your existing custodian to verify that firm's proper mailing
address.
3. Be sure that your AIM account number is in Section 3 of the
form. If you do not have an AIM IRA, please complete the IRA
Application included on pages 13 through 16 of this booklet.
NOTE: If you currently hold AIM shares through a brokerage firm,
check with your investment representative to determine if you
should establish your IRA with the brokerage firm or directly
with AIM. If you decide to establish your IRA directly with AIM,
you must complete the AIM IRA Application.
4. Contact your existing custodian to determine whether a signature
guarantee is required in Section 5 of the IRA Asset Transfer
Form. Signature guarantees can be obtained at your bank or
brokerage firm.
5. You may wish to attach a current account statement for your
existing IRA to the IRA Asset Transfer Form.
6. Please mail any insurance or annuity policies and contracts
directly to the company which issued them. Do not attach them to
the IRA Application or IRA Asset Transfer Form.
7. Please mail the completed IRA Asset Transfer Form, along with
the completed IRA Application (if establishing a new AIM IRA)
to:
REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY
AIM Fund Services, Inc. AIM Fund Services, Inc.
P.O. Box 4739 11 Greenway Plaza, Suite 763
Houston, TX 77210-4739 Houston, TX 77046
NOTE: If your existing account is a qualified plan, such as a
profit sharing, 401(k) or 403(b) plan, please complete the
Direct Rollover Form on page 23. Refer to the Instructions for
Direct Rollover Form to complete that form.
18
<PAGE>
[AIM LOGO APPEARS HERE]
IRA ASSET-TRANSFER FORM
Use this form only when transferring assets from an existing IRA to an AIM IRA.
Note: Use this form ONLY if you want AIM to request the money directly from
another custodian. Complete Sections 1-5.
If you do not already have an AIM IRA, you must also submit an AIM IRA
Application. AIM will arrange the transfer for you.
- --------------------------------------------------------------------------------
1. INVESTOR INFORMATION (PLEASE PRINT OR TYPE.)
Name
-----------------------------------------------------------------------
First Name Middle Last Name
Address
--------------------------------------------------------------------
Street
----------------------------------------------------------------------------
City State Zip Code
Social Security Number Birth Date / /
---------------------- -- -- --
Month Day Year
Home Telephone ( ) Work Telephone ( )
--- ----------------- --- -----------------
- --------------------------------------------------------------------------------
2. CURRENT TRUSTEE/CUSTODIAN
Name of Resigning Trustee
--------------------------------------------------
Account Number of Resigning Trustee
----------------------------------------
Address of Resigning Trustee
-----------------------------------------------
Street
----------------------------------------------------------------------------
City State Zip Code
Attention Telephone
---------------------------------- -----------------------
- --------------------------------------------------------------------------------
3. IRA ACCOUNT INFORMATION
Please deposit proceeds in my [ ]New* [ ]Existing
Existing AIM Account Number
------------------
[ ]IRA Account [ ]Rollover IRA Account
[ ]SEP IRA Account [ ]SARSEP IRA Account
INVESTMENT ALLOCATION:
Fund Name Class %
--------------------------- --------------------- ------------
Fund Name Class %
--------------------------- --------------------- ------------
Fund Name Class %
--------------------------- --------------------- ------------
*If this is a new AIM IRA account, you must attach a completed AIM IRA
Application. If no class of shares is selected, Class A shares will be
purchased, except in the case of AIM Money Market Fund, where AIM Cash
Reserve Shares will be purchased.
- --------------------------------------------------------------------------------
4. TRANSFER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
OPTION 1: Please liquidate from the account(s) listed in Section 2 and
issue a check to my IRA with INVESCO Trust Company.
Amount to liquidate: [ ] All [ ] Partial amount of $_______________
When to liquidate: [ ] Immediately [ ] At maturity ____ /___ /___
OPTION 2: (If the account listed in Section 2 contains shares of an AIM
Fund, you may choose to transfer them "in kind.") Please deposit "in kind"
the shares of the AIM Fund held in my account to INVESCO Trust Company.
NOTE: ONLY AIM FAMILY OF FUND SHARES MAY BE TRANSFERRED IN KIND. TO
TRANSFER ALL OTHER ASSETS, THEY MUST BE LIQUIDATED.
Amount to transfer "in kind" immediately:[ ]all [ ] partial amount of
shares_____________
19
<PAGE>
- --------------------------------------------------------------------------------
5. AUTHORIZATION AND SIGNATURE
I have established an Individual Retirement Account with the AIM Funds and
have appointed INVESCO Trust Company as the successor Custodian. Please
accept this as your authorization and instruction to liquidate or transfer
in kind the assets noted above, which your company holds for me.
Your Signature Date / /
---------------------------------- ----- ----- -----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Brokerage Firm
---------------------------------------------
Signature Guaranteed by
---------------------------------------------------
(Name and title)
- --------------------------------------------------------------------------------
6. DISTRIBUTION ELECTION INFORMATION SECTION 6 OF FORM TO BE COMPLETED BY
PRIOR CUSTODIAN
If this participant is age 70 1/2 or older this year, the resigning
Trustee/Custodian must complete this section. Election made by the
participant as of the required beginning date:
1. Method of calculation [ ] declining years [ ] recalculation
[ ] annuitization [ ] amortization
2. Life expectancy [ ] single life payout [ ] joint life expectancy
factor-Joint birth date and relationship________________
3. The amount withheld from this rollover to satisfy this year's required
distribution $____________________
The life-expectancy ages used to calculate this required payment
was _________________________________________
Signature of Current Custodian/Trustee
------------------------------------
- --------------------------------------------------------------------------------
REMAINDER OF FORM TO BE COMPLETED BY AIM
7. CUSTODIAN ACCEPTANCE
This is to advise you that INVESCO Trust Company, as custodian, will accept
the account identified above for:
Depositor's Name Account Number
-------------------- ---------------------
This transfer of assets is to be executed from fiduciary to fiduciary and
will not place the participant in actual receipt of all or any of the plan
assets. No federal income tax is to be withheld from this transfer of
assets.
Authorized Signature Mailing Date / /
------------------------ ---- ---- ----
(INVESCO Trust Company)
- --------------------------------------------------------------------------------
8. INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check and return to:
INVESCO Trust Company, c/o A I M Fund Services, Inc., P.O. Box 4739,
Houston, TX 77210-4739.
Make check payable to INVESCO Trust Company.
Indicate the AIM account number and the social security number of the IRA
holder on all documents.
20 [AIM LOGO APPEARS HERE]
<PAGE>
[AIM LOGO APPEARS HERE]
DIRECT ROLLOVER FORM
To directly roll over distributions from your employer's qualified plan to your
AIM IRA.
Note: Use this form ONLY if you want AIM to request the money directly from
another custodian. Effective January 1, 1993, the Unemployment Compensation
Amendments of 1992 require that certain distributions from 403(b) accounts and
employer qualified plans (Keogh, money purchase pension, profit sharing and
401(k) plans) are subject to 20% withholding tax, unless the distribution is
"directly rolled over" to a new employer's qualified plan, a 403(b) account or
an IRA. Your employer will inform you what portion of your distribution is
eligible for rollover.
Please use this form to request a "direct rollover" to your AIM IRA. If you
currently do not have an IRA, you must also submit an AIM IRA Application with
this request. You may also use your former employer's direct rollover form.
PLEASE CONTACT YOUR EMPLOYER TO DETERMINE IF ADDITIONAL FORMS ARE REQUIRED.
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1 PLAN TYPE Indicate type of retirement plan to be rolled over. [ ] 403(b) Plan
[ ] Employer's Qualified Retirement Plan
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2 INVESTOR INFORMATION (Please print or type.)
Name
-------------------------------------------------------------------------
First Name Middle Last Name
Address
----------------------------------------------------------------------
Street City State Zip Code
Social Security Number Birth Date / /
-------------------- ---- ---- ----
Day Phone ( ) Month Day Year
---- ------------
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3 CURRENT PLAN CUSTODIAN OR FORMER EMPLOYER INFORMATION
Name of Resigning Custodian or Former Employer
------------------------------
Former Employer Plan Name or Fund Account Number
------------------- --------
Address of Releasing Institution
--------------------------------------------
City State Zip Code
----------------------- ------------- ---------
Attention Telephone
------------------------------ ---------------------
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4 ROLLOVER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
OPTION 1: Please liquidate from the account(s) listed in Section 3 and
issue a check to my IRA with INVESCO Trust Company.
Amount to liquidate: [ ] All [ ] Partial amount of $_______________
When to liquidate: [ ] Immediately [ ] At maturity_____ /_____ /_____
OPTION 2: (If the account listed in Section 2 contains shares of an AIM Fund,
you may choose to roll them over "in kind.")
NOTE: ONLY AIM FAMILY OF FUND SHARES MAY BE ROLLED OVER IN KIND.
Amount to roll over "in kind" immediately: [ ] all
[ ] partial amount of shares_____________
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5 IRA ACCOUNT INFORMATION
Please deposit proceeds in my [ ] New* [ ] Existing
Existing AIM Account Number
----------------
[ ] IRA Account [ ] Rollover IRA Account
INVESTMENT ALLOCATION:
Fund Name Class %
---------------------- ------------------------- ---------
Fund Name Class %
---------------------- ------------------------- ---------
Fund Name Class %
--------------------- ------------------------- ---------
*If this is a new AIM IRA account, you must attach a completed AIM IRA
application. If no class of shares is selected, Class A shares will be
purchased, except in the case of AIM Money Market Fund, where AIM Cash
Reserve Shares will be purchased.
23
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6 AUTHORIZATION AND SIGNATURE
I have established an Individual Retirement Account with the AIM Funds and
have appointed INVESCO Trust Company as the successor Custodian. Please
accept this as your authorization and instruction to liquidate or transfer
in kind the assets noted above, which your company holds for me.
Your Signature Date / /
-------------------------------- ---- ---- ----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Brokerage Firm
---------------------------------------------
Signature Guaranteed by
---------------------------------------------------
(Name and title)
NOTE: SOME CUSTODIANS OF RETIREMENT PLANS REQUIRE THE COMPLETION OF THEIR
OWN FORM BEFORE SENDING A CHECK TO AIM.
[ ] Yes, I have [ ] No, I have not filed the necessary completed forms
with the current custodian.
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7 DISTRIBUTION ELECTION INFORMATION SECTION 7 OF FORM TO BE COMPLETED BY
PRIOR CUSTODIAN
If this participant is age 70 1/2 or older this year, the resigning
Trustee/Custodian must complete this section. Election made by the
participant as of the required beginning date:
1. Method of calculation [ ] declining years [ ] recalculation
[ ] annuitization [ ] amortization
2. Life expectancy [ ] single life payout
[ ] joint life expectancy factor-Joint birth date and relationship______
3. The amount withheld from this rollover to satisfy this year's required
distribution $____________________
The life-expectancy ages used to calculate this required payment was _______
Signature of Current Custodian/Trustee
-------------------------------------
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REMAINDER OF FORM TO BE COMPLETED BY AIM
8 CUSTODIAN ACCEPTANCE
This is to advise you that INVESCO Trust Company, as custodian, will accept
the account identified above for:
Depositor's Name Account Number
--------------------- ----------------------
This direct rollover is to be executed from fiduciary to fiduciary and will
not place the participant in actual receipt of all or any of the plan
assets.
No federal income tax is to be withheld from this direct rollover.
Authorized Signature Mailing Date / /
------------------------- ---- ---- ----
(INVESCO Trust Company)
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9 INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check and return to:
INVESCO Trust Company, c/o A I M Fund Services, Inc., P.O. Box 4739,
Houston, TX 77210-4739.
Make check payable to INVESCO Trust Company.
Indicate the AIM account number and the social security number of the IRA
holder on all documents.
24 [AIM LOGO APPEARS HERE]
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[AIM LOGO APPEARS HERE]
AUTOMATIC BANK DRAFT
To establish regular, monthly purchases of Fund shares.
The Automatic Bank Draft is a service available to shareholders of The AIM
Family of Funds--Registered Trademark--, making possible regular, monthly
purchases of Funds to allow dollar-cost averaging. Each month, A I M Fund
Services,Inc. will arrange for an amount of money selected by you ($50 minimum
per Fund) to be deducted from your checking account and used to purchase shares
of a specified AIM Fund. You will receive confirmations from A I M Fund
Services, Inc., and your bank statement will reflect the amount of the draft.
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1 DRAFT AMOUNT
I authorize you to withdraw a total of $ __________________ ($50 minimum
per Fund) from my checking account at the bank shown below, beginning in
__________________________________ and invest this amount in shares of the
AIM Fund listed below. You have the option of selecting the 10th, 25th or
both dates each month for the automatic bank draft. Please refer to Section
2 for this selection. ALL DRAFTS WILL BE CONSIDERED CURRENT-YEAR IRA
CONTRIBUTIONS.
I agree that if the check is not honored by my bank upon presentation, AIM
Fund Services, Inc. may discontinue this service. I also authorize AIM Fund
Services, Inc. to liquidate sufficient shares of the Fund to make up any
deficiency resulting from a dishonored check. I understand that this program
may be discontinued at any time by the Fund or by myself by written notice to
AIM Fund Services, Inc. received no later than ten business days prior to the
above designated investment date.
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2 FUND ACCOUNT INFORMATION (Please enter information exactly as your account is
registered.)
Name(s) AIM Account #
--------------------------------- -----------------------
---------------------------------
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
*Total $
--------------------------------
Signature Signature
-------------------------- ------------------------------
(All registered owners must sign.) (All registered owners must sign.)
*Please note that each draft (per Fund account) will be treated as a
separate item by your bank.
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3 BANK AUTHORIZATION
Name of Bank
-----------------------------------------------------------------
Address of Bank
--------------------------------------------------------------
Bank Account # ABA Routing #
---------------------- ---------------------------
Please honor checks on my account by The Shareholders Services Group, Inc.
(TSSG), a wholly-owned subsidiary of First Data Corporation. Your authority
to do so shall continue until you receive further notice from me revoking
this authority. You may terminate your participation in this arrangement by
written notice either to TSSG or me. I agree that your rights with respect to
each check shall be the same as if it were drawn by me. I further agree that
should any check be dishonored, with or without cause, intentionally or
inadvertently, you shall be under no liability whatsoever.
------------------------------- -------------------------------------------
Depositor's Name (please print) Signature (exactly as appearing on bank
records)
------------------------------- -------------------------------------------
Depositor's Name (please print) Signature (exactly as appearing on bank
records)
25
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4 VOIDED CHECK
ATTACH YOUR VOIDED CHECK HERE.
AIM Fund Services, Inc.
P.O. Box 4739
Houston, Texas 77210-4739
Phone: 800-959-4246
[Voided Check Graphic]
26 [AIM LOGO APPEARS HERE]
<PAGE>
[AIM LOGO APPEARS HERE]
Form 5305-A (Rev. October 1992) Department of the Treasury Internal Revenue
Service
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
(under Section 408(a) of the Internal Revenue Code)
Please fill out and retain with your tax records. Do NOT file with Internal
Revenue Service or AIM.
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Name of depositor
---------------------------------------------------------------
Date of birth of depositor / / Social Security Number
----- ----- ----- -----------
Month Day Year
Address of depositor [ ] Check if Amendment
-------------------------------------
Name of Custodian INVESCO Trust Company
Address or principal place of business of custodian The State of Colorado
The Depositor whose name appears above is establishing an individual retirement
account under section 408(a) to provide for his or her retirement and for the
support of his or her beneficiaries after death.
The Custodian named above has given the Depositor the disclosure statement
required under Regulations section 1.408-6.
The Depositor assigned the custodial account ________ dollars ($______) in cash.
The Depositor and the Custodian make the following agreement:
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A I M DISTRIBUTORS, INC. CUSTODIAN AGREEMENT
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. NO PART OF THE CUSTODIAL FUNDS may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. NO PART OF THE CUSTODIAL FUNDS may be invested in collectibles (within the
meaning of section 408(m)) except as otherwise permitted by section 408(m)(3)
which provides an exception for certain gold and silver coins and coins issued
under the laws of any state.
ARTICLE IV
1. NOTWITHSTANDING ANY PROVISION of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. UNLESS OTHERWISE ELECTED by the time distributions are required to begin
to the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. THE DEPOSITOR'S ENTIRE INTEREST in the custodial account must be, or begin
to be, distributed by the Depositor's required beginning date (April 1 following
the calendar year end in which the Depositor reaches age 70 1/2. By that date,
the Depositor may elect, in a manner acceptable to the Custodian, to have the
balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of the
Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. IF THE DEPOSITOR DIES before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the Depositor or,
if the Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the
life expectancy of the designated beneficiary or beneficiaries starting by
December 31 of the year following the year of the Depositor's death. If,
however, the beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in which
the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced distributions are treated as having begun on the Depositor's required
beginning date, even though payments may actually have been made before that
date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
5. IN THE CASE OF DISTRIBUTION over life expectancy in equal or substantially
equal annual payments, to determine the minimum annual payment for each year,
divide the Depositor's entire interest in the Custodial account as of the close
of business on December 31 of the preceding year by the life expectancy of the
Depositor (or the joint life and last survivor expectancy of the Depositor and
the Depositor's designated beneficiary, or the life expectancy of the designated
beneficiary, whichever applies). In the case of distributions under paragraph 3,
determine the initial life expectancy (or joint life and last survivor
expectancy) using the attained ages of the Depositor and designated beneficiary
as of their birthdays in the year the Depositor reaches age 70 1/2. In the case
of distribution in accordance with paragraph 4(b)(ii), determine life expectancy
using the attained age of the designated beneficiary as of the beneficiary's
birthday in the year distributions are required to commence.
27
<PAGE>
6. THE OWNER OF TWO OR MORE INDIVIDUAL RETIREMENT ACCOUNTS may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524 to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. THE DEPOSITOR AGREES to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408.6.
2. THE CUSTODIAN AGREES to submit reports to the Internal Revenue Service and
the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and the related
regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
ARTICLE VIII
1. PURSUANT TO THE TERMS of this A I M Distributors, Inc. Individual
Retirement Custodial Account Agreement and the related IRA Account Application
(referred to herein as the "IRA Adoption Agreement") (such Agreements being
collectively referred to herein as the "Agreement"), the Depositor directs the
Custodian to invest all custodial account funds after deductions for sales
charges and Custodian fees, in shares issued by the investment company or
companies selected by the Depositor on the related IRA Adoption Agreement, until
the Depositor hereafter gives the Custodian contrary instructions pursuant to
Article XIII below. The investment companies from which the Depositor may select
are enumerated on the applicable list prepared by A I M Distributors, Inc. (the
"Distributor"), a copy of which accompanies the Adoption Agreement. Such
investment companies are part of "The AIM Family of Funds--Registered
Trademark--," which are managed or advised by subsidiaries of A I M Management
Group Inc., and any such investment company will hereafter be referred to as
"Investment Company."
2. (i) ANNUAL CASH CONTRIBUTIONS:
The Depositor may make annual cash contributions to the account within the
limits specified in Article I. All contributions shall be hand delivered or
mailed to the Custodian by the Depositor, with an indication of the taxable year
to which such contribution relates. Additionally, if the Depositor's employer
maintains a qualified simplified employee pension (SEP), such employer may
contribute on behalf of the Depositor, the lesser of 15% of the Depositor's
compensation from such employer or $30,000.
(ii) ROLLOVER CONTRIBUTIONS:
In addition to any annual contributions referred to in Paragraph (i) above,
but subject to this Paragraph (ii), the Depositor may contribute to the account,
at any time, a rollover contribution of such cash or other property as shall
constitute a rollover amount or contribution under section 402(a)(5), 402(a)(7),
403(a)(4), 403(b)(8) or 408(d)(3) of the Code. The Custodian will accept for the
account all rollover contributions which consist of cash, and it may, but shall
be under no obligation to, accept any other rollover contribution. In the case
of rollover contributions composed of assets other than cash, the prospective
Depositor shall provide the Custodian with a description of such assets and such
other information as the Custodian may reasonably require. The Custodian may
accept all or any part of such a rollover contribution if it determines that the
assets of which such contribution consists are either in a medium proper for
investment hereunder or that the assets can be promptly liquidated for cash.
The Depositor warrants that any rollover contribution to the account consists
of cash, the same property received in the distribution or, in the case of
amounts distributed to the Depositor from a qualified employer's plan or
annuity, the proceeds from the sale of the same property received in the
distribution. The Depositor also warrants that in the case of a rollover into
the account of amounts distributed to the Depositor from a qualified employer's
plan or annuity, only amounts in excess of the amounts considered to be the
Depositor's employee contributions included in such distribution constitute the
contribution to this account. Additionally, the Depositor affirms that the
contribution to the account does not consist of amounts received from an
inherited individual retirement account or annuity. An individual retirement
account or annuity shall be treated as inherited if it was acquired by reason of
the death of an individual other than the Depositor's spouse. The Depositor also
affirms that in the case of a rollover into the account of amounts distributed
from an individual retirement account or annuity or retirement bond, he has not
during the one year period ending on the date of the distribution received any
other distribution from an individual retirement account or annuity or
retirement bond which constituted a rollover contribution (as described in
section 408(d)(3) of the Code).
3. THE DEPOSITOR SHALL BE FULLY AND SOLELY RESPONSIBLE for all taxes,
interest and penalties which might accrue or be assessed by reason of any excess
deposit, and interest, if any, earned thereon. Any contributions made by or on
behalf of the Depositor in respect of a taxable year of the Depositor shall be
made by or on behalf of the Depositor to the Custodian for deposit in the
custodial account within the time period for claiming any income tax deduction
for such taxable year. It shall be the sole responsibility of the Depositor to
determine the amount of the contributions made hereunder. The Depositor shall
execute such forms as the Custodian may require in connection with any
contribution hereunder.
ARTICLE IX
1. THE CUSTODIAN SHALL from time to time, subject to the provisions of
Articles IV and V, make distributions out of the custodial account to the
Depositor, in such manner and amounts as may be specified in written
instructions of the Depositor. All such instructions shall be deemed to
constitute a certification by the Depositor that the distribution so directed is
one that the Depositor is permitted to receive. A declaration of the Depositor's
intention as to the disposition of an amount distributed pursuant to Article V
hereof shall be in writing and given to the Custodian. The Custodian shall have
no liability with respect to any contribution to the custodial account, any
investment of assets in the custodial account or any distribution therefrom
pursuant to instructions received from the Depositor or pursuant to this
Agreement, or for any consequences to the Depositor arising from such
contributions, investments or distributions including, but not limited to,
excise and other taxes and penalties which might accrue or be assessed by reason
thereof, nor shall the Custodian be under any duty to make any inquiry or
investigation with respect thereto.
2. IF THE DEPOSITOR IS DISABLED (as defined in Section 72(m) of the Code),
all or a portion of the balance in the custodial account may be distributed to
him/her as soon as practicable after the Custodian receives written notice of
the Depositor's disability and a written request for distribution. The Custodian
may require such proof of disability as it deems necessary prior to the time
that amounts are distributed to the Depositor due to such disability.
3. THE DEPOSITOR SHALL BE fully and solely responsible for all taxes and
penalties which might accrue or be assessed for having failed to make the annual
minimum withdrawal required in any year.
ARTICLE X
A Depositor shall have the right to designate a beneficiary or beneficiaries
to receive any amounts remaining in his account in the event of his death. Any
prior beneficiary designation may be changed or revoked at any time by a
Depositor by written designation signed by the Depositor on a form acceptable
to, and filed with, the Custodian; provided, however, that such designation, or
change or revocation of a prior designation shall not become effective until it
has been received by the Custodian, nor shall it be effective unless received by
the Custodian no later than thirty days before the death of the Depositor, and
provided further that the last such designation of beneficiary or change or
revocation of beneficiary executed by the Depositor, if received by the
Custodian within the time specified, shall control. Unless otherwise provided in
the beneficiary designation, amounts payable by reason of the Depositor's death
will be paid in equal shares only to the primary beneficiary or beneficiaries
who survive the Depositor, or, if no primary beneficiary survives the Depositor,
to the contingent beneficiary or beneficiaries who survive the Depositor. If the
Depositor had not, by the date of his death, properly designated a beneficiary
in accordance with the preceding sentences, or if no designated beneficiary
survives the Depositor, then the Depositor's beneficiary shall be the
Depositor's estate.
ARTICLE XI
1. ANY ADMINISTRATIVE OR OTHER FEES of the Custodian and its agents for
performing duties pursuant to this Agreement shall be in such amount as shall be
established from time to time. The Depositor agrees to pay the Custodian the
fees specified in its current fee schedule and authorizes the Custodian to
charge the Depositor's custodian account for the amount of such fees.
2. UPON THIRTY DAYS' PRIOR WRITTEN NOTICE, the Custodian may substitute a new
fee schedule. The Custodian's fees, any income, gift, estate and inheritance
taxes and other taxes of any kind whatsoever, including transfer taxes incurred
in connection with the investment or reinvestment of the assets of the custodial
account, that may be levied or assessed in respect of such assets, and all other
administrative expenses incurred by the Custodian in the performance of its
duties including fees for legal services rendered to the Custodian, may be
charged to the custodial account with the right to liquidate Investment Company
shares for this purpose, or at the Custodian's option, shall be billed to the
Depositor directly.
28
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ARTICLE XII
1. THIS AGREEMENT SHALL take effect only when accepted and signed by the
Custodian. As directed, the Custodian shall then open and maintain a separate
custodial account for Depositor and invest the initial contribution hereunder in
shares of the Investment Company. Where the IRA Adoption Agreement is checked
for spousal accounts, separate custodial accounts will be opened and maintained
in each spouse's name. The amounts specified in the IRA Adoption Agreement shall
be credited to each spouse's separate custodial account except that no more than
$2,000 shall be credited to either custodial account.
2. THE CUSTODIAN SHALL invest subsequent contributions as directed. If any
such written instructions are not received as required however, or if received,
are in the opinion of the Custodian unclear, or if the accompanying contribution
exceeds $2,000 for the Depositor and/or $2,000 for the Depositor's spouse, the
Custodian may hold or return all or a portion of the contribution uninvested
without liability for loss of income or appreciation, and without liability for
interest, pending receipt of written instructions or clarification.
3. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, less charges, received on
Investment Company shares held in the custodial account shall (unless received
in additional such shares) be reinvested in shares of the Investment Company,
which shall be credited to the custodial account. If any distribution on such
shares may be received at the election of the Depositor in additional such
shares or in cash or other property, the Custodian shall elect to receive it in
additional Investment Company shares.
4. ALL INVESTMENT COMPANY SHARES ACQUIRED by the Custodian hereunder shall be
registered in the name of the Custodian (with or without identifying the
Depositor) or of its nominees. The Custodian shall deliver, or cause to be
executed and delivered, to the Depositor all notices, prospectuses, financial
statements, proxies and proxy solicitation materials relating to such Investment
Company shares held in the custodial account. The Custodian shall not vote any
Investment Company shares except in accordance with the written instructions
received from the Depositor.
ARTICLE XIII
1. THE CUSTODIAN SHALL keep adequate records of transactions it is required
to perform hereunder. Not later than six months after the close of each calendar
year or after the Custodian's registration or removal pursuant to Article XV
below, the Custodian shall render to the Depositor or the Depositor's legal
representative a written report or reports reflecting the transactions effected
by it during such period and the assets and liabilities of the custodial account
at the close of the period. Sixty days after rendering such report(s), the
Custodian shall (to the extent permitted by law) be forever released and
discharged from all liability and accountability to anyone with respect to its
acts and transactions shown in or reflected by such report(s), except with
respect to those as to which the Depositor or the Depositor's legal
representative shall have filed written objections with the Custodian within the
latter such sixty-day period.
2. THE CUSTODIAN SHALL receive and invest contributions as directed by the
Depositor, hold and distribute such investments, and keep adequate records and
reports thereon, all in accordance with this Agreement. The parties do not
intend to confer any other fiduciary duties of the Custodian, and none shall be
implied. The Custodian shall not be liable (and assumes no responsibility) for
the collection of contributions, the deductibility or propriety of any
contribution under this Agreement, or the purposes or propriety of any
distribution from the account, which matters are the responsibility of the
Depositor or the Depositor's legal representative.
3. THE DEPOSITOR, to the extent permitted by law, shall always fully
indemnify the Custodian and save it harmless from any and all liability
whatsoever which may arise in connection with this Agreement and matters which
it contemplates, except that which arises due to the Custodian's negligence and
willful misconduct. The Custodian shall not be obligated or expected to commence
or defend any legal action or preceding in connection with this Agreement or
such matters unless agreed upon by the Custodian and Depositor or said legal
representative, and unless fully indemnified for so doing to the Custodian's
satisfaction.
4. THE CUSTODIAN MAY conclusively rely upon and shall be protected in acting
upon any written order from the Depositor or the Depositor's legal
representative or any other notice, request, consent, certificate or other
instruments or paper believed by it to be genuine and to have been properly
executed, and as long as it acts in good faith in taking or omitting to take any
other action in reliance thereon.
ARTICLE XIV
1. THE CUSTODIAN MAY resign at any time upon thirty days' notice in writing
to the Depositor, and may be removed by the Depositor at any time upon thirty
days' notice in writing to the Custodian. Upon such resignation or removal, the
Depositor shall appoint a successor custodian to serve under this Agreement.
Upon receipt by the Custodian of written acceptance of such appointment by the
successor custodian, the Custodian shall transfer to such successor the assets
of the custodial account and all necessary records (or copies thereof)
pertaining thereto, provided that (at the Custodian's request) any successor
custodian shall agree not to dispose of any such records without the Custodian's
consent. The Custodian is authorized, however, to reserve such assets as it may
deem advisable for payment of any other liabilities constituting a charge on or
against the assets of the custodial account or on or against the Custodian, with
any balance of such reserve remaining after the payment of all such items to be
paid over to the successor custodian.
2. THE CUSTODIAN SHALL NOT be liable for the acts or omissions of such
successor custodian.
3. THE CUSTODIAN, AND EVERY SUCCESSOR CUSTODIAN appointed to serve under this
Agreement, must be a bank (as defined in Section 408(n) of the Code) or such
other person who qualifies with the Internal Revenue Service to serve in the
manner prescribed by Code section 408(a)(2) and satisfies the Custodian, upon
request, as to such qualification.
4. AFTER THE CUSTODIAN HAS transferred the custodial account assets
(including any reserve balance as contemplated above) to the successor
custodian, the Custodian shall be relieved of all further liability with respect
to this Agreement, the custodial account and the assets thereof.
ARTICLE XV
1. THE CUSTODIAN SHALL terminate the custodial account and pay the
proceeds of the account to the depositor if within thirty days after the
resignation or removal of the Custodian pursuant to Article XV above, the
Depositor has not appointed a successor custodian which has accepted such
appointment unless within that time the Distributor appoints such successor and
gives written notice thereof to the Depositor and the Custodian. The Distributor
shall have the right, but not the duty, to appoint such a successor. Termination
of the custodial account shall be effected by distributing all of the assets
therein in cash or in kind to the Depositor in a lump sum, subject to the
Custodian's right to reserve funds as provided in said Article XV.
2. UPON TERMINATION of the custodial account in any manner provided for in
this Article XVI, this Agreement shall terminate and have no further force and
effect, and the Custodian shall be relieved from all further liability with
respect to this Agreement, the custodial account and all assets thereof so
distributed.
ARTICLE XVI
1. ANY NOTICE FROM THE CUSTODIAN TO THE DEPOSITOR provided for in this
Agreement shall be effective when mailed if sent by first class mail to the
Depositor at the Depositor's last known address as shown on the Custodian's
records. Any notice required or permitted to be given to the Custodian, shall
become effective upon actual receipt by the Custodian at such address as the
Custodian shall provide the Depositor from time to time in writing.
2. THIS AGREEMENT IS accepted by the Custodian and shall be construed and
administered in accordance with the laws of The State of Colorado. The Custodian
and the Depositor hereby waive and agree to waive right to trial by jury in an
action or proceeding instituted in respect to this custodial account. The
Depositor further agrees that the venue of any litigation between him and the
Custodian with respect to the custodial account shall be in the State of
Colorado.
3. THIS AGREEMENT is intended to qualify under section 408 of the Code as an
Individual Retirement Account and to entitle the Depositor to any retirement
savings deduction which he may qualify for under section 219 of the Code, and if
any provision hereof is subject to more than one interpretation or any term used
herein is subject to more than one construction, such ambiguity shall be
resolved in favor of that interpretation or construction which is consistent
with that intent.
4. ALL PROVISIONS IN THIS AGREEMENT ARE subject to the Code and to
regulations promulgated thereunder. In the event that any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
5. THE CUSTODIAN SHALL have no duties whatsoever except such duties as it
specifically agrees to in writing, and no implied covenants or obligations shall
be read into this Agreement against the Custodian. The Custodian shall not be
liable under this Agreement, except for its own bad faith, gross negligence or
willful misconduct.
6. NO INTEREST, RIGHT OR CLAIM IN OR TO ANY PART of the custodial account or
any payment therefrom shall be assignable, transferable, or subject to sale,
mortgage, pledge, hypothecation, communication, anticipation, garnishment,
attachment, execution, or levy of any kind and the Custodian shall not recognize
any attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute or
anticipate the same, except as required by law.
7. THE DEPOSITOR HEREBY DELEGATES to the Custodian the power to amend this
Agreement from time to time as it deems appropriate, and hereby consents to all
such amendments, provided, however, that all such amendments are in compliance
with the provisions of the Code and the regulations promulgated thereunder. All
such amendments shall be effective as of the date specified in a written notice
of amendment which will be sent to the Depositor.
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INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF FORM
This model custodial account agreement may be used by an individual who
wishes to adopt an individual retirement account under section 408(a). When
fully executed by the Depositor and the Custodian not later than the time
prescribed by law for filing the Federal income tax return for the Depositor's
tax year (not including any extensions thereof), a Depositor will have an
individual retirement account (IRA) custodial account which meets the
requirements of section 408(a). This account must be created in the United
States for the exclusive benefit of the Depositor or his/her beneficiaries.
DEFINITIONS
Custodian. -- The Custodian must be a bank or savings and loan association,
as defined in section 408(n), or other person who has the approval of the
Internal Revenue Service to act as custodian.
DEPOSITOR. -- The Depositor is the person who establishes the custodial
account.
IRA FOR NON-WORKING SPOUSES
Contributions to an IRA custodial account for a non-working spouse must be
made to a separate IRA custodial account established by the non-working spouse.
This form may be used to establish the IRA custodial account for the
non-working spouse.
An individual's social security number will serve as the identification
number of his or her individual retirement account.
For more information, obtain a copy of the required disclosure statement from
your custodian or get Publication 590, Individual Retirement Arrangements.
(IRAs).
SPECIFIC INSTRUCTIONS
Article IV -- Distribution made under this Article may be made in a single
sum, periodic payment, or a combination of both. The distribution option should
be reviewed in the year the Depositor reaches age 70 1/2 to make sure the
requirements of section 408(a)(6) have been met.
Article IX -- This article and any that follow it may incorporate additional
provisions that are agreed upon by the Depositor and the Custodian to complete
the agreement. These may include, for example: definitions, investment powers,
voting rights, exculpatory provisions, amendment and termination, removal of
Custodian, Custodian's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the Depositor, etc. Use additional pages if
necessary and attach them to this form.
Note: This form may be reproduced and reduced in size for adoption to
passbook or card purposes.
THE AIM FAMILY OF FUNDS--Registered Trademark--
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
DISCLOSURE STATEMENT
Under applicable federal regulations, a custodian of an individual
retirement account is required to furnish each depositor who has established or
is establishing an individual retirement account with a statement which
discloses certain information regarding the account. INVESCO Trust Company
(hereinafter referred to as the "Custodian") is providing this Disclosure
Statement to you in accordance with that requirement, and this Disclosure
Statement contains general information about the The AIM Family of
Funds--Registered Trademark-- Individual Retirement Custodial Account
(hereinafter referred to as "IRA"). This Disclosure Statement should be reviewed
in conjunction with both the Individual Retirement Custodial Account agreement
(From 5305-A and any attachments thereto, hereinafter referred to as the
"Custodial Agreement") and the Adoption Agreement for your IRA. You should
review this Disclosure Statement and the IRA documents with your attorney or tax
advisor. The Custodian cannot give tax advice or determine whether or not the
IRA is appropriate for you.
A. SEVEN DAY RIGHT TO REVOKE YOUR IRA.
You may revoke your IRA at any time within seven business days after the date
the IRA is established, by giving proper notice. For purposes of revocation, it
will be assumed that you received the Disclosure Statement no later than the
date of your check with which you opened your IRA. Written notice must be hand
delivered or sent by first class mail, in which case, the revocation will be
effective as of the date the notice is postmarked (or if sent by certified or
registered mail, the date of certification or registration). Notice of
revocation should be made to: A I M Distributors, Inc., Eleven Greenway Plaza,
Suite 763, P.O. Box 4739, Houston, Texas 77210-4739, Attention: Shareholder
Services Department, area code (800) 959-4246. If you revoke your IRA, you are
entitled to a refund of your entire contribution to the IRA, without adjustment
for such items as sales commissions, administrative expenses or fluctuation in
market value. If you do not revoke within seven business days after the
establishment of the IRA, you will be deemed to have accepted the terms and
conditions of the IRA and cannot later revoke the IRA without certain potential
penalties.
B. STATUTORY REQUIREMENTS.
An IRA is a trust or custodial account created or organized in the United
States for your exclusive benefit or that of your beneficiaries. It must be
created by a written governing instrument that meets the following requirements:
(1) THE TRUSTEE OR CUSTODIAN MUST BE A BANK, federally insured credit union,
savings and loan association or another person eligible to act as trustee or
custodian;
(2) EXCEPT FOR ROLLOVER CONTRIBUTIONS (as described in Part F below), no
contribution will be accepted unless it is in cash or cash equivalent,
including, but not by way of limitation, personal checks, cashier's checks, and
wire transfers;
(3) EXCEPT FOR ROLLOVERS and simplified employee pension ("SEP")
contributions, contributions of more than $2,000 for any tax year may not be
made;
(4) YOU WILL HAVE A NONFORFEITABLE INTEREST IN THE ACCOUNT;
(5) NO PART OF THE TRUST OR CUSTODIAL FUNDS will be invested in life
insurance contracts, nor may the assets be commingled with other property except
in a common trust fund or common investment fund. Furthermore, as provided in
section 408(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
your IRA may not be invested in "collectibles," such as art works, antiques,
metals, gems, stamps, coins (with an exception for certain U.S.-minted gold and
silver coins), and certain other types of tangible personal property. An
investment in a collectible would be treated as a distribution from your IRA
which would be includible in your gross income, and, if you had not attained the
age of 59 1/2, the distribution would also be subject to the premature
distribution penalty as discussed in Part E(4) below;
(6) YOUR ENTIRE INTEREST IN THE ACCOUNT MUST BE, or begin to be, distributed
on or before April 1 of the calendar year following the calendar year in which
you reach age 70 1/2. The distribution may be made in a single sum, or you may
receive periodic distributions, so long as your entire interest is distributed
in equal or substantially equal payments over any of the following periods:
(a) your life;
(b) the lives of you and your designated beneficiary;
(c) a period certain not extending beyond your life expectancy;
(d) a period certain not extending beyond the life expectancy of you and
your designated beneficiary.
If the distributions from your IRA are to be made over one of the foregoing
periods, the amount distributed each year must meet the minimum distribution
requirements set forth in your IRA Custodial Agreement, or you will incur a
penalty as described in Part E(8) below;
(7) IF YOU DIE AFTER DISTRIBUTIONS HAVE commenced but before your entire
interest has been distributed to you, payments must continue at least as rapidly
as under the method of distribution in effect, at your death. If you die before
distributions have commenced, generally your entire interest must be distributed
within five years of your death. However, if your interest is payable to a
designated beneficiary, payments may be made over the life or a period not
exceeding the life expectancy of the beneficiary; provided, however, that such
payments must commence within one year of your death unless your designated
beneficiary is your surviving spouse, in which case payments need not commence
until the date on which you would have attained age 70 1/2. You should advise
the Custodian as to your beneficiary and the method of distribution desired.
C. INVESTMENT OF YOUR IRA.
Under the terms of the Custodial Agreement, your contributions will be
invested by the Custodian in full and fractional shares of the investment
company or companies that you select. As provided in the Custodial Agreement,
you may only invest your IRA Funds in shares of investment companies which are
part of "The AIM Family of Funds--Registered Trademark--," which are managed
or advised by subsidiaries of A I M Management Group Inc. You will be provided
with a list of the investment companies from which you may choose to invest.
Subject to the foregoing and to any additional restrictions described in the
Custodial Agreement, you have complete control over the investment of your IRA
Funds. The Custodian will not provide any form of investment advice or make
investment recommendations of any type, so you will make all investment
decisions on the basis of information you obtain from other sources. When you
make a decision on how you wish to invest Funds held in your IRA, you should
provide the Custodian with specific
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instructions, detailing your investment decision so that the Custodian can
effectuate such investments as provided in your IRA Custodial Agreement. If you
fail to direct the Custodian as to the Investment of all or any portion of your
IRA account, the Custodian shall hold such uninvested amount in your account and
shall incur no liability for interest or earnings thereon. All dividends and
capital gain distributions received on shares of an investment company held in
your IRA will be reinvested in shares of that investment company, if available,
which shall be credited to the Custodian account. Detailed information about the
shares of the AIM fund(s) you select must be furnished to you in the form of
prospectuses governed by rules of the Securities and Exchange Commission.
D. LIMITATIONS AND RESTRICTIONS ON IRA CONTRIBUTIONS AND DEDUCTIONS.
Except in the case of rollover contributions (see Part F below), generally
you may contribute up to the lesser of $2,000 or 100% of your compensation
(earned income) to your IRA for any taxable year. A non-working spouse may
contribute up to $2,000 to a separate IRA.
Section 219 of the Code contains special provisions governing whether amounts
contributed to your IRA will be deductible from gross income for federal income
tax purposes. To the extent you are not eligible or elect not to make deductible
IRA contributions, you may make nondeductible IRA contributions within the
aforementioned limits which are reduced by the amount of any deductible
contributions. The following is a summary of the rules regarding the
deductibility of contributions to your IRA. You should consult your tax advisor
to determine the specific application of such rules to your IRA contributions
for any particular taxable year.
(1) IF NEITHER YOU NOR YOUR SPOUSE IS an "active participant" (as
determined under section 219(g) of the Code and any regulations or rulings
thereunder) in a retirement plan during any part of the taxable year, you may
take a deduction for contributions to your IRA for such taxable year in an
amount equal to the lesser of $2,000 or 100% of your compensation (earned
income) for such taxable year.
(2) IF EITHER YOU OR YOUR SPOUSE (unless you file separate income tax returns
as noted below) is considered an "active participant" in a retirement plan for
any part of the taxable year, the extent, if any, to which contributions to your
IRA will be deductible depends on the amount of your adjusted gross income
("AGI"). The maximum IRA deduction as specified in Paragraph (1) above will be
reduced in the same ratio that the excess of your AGI over $25,000 (for a single
individual), $40,000 (for a married couple filing jointly) and zero (for a
married couple filing separately) bears to $10,000. Thus, if you are an active
participant in a retirement plan, no IRA deduction will be permitted if:
(a) You are a single individual with AGI in excess of $35,000,
(b) you are married and file a joint return with AGI in excess of $50,000,
or
(c) you are married, file separate returns and either you or your spouse
have AGI in excess of $10,000.
(3) IF YOU ARE MARRIED and your spouse has no compensation for the
taxable year, or elects to be treated as having no compensation for such year,
you are permitted an additional deduction in the amount of $2,000 for
contributions to an IRA for the benefit of your spouse provided that your spouse
has not attained age 70 1/2 and you file a joint income tax return for such
year, subject to the provisions of (1) or (2) above, whichever is applicable.
(see below)
You will be considered an "active participant" for any particular taxable
year if you are covered by a retirement plan for any part of such year.
Generally, you will be considered 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 such year. 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 SEP or a plan which promises you a retirement
benefit which is based upon the number of years of service you have with the
employer, 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 should note that if you are married but file a separate tax return,
and you did not live with your spouse at any time during the taxable year, your
spouse's active participation does not affect your ability to make deductible
contributions.
No deduction will be allowed under (1) or (2) above for any contribution
which is made for the taxable year during which you attain age 70 1/2 or for any
subsequent year. You are permitted to contribute and deduct up to $4,000 for
contributions to your IRA and a spousal IRA, subject to the provisions of (1)
and (2) above. However, in no event shall the contribution to either IRA exceed
$2,000. It should be noted that if both you and your spouse work, each may
contribute up to $2,000 of compensation (earned income) to his or her own IRA.
If your employer maintains a SEP, your employer may contribute to your IRA up
to the lesser of 15% of your compensation from such employer or $30,000.
Since SEP contributions are excluded from your gross income, such contributions
are not deductible for federal income tax purposes.
If contributions to your IRA are deductible as outlined above, you may claim
such deduction even if you do not itemize your deductions on your federal income
tax return. You must make contributions to your IRA during the taxable year for
which you claim the deduction or by the deadline for filing your federal income
tax return for such year (without regard to any filing deadline extension). For
example, if you are a calendar-year taxpayer, you must make contributions no
later than April 15th in order to take a deduction for the previous year.
If any portion of a contribution to your IRA is nondeductible as outlined
above, you must so designate on your federal income tax return, as required
under section 408(o)(4) of the Code and file From 8606 with your tax return.
E. FEDERAL INCOME TAX STATUS OF THE IRA AND CERTAIN DISTRIBUTIONS.
(1) IN GENERAL. Except as described below, your IRA and earnings thereon are
exempt from federal income tax until distributions are made from the IRA.
(2) TAX TREATMENT OF DISTRIBUTIONS. If all contributions to your IRA (other
than rollover contributions) have been deductible for federal income tax
purposes then all distributions from your IRA will be taxable as ordinary
income. However, if you have made any nondeductible IRA contributions,
distributions from your IRA will be treated as partially a return of deductible
contributions, if any, (taxable), partially a return of nondeductible
contributions (nontaxable) and partially a distribution of earnings (taxable).
The portion of an IRA distribution which will be excludable from income will be
determined by multiplying the total amount distributed by a fraction, the
numerator of which is the aggregate of all your nondeductible IRA contributions,
and the denominator of which is the aggregate balance of all of your IRAs
(including rollover IRAs and SEPs). For purposes of the foregoing, (a) all of
your IRAs will be treated as a single IRA, (b) all distributions during a
taxable year will be treated as a single distribution and (c) the aggregate
balance of your IRAs will be determined as of the end of the calendar year with
or within which your taxable year ends, after adding back any distributions for
such year.
Distributions from your IRA are not eligible for any special tax treatment
such as five-or ten-year averaging or capital gains treatment.
(3) EXCESS CONTRIBUTIONS. If contributions to your IRA are in excess of the
limits stated in Part D above, you will be assessed a 6% nondeductible excise
tax on such excess amounts. This tax is payable for each year the excess is
permitted to remain in your IRA. However, if the excess contribution has not
been taken as a deduction, and if the excess and all earnings thereon are
returned before the due date for filing your income tax return for the year in
which the excess contribution was made, the 6% excise tax will not be assessed.
The earnings on such excess contribution that are returned to you will be
taxable as ordinary income and will be deemed to have been earned and taxable in
the tax year during which the excess contribution was made. In addition, if you
are not disabled or have not reached age 59 1/2, the earnings will be subject to
the 10% premature withdrawal penalty discussed below. The 6% excess contribution
tax may be eliminated for future tax years by withdrawing the excess
contribution from your IRA before the due date for filing your tax return for
that year or by under-contributing for a subsequent year by an amount equal to
the excess contribution. If the total contributions for the year to your IRA are
$2,000 or less, and there are no employer contributions for the year, you may
withdraw any excess contributions after the due date for filing your tax return,
including extensions, and not include the amount withdrawn in your gross income.
This applies only to the part of the excess that you did not take a deduction
for. It is not necessary to withdraw the interest or other income earned on the
excess. You will have to pay the 6% tax on the excess amount for each year the
excess contribution was in the IRA.
If the contributions to your IRA for any year are more than $2,000, you must
include in your gross income any excess over $2,000, unless it is an excess
rollover contribution attributable to erroneous information. You may also have
to pay a 10% tax on premature distributions on the amount you withdraw, unless
you are age 59 1/2 or disabled.
If less than the maximum amount of contributions has been made in years
before the year you make an excess contribution, the prior year's difference may
not be used to reduce the excess contribution. Qualified rollover contributions,
as described in Part F below, are not considered excess contributions.
(4) PREMATURE DISTRIBUTIONS. In addition to any regular income tax that may
be payable, distributions from your IRA that occur before you reach age 59 1/2
(except in the event of disability, death, rollover, medical expenses in excess
of 7.5% of adjusted gross income, medical insurance premiums in the event of
unemployment or as a qualifying distribution of an excess contribution), will be
assessed a 10% additional income tax on the amount distributed which is
includible in your gross income. However, the additional 10% income tax will not
be imposed if the distribution is one of a scheduled series of level payments to
be made over your life or life expectancy or over the joint lives or joint life
expectancies of you and your beneficiary. Amounts treated as distributions from
the IRA because of pledging the IRA as described below, or prohibited
transactions as described below, will also be considered premature distributions
if they occur before you reach age 59 1/2 (assuming you are not disabled).
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(5) PLEDGING THE IRA. If you pledge your IRA as security for a loan, the
portion so pledged is treated as being distributed to you in that year. In
addition
to any regular income tax that may be payable on the distribution, the premature
distribution penalty as discussed above may also be applicable.
(6) PROHIBITED TRANSACTIONS. If you or your beneficiary engages in a
prohibited transaction, as described in section 4975 of the Code with respect to
your IRA, your IRA will lose its exemption from tax and you must include the
fair market value of your IRA in your gross income for the year during which the
prohibited transaction occurred. In addition to any regular income tax that may
be payable, the premature distribution
penalty as discussed above may also be applicable.
(7) INSUFFICIENT OR LATE DISTRIBUTIONS. In addition to the regular income tax
that may be payable on distributions from your IRA, you will be assessed
penalties on certain accumulations if funds in your IRA are not distributed in
accordance with the rules described in Part B above. If the amount distributed
from your IRA during the year is less than the minimum amount required to be
distributed during such year, an excise tax will be imposed. The tax imposed is
equal to 50% of the amount by which the minimum required distribution exceeds
the amount actually distributed during the year.
(8) ESTATE AND GIFT TAX STATUS OF DISTRIBUTIONS. Generally, for estate tax
purposes, the value of your IRA will be fully includible in your gross estate in
the event of your death. For gift tax purposes, beneficiary designations will
not be treated as gifts. Also, contributions to an IRA on behalf of a spouse who
has no earned income or elects to be treated as having no earned income will
qualify for the annual present interest gift exclusion. You should consult your
tax advisor with respect to the application of community property laws on estate
and gift tax issues relating to your IRA.
(9) INHERITED IRAS. Your IRA will be treated as an inherited IRA if, upon
your death, it is acquired by a beneficiary other than your surviving spouse. An
inherited IRA may not be rolled over to a qualified plan or to another IRA, nor
may an inherited IRA accept any regular or rollover deposits. Only a beneficiary
who is your surviving spouse will be allowed to roll over the IRA funds into his
or her own IRA.
(10) FEDERAL INCOME TAX WITHHOLDING. The taxable portion of
distributions from your IRA is subject to federal income tax withholding unless
you elect not to have withholding applied. If you elect not to have withholding
applied to taxable distributions from your IRA, or if insufficient federal
income tax is withheld from any distribution, you may be responsible for payment
of estimated taxes, as well as for penalties under the estimated tax rules, if
withholding and estimated tax payments were not sufficient. Additional
information regarding withholding and the necessary election forms will be
provided no later than at the time a distribution is requested.
F. ROLLOVER CONTRIBUTIONS.
A rollover is a tax-free distribution of cash or other assets from one
retirement program to another. There are two kinds of rollover contributions to
an IRA. In one, you contribute amounts distributed to you from one IRA to
another IRA. With the other, you contribute amounts distributed to you from your
employer's qualified plan or 403(b) plan to an IRA. A rollover is an allowable
IRA contribution which is not subject to the limits on regular contributions
discussed in Part D above. However, you may not deduct a rollover contribution
to your IRA on your tax return.
If you receive a distribution from the qualified plan of your employer or
former employer, the distribution must be an "eligible rollover distribution" in
order for you to be able to roll all or part of the distribution over to your
IRA. The portion you contribute to your IRA will not be taxable to you until you
withdraw it from the IRA. Your employer or former employer will give you the
opportunity to roll over the distribution directly from the plan to the IRA. If
you elect, instead, to receive the distribution, you must deposit it into the
IRA within 60 days after you receive it.
An "eligible rollover distribution" is any distribution from a qualified plan
that would be taxable other than (1) a distribution that is one of a series of
periodic payments for an employee's life or over a period of 10 years or more,
(2) a required distribution after you attain age 70 1/2 and (3) certain
corrective distributions.
If the entire amount in your IRA has been contributed in a tax-free rollover
from your employer's or former employer's qualified plan or 403(b) plan, you may
later roll over the IRA to a new employer's plan if such plan permits rollovers.
Your IRA would then serve as a conduit for those assets. However, you may later
roll those IRA funds into a new employer's plan only if you make no further
contributions to that IRA, or commingle the IRA rollover funds with existing IRA
assets.
G. AMENDMENTS.
The Custodian of your IRA may amend the agreements establishing your IRA at
any time. The Custodian will comply with the amendment procedures set forth in
your Custodial Agreement.
H. FINANCIAL DISCLOSURE.
Because the value of assets held in your IRA is subject to market
fluctuation, the value of your IRA can neither be guaranteed nor projected.
There is no assurance of growth in the value of your IRA or guarantee of
investment results. You will, however, be provided with periodic statements of
your IRA, including current market values of investments. Certain fees will be
charged by the Custodian in connection with your IRA.
Such fees are disclosed on the Custodian's fee schedule, a copy of which
has been provided to you. Upon thirty days' prior written notice, the Custodian
may substitute a new fee schedule. Any fees or other expenses incurred in
connection with your IRA will be deducted from your IRA (with liquidation of
Fund Shares, if necessary), or at the Custodian's option, such fees or expenses
may be billed to you directly.
For its services to the various funds, in The AIM Family of
Funds--Registered Trademark--, INVESCO Trust Company receives a custodian fee.
This fee is in addition to fees it receives for acting as Custodian under the
IRA. INVESCO Trust Company and A I M Distributors, Inc. also will receive
additional fees for performing specific services with respect to the various
funds in the AIM Family of Funds. Any such fees will be fully disclosed to you.
Potential investors should obtain a copy of the current Prospectus relating to
the fund(s) selected for investment prior to making an investment. Also, copies
of the Statement of Additional Information relating to such fund(s) will be
provided upon your request to A I M Distributors, Inc.
I. MISCELLANEOUS.
Each year you will be provided a statement(s) of account which will give the
amount of contributions to the IRA, the year to which each contribution relates,
and the total value of the IRA as of the end of the year. Information relating
to contributions and distributions must be reported annually to the Internal
Revenue Service and to you. You must also file Form 5329 (Return for Individual
Retirement Savings Arrangement) with the Internal Revenue Service for each
taxable year during which you are assessed any penalty or tax as discussed in
Part E above.
Your IRA has been approved by the Internal Revenue Service. Such approval is
a determination as to the form of the IRA, and does not represent a
determination of the IRA's merits as an investment.
Further information about IRAs can be obtained from any district office of
the Internal Revenue Service or from the Custodian.
All provisions in this Disclosure Statement are subject to the Code and to
the regulations promulgated thereunder. This Disclosure Statement constitutes a
nontechnical restatement and summary of certain provisions of the Code which may
affect your IRA. This is not a legal document. Your legal rights and obligations
are governed by the federal tax laws and regulations and your Custodial
Agreement and Adoption Agreement with the Custodian.
32
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EXHIBIT 14(b)
SEP AND SARSEP IRA ADOPTION AGREEMENT [AIM LOGO APPEARS HERE]
The undersigned Employer hereby establishes a Simplified Employee Pension Plan
(SEP) and/or a Salary Reduction Simplified Employee Pension Plan (SARSEP) for
the exclusive benefit of Employees who are eligible to participate. The terms of
the Plan are set forth in this Adoption Agreement and the accompanying Plan
Document which is hereby adopted and incorporated herein by reference.
- --------------------------------------------------------------------------------
1. EMPLOYER AND PLAN INFORMATION
Employer's Name
-------------------------------------------------------------
Address
---------------------------------------------------------------------
Tax I.D. Number Telephone Number
---------------------------- --------------
Form of Business:
[ ] Sole Proprietor [ ] Partnership [ ] Corporation
[ ] Electing S Corporation
Name of individual authorized to issue instructions to AIM:
----------------------------------------------------------------------------
Plan Year: Plan Type:
[ ] Calendar year. [ ] SEP IRA only
[ ] Employer's Taxable Year ending on . [ ] SARSEP IRA only
------
[ ] Combined SEP and SARSEP IRA
- --------------------------------------------------------------------------------
2. EFFECTIVE DATES
(a) New Plan: Effective as of .
------------------
(b) Amended and Restated Plan:
(i) Original Plan effective as of .
------------------------
(ii) Amended and Restated Plan effective as of .
----------------------
(c) Elective Deferrals effective as of .
-----------------------
- --------------------------------------------------------------------------------
3. ELIGIBILITY REQUIREMENTS
(a) Age: [ ] No requirement. [ ] Minimum age _____________ (not over 21).
(b) Service:
Employees who have performed services for the Employer during at least
________ (maximum 3) of the immediately preceding 5 Plan Years.
(c) Excluded Classes of Employees (select all applicable options):
[ ] None.
[ ] Employees covered by a collective bargaining agreement under which
retirement plan benefits have been the subject of good faith bargaining.
[ ] Employees whose Compensation as defined at Code Section 414(q)(7)
is less than $400 (as adjusted for inflation) during the Plan Year.
[ ] Non-resident aliens.
- --------------------------------------------------------------------------------
4. EMPLOYER ALLOCATION FORMULA
[ ] (a) Proportionate Allocation described at paragraph 3.3(a) of the SEP
and SARSEP Plan Document, or
[ ] (b) Integrated Allocation described at paragraph 3.3(b) of the Plan
Document. This allocation formula may not be adopted if the Employer
maintains any other plan which is integrated with Social Security.
15
<PAGE>
- --------------------------------------------------------------------------------
5. EMPLOYEE ELECTIVE DEFERRALS (FOR SARSEP ONLY)
% limit ________ (not to exceed 15%). Dollar limit $ _________________(not
to exceed $9,240 as indexed).
- --------------------------------------------------------------------------------
6. CASH BONUS OPTION
An Employee [ ] may [ ] may not defer a bonus.
- --------------------------------------------------------------------------------
7. LIMITATIONS ON USE OF PROTOTYPE
An Employer may adopt this Plan even if such Employer maintains another
qualified defined contribution plan, provided that contributions are limited
in accordance with Code Section 415. An Employer may not participate in this
Plan if the Employer maintains currently or has ever maintained a defined
benefit plan which is now terminated. An Employer who participates in this
Plan and who adopts a qualified defined benefit plan, may no longer
participate in this Plan. Thereafter, such Employer shall be considered to
have an individually drafted plan.
- --------------------------------------------------------------------------------
8. TOP-HEAVY MINIMUM CONTRIBUTIONS
The Top-Heavy Plan requirements under Code Section 416 shall be satisfied
by:
[ ] (a) this Plan.
[ ] (b)
----------------------------------------------------------------------
(Name of other qualified plan of the Employer).
- --------------------------------------------------------------------------------
9. SPONSOR CONTACT
Employers should direct questions concerning the language contained in and
qualification of the prototype to:
A I M Distributors, Inc.
Retirement Plans Department
11 Greenway Plaza, Suite 1919
P.O. Box 4333
Houston, Texas 77210-4739
(800) 998-4246 Ext. 5612
In the event that the Sponsor amends, discontinues or abandons this
prototype Plan, notification will be provided to the Employer's address
provided on the first page of this Agreement.
- --------------------------------------------------------------------------------
10. SIGNATURES
(a) This Agreement was signed by the Employer the day of 19 .
------ --------- --
Signed for the Employer by
--------------------------------------------------
Title
-----------------------------------------------------------------------
Signature
-------------------------------------------------------------------
(b) This Agreement was signed by AIM Distributors, Inc. the day of 19 .
---- --- -
Signed for the Sponsor by
--------------------------------------------------
Title
-----------------------------------------------------------------------
Signature
-------------------------------------------------------------------
[AIM LOGO APPEARS HERE] AIM Distributors, Inc. 43101-10/95
16
<PAGE>
SEP AND SARSEP IRA PLAN DOCUMENT [AIM LOGO APPEARS HERE]
AIM Distributors, Inc. hereby establishes a Prototype Plan for use, in
conjunction with an Internal Revenue Service approved IRA, by Employers who wish
to establish a qualified Simplified Employee Pension Plan (SEP) and/or a Salary
Reduction Simplified Employee Pension Plan, sometimes called a SARSEP. If the
Employer executes an Adoption Agreement which is accepted by AIM Distributors,
Inc. and which incorporates this document by reference, the Boston Safe Deposit
& Trust will act as custodian or trustee of the IRA plans established by
Employees eligible to receive contributions under the terms of this Plan. The
salary reduction feature of this prototype SEP and SARSEP may not be used by an
Employer who: 1) at any time during the prior Plan Year had more than 25
Employees who would have been eligible to participate; 2) has any leased
employees within the meaning of Code Section 414(n)(2); 3) is a governmental or
tax-exempt entity; 4) has eligible Employees whose taxable year is not the
calendar year; 5) has less than 50% of the Employees that are eligible to make
Elective Deferrals elect to have Elective Deferrals made to the Plan. No part of
this prototype document may be used if the Employer currently maintains or has
ever maintained a defined benefit pension plan which is now terminated. The
Employer's SARSEP shall contain the following terms and conditions:
ARTICLE I
DEFINITIONS
1.1 ADOPTION AGREEMENT The document attached hereto by which the Employer
elects to establish a qualified Salary Reduction Simplified Employee Pension
Plan under the terms of this Prototype Plan.
1.2 CODE The Internal Revenue Code of 1986, including any amendment thereto.
1.3 COMPENSATION The total wages, salaries, fees (for professional services)
and other taxable remuneration (without regard to whether or not an amount is
paid in cash) paid to a Participant from the Employer which are includible in
the Participant's gross income for the taxable year, as defined within the
meaning of Code Section 415(c)(3). Compensation does not include:
(a) Contributions to this plan or any other plan of deferred
compensation; and
(b) Amounts realized from the exercise of a nonqualified stock option,
or when restricted stock becomes freely transferable or is no longer subject to
a substantial risk of forfeiture; and
(c) Amounts realized from the disposition of stock acquired under a
qualified stock option; and
(d) Amounts received as a pension or annuity.
When applicable to a Self-Employed Individual, Compensation shall mean
Earned Income. With respect to any Plan Year, Compensation will be limited to
the first $150,000 of Compensation [or such higher amount determined in
accordance with Code Section 408(k)(3)(C)]. If a Plan determines Compensation
on a period of time that contains fewer than 12 calendar months, then the annual
compensation limit is an amount equal to the annual compensation limit for the
calendar year in which the Compensation period begins multiplied by the ratio
obtained by dividing the number of full months in the period by 12.
1.4 CUSTODIAN BOSTON SAFE DEPOSIT & TRUST or any successor thereto.
1.5 DEFERRAL PERCENTAGE LIMITATION Deferral Percentage Limitation is the
maximum amount of Elective Deferrals, expressed as a percentage of Compensation,
that can be contributed on behalf of any Highly Compensated Employee for a
particular Plan Year. This limitation equals the product of the average of the
Elective Deferrals (expressed as a percentage of each such Employee's
Compensation) made on behalf of each non-highly compensated employee for the
same Plan Year, multiplied by 1.25.
In calculating this average, the percentage for an eligible non-highly
compensated Employee who chooses not to have Elective Deferrals made on his or
her behalf for a Plan Year, is zero. The determination of the deferral
percentage for any Employee is to be made in accordance with Code Section
408(k)(6) and such other requirements as may be provided by the Secretary of
the Treasury. In addition, for purposes of determining the deferral percentage
of a Highly Compensated Employee, the Elective Deferrals and Compensation of
the Employee will also include the Elective Deferrals and Compensation of
any Family Member. This special rule applies, however, only if the Highly
Compensated Employee owns more than 5% of the Employer or is one of the ten
most highly-paid employees. The Elective Deferrals and Compensation of Family
Members used in this special rule do not count in computing the average of the
deferral percentages of non-highly compensated Employees.
1.6 EARNED INCOME Net earnings from self-employment in the trade or business
with respect to which the Plan is established, determined without regard to
items not included in gross income and the deductions allocable to such items,
provided that personal services of the individual are a material income
producing factor. Earned Income shall be reduced by contributions made by an
Employer to a qualified plan, including this Plan, to the extent deductible
under Code Section 404. Earned Income shall also be reduced by one-half of the
self employed's social security taxes.
1.7 EFFECTIVE DATE The date on which the Employer's Plan commences or an
amendment becomes effective. The Effective Date of the Elective Deferral
provisions shall be designated by the Employer in the Adoption Agreement.
1.8 ELECTIVE DEFERRAL(s) Employer contributions made to the Plan at the
election of the Participant, in lieu of cash Compensation, pursuant to a Salary
Savings Agreement or other deferral mechanism, such as a cash option
contribution. With respect to any taxable year, a Participant's Elective
Deferral is the sum of all Employer contributions made on behalf of such
Participant pursuant to an election to defer under any of the following: a
qualified cash or deferred arrangement as described in Code Section 401(k);
this Plan or any other simplified employee pension cash or deferred
arrangement described in Code Section 402(h)(1)(B); an eligible deferred
compensation plan under Code Section 457; and a plan described in Code Section
501(c)(18). Also included are any Employer contributions made on the behalf of
Participant for the purchase of an annuity contract under Code Section 403(b)
pursuant to a Salary Savings Agreement.
1.9 EMPLOYEE Any person employed by the Employer (including Self-Employed
Individuals and partners), all Employees of a member of an affiliated service
group [as defined in Code Section 414(m)], Employees of a controlled group of
corporations [as defined in Code Section 414(b)], Employees of any incorporated
or unincorporated trade or business which is under common control [as defined in
Code Section 414(c)], and all leased Employees who are not Employees of the
Employer but are required to be treated as Employees of the Employer under
section 414(n), and all Employees required to be aggregated under section
414(o) of the Code. All such Employees shall be treated as employed by a
single Employer.
1.10 EMPLOYER Any corporation, partnership, or proprietorship which adopts
this prototype plan, including any entity which succeeds the Employer and adopts
this Plan.
1.11 FAMILY MEMBER An Employee who is related to a Highly Compensated
Employee as a spouse, or as a lineal ascendant (such as a parent or grandparent)
or descendant (such as a child or grandchild) or spouse of either of those, in
accordance with Code Section 414(q) and the regulations thereunder. Family
membership is only applicable to Highly Compensated Employees who either own
more than 5% of the Employer or are one of the ten most highly compensated
Employees.
1.12 HIGHLY COMPENSATED EMPLOYEE An individual described in Code Section
414(q) who, during the current or preceding Plan Year:
(a) Was a 5% owner as defined in Code Section 416(i)(1)(B)(i);
(b) Received Compensation in excess of $50,000, as adjusted pursuant to
Code Section 415(d), and was in the top-paid group (the top 20% of Employees
ranked by Compensation);
(c) Received Compensation in excess of $75,000, as adjusted pursuant to
Code Section 415(d); or
(d) Was an officer as defined in Code Section 416(i)(1)(A) and received
Compensation in excess of 50% of the dollar limit on annual benefits payable
under Code Section 415 for defined benefit plans.
1.13 INDIVIDUAL RETIREMENT ACCOUNT AIM Distributors, Inc. Individual
Retirement Account which meets the requirements of Code Section 408(a)
established in conjunction with the Employer's Plan (IRA), as the recipient
of the Employer's contributions for the benefit of a participating Employee.
1.14 KEY EMPLOYEE Any Employee or former Employee [and the beneficiaries of
these Employees] who, at any time during the current Plan Year and the four
preceding Plan Years, was:
(a) An officer of the Employer [if the Employee's Compensation exceeds
50% of the limit under Code Section 415(b)(1)(A)];
(b) An owner of one of the ten largest interests in the Employer [if the
Employee's Compensation exceeds 100% of the limit under Code Section
415(c)(1)(A) and the ownership interest exceeds 1/2% of the Employer];
(c) A 5% owner of the Employer as defined in Code Section
416(i)(1)(B)(i)]; or
(d) A 1% owner of the Employer [if the Employee has Compensation in
excess of $150,000].
1.15 OWNER-EMPLOYEE A sole proprietor or partner owning more than 10% of
either the capital or profits interest of the partnership.
17
<PAGE>
1.16 PARTICIPANT Any Employee of the Employer who is participating in the
Plan.
1.17 PLAN The Simplified Employee Pension Plan with salary reduction
provisions as embodied herein.
1.18 PLAN ADMINISTRATOR The Employer is the Plan's named fiduciary and Plan
Administrator.
1.19 PLAN YEAR The 12-consecutive month period designated by the Employer in
the Adoption Agreement.
1.20 SALARY SAVINGS AGREEMENT A written agreement between the Employer and a
participating Employee where the Employee authorizes the Employer to withhold a
specified percentage of his or her Compensation for deposit to the Plan on
behalf of such Employee.
1.21 SARSEP A Simplified Employee Pension Plan (SEP) in which a
participating Employee may make an election through a Salary Savings Agreement
to have a portion of his or her salary deferred and have the Employer contribute
the entire amount of deferred salary to an IRA on his or her behalf.
1.22 SELF-EMPLOYED INDIVIDUAL An individual who has Earned Income for the
taxable year from the trade or business for which the Plan is established
including an individual who would have had Earned Income but for the fact that
the trade or business had no net profits for the taxable year.
1.23 SEP-IRA The Individual Retirement Account established to receive the
Employer's contributions for the benefit of each participating Employee.
1.24 SPONSOR The institution whose name appears on the cover hereof.
1.25 TAXABLE WAGE BASE The maximum amount of earnings which may be
considered wages at the beginning of the Plan Year under Section 230 of the
Social Security Act.
1.26 TAXABLE YEAR The taxable year of an Employer for Federal income tax
purposes.
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 PARTICIPATION Each Employee of the Employer shall automatically become a
Participant under the Plan as of the first day of the Plan Year during which
such Employee meets the eligibility requirements selected by the Employer in the
Adoption Agreement. Employees shall not be permitted to authorize Elective
Deferrals until the individual satisfies the Plan's eligibility requirements. In
the event an Employee who is not a member of the eligible class of Employees
becomes a member of the eligible class, such Employee shall participate
immediately if such Employee has satisfied the minimum age and service
requirements and would have become a Participant had he or she been in the
eligible class. A former Participant shall again become a Participant
immediately upon returning to the employ of the Employer.
2.2 MAXIMUM AGE The Plan shall not exclude Employees who have attained age
70 1/2, provided such Employees meet the eligibility requirements in the
Adoption Agreement.
2.3 EMPLOYMENT RIGHTS Participation in the Plan shall not confer upon a
Participant any employment rights, nor shall it interfere with the Employer's
right to terminate the employment of any Employee at any time.
2.4 WITHDRAWAL OF CONTRIBUTIONS Participation in the Plan shall not be
terminated, suspended, or in any way affected, if a Participant withdraws all or
any part of his or her IRA. This Plan shall not impose any prohibition on a
Participant's right to make withdrawals from his or her IRA.
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 AMOUNT Prior to the close of each Plan Year, the Employer shall
determine in writing the amount of its contribution for such Plan Year. This is
in addition to any amount contributed pursuant to Salary Savings Agreements with
the Participants. The Employer's contribution shall be discretionary and the
Employer shall be under no obligation to contribute each year. The Employer may
make a contribution even if no Elective Deferrals are contributed for such year.
Contributions to the SEP are deductible by the Employer for the Taxable Year
with or within which the Plan Year of the SEP ends. Contributions made for a
particular Taxable Year and contributed by the due date of the Employer's income
tax return, including extensions, are deemed made in that Taxable Year.
3.2 LIMITATIONS ON ALLOCATIONS The Employer's contribution (including Salary
Savings Agreement amounts) when allocated to eligible Participants for any Plan
Year shall not exceed the lesser of 15% of each Participant's Compensation or
$30,000 [as indexed under Code Section 415]. In addition, the Employer's
contribution shall also bear a uniform relationship to the total Compensation
of each Participant. For purposes of the preceding sentence, the Employer's
contribution to the Old Age, Survivors and Disability Insurance program may be
considered as part of the Employer's contribution. Employer contributions to
the Old Age, Survivors and Disability Insurance Program may not be considered
under this Plan if it is considered under any other plan of the Employer.
3.3 ALLOCATION FORMULAS The Employer's contribution shall be allocated among
eligible Participants in accordance with one of the formulas provided below.
Employees and former Employees employed by the Employer at any time during the
Plan Year, who met the eligibility requirements at any time during the Plan
Year, shall share in the Employer's contribution for such Plan Year, even though
no longer employed. The Employer's contribution shall automatically be allocated
in accordance with paragraph (a) unless paragraph (b) is selected in the
Adoption Agreement.
(a) PROPORTIONATE ALLOCATION The Employer's contribution for each Plan
Year shall be allocated to the IRA of each eligible Employee in the same portion
as such Employee's Compensation [not in excess of $150,000 as adjusted for
inflation under Code Section 401(a)(17)] for such Plan Year bears to all
eligible Employees' Compensation for that year.
(b) INTEGRATED ALLOCATION The Employer's contribution for the Plan Year
shall be allocated to each eligible Participant (using his or her Compensation
earned during the Plan Year) as follows:
(i) First, to the extent contributions are sufficient, all
Participants will receive an allocation equal to 3% of their Compensation.
(ii) Next, any remaining Employer Contributions will be allocated to
Participants who have Compensation in excess of the Taxable Wage Base (excess
Compensation) as in effect at the beginning of the Plan Year. Each such
Participant will receive an allocation in the ratio that his or her excess
Compensation bears to the excess Compensation of all Participants. Participants
may only receive an allocation of 3% of excess Compensation.
(iii) Next, any remaining Employer contributions will be allocated
to all Participants in the ratio that their Compensation plus excess
Compensation bears to the total Compensation plus excess Compensation of all
Participants. Participants may only receive an allocation of up to 2.7% of their
Compensation plus excess Compensation, under this allocation method.
NOTE: If the Plan is not Top-Heavy or if the Top-Heavy minimum contribution or
benefit is provided under another Plan [see Section 8 of the Adoption
Agreement] covering the same Employees, sub-paragraphs (i) and (ii) above may
be disregarded and 5.7% may be substituted for 2.7% where it appears in (iii)
above.
(iv) Next, any remaining Employer contributions will be allocated to
all Participants in the ratio that each Participant's Compensation bears to all
Participants' Compensation.
3.4 RESPONSIBILITY FOR CONTRIBUTIONS The Sponsor shall not be required to
determine if the Employer has made a contribution or if the amount contributed
is in accordance with the Adoption Agreement or the Code. The Employer shall
have sole responsibility in this regard.
ARTICLE IV
EMPLOYEE ELECTIVE DEFERRALS
4.1 ELECTIVE DEFERRAL REQUIREMENTS Elective Deferrals shall only be
permitted for Plan Years in which:
(a) Not less than 50% of the Participants elect to make Elective
Deferrals to the SEP-IRA on their behalf; and
(b) The Employer had no more than 25 Employees at all times during the
prior Plan Year who were eligible to participate in the Plan.
4.2 SALARY SAVINGS AGREEMENT An Employee may elect to have Elective
Deferrals made under this Plan through either a lump sum or continuing Elective
Deferrals, or both, pursuant to his or her Salary Savings Agreement. The amount
of Elective Deferrals may not exceed the percentage or dollar amount specified
in the Employer's Adoption Agreement. Under no circumstances may an Employee's
Elective Deferrals in any calendar year exceed the lesser of:
(a) Fifteen percent of the Employee's Compensation determined without
including the SEP-IRA contributions, (13.0435% of Compensation plus Elective
Deferrals), or
(b) $7,000 as adjusted for inflation at the beginning of such taxable
year. This amount may be reduced if a Participant contributes pre-tax
contributions to qualified plans of this or other Employers.
4.3 TIMING OF ELECTIVE DEFERRALS Elective Deferrals may not be based on
Compensation an Employee has received, or had a right to receive, prior to the
execution of the Employee's Salary Savings Agreement. A Participant may amend
his or her Salary Savings Agreement to increase, decrease or terminate the
Elective Deferral percentage upon written notice to the Employer. Such increase,
decrease or termination shall be effective as soon as reasonably possible, but
in any event within 90 days of written notice. If a Participant terminates his
or her Elective Deferrals, such Participant shall not be permitted to put a new
Salary Savings Agreement into effect until after 90 days. The Employer may also
amend or terminate said agreement on written notice to the Participant to insure
the Plan's qualified status. If a Participant has not authorized the Employer to
withhold at the maximum rate and desires to increase the total withheld for a
Plan Year, such Participant may authorize the Employer to withhold a
supplemental amount up to 100% of his or her Compensation for one or more pay
periods. In no event may the sum of the amounts withheld under the Salary
18
<PAGE>
Savings Agreement plus the supplemental withholding exceed 15% of a
Participant's Compensation for a Plan Year (net of the Elective Deferrals).
The Employer agrees to deposit Elective Deferrals with the Sponsor for credit
to Participant IRAs within 30 days after being withheld from the Participant's
Compensation.
4.4 CASH BONUS OPTION If permitted by the Employer in the Adoption
Agreement, an Employee may base Elective Deferrals on cash bonuses during the
year that, at the Employee's election, may be contributed to the SEP-IRA or
received by the Employee in cash.
4.5 DISALLOWED ELECTIVE DEFERRALS If the 50% requirement in paragraph
4.1(a) is not satisfied as of the end of any Plan Year, all the Elective
Deferrals made by Employees for that Plan Year shall be considered disallowed
Elective Deferrals.
4.6 NOTIFICATION OF DISALLOWED ELECTIVE DEFERRALS The Employer shall notify
each affected Participant, within 2 1/2 months after the end of the Plan Year to
which the disallowed Elective Deferrals relate, that the deferrals are no longer
considered SARSEP contributions. Such notification shall specify the amount of
the disallowed Elective Deferrals and the Participant's calendar year in which
they are includible in income. Additionally, the notice must provide an
explanation of the applicable penalties if the disallowed Elective Deferrals are
not withdrawn in a timely fashion. The notice to each affected Participant shall
state the following:
(a) The amount of the disallowed Elective Deferral;
(b) That the disallowed Elective Deferrals are includible in the
Participant's gross income for the calendar year or years in which the amounts
deferred would have been received by the Participant in cash had she or he not
made the election to defer, and that the income allocable to such disallowed
Elective Deferrals is includible in the Participant's gross income in the year
withdrawn from the SEP-IRA; and
(c) That the Participant must withdraw the disallowed Elective Deferrals
and allocable income from the SEP-IRA by the April 15 following the calendar
year of notification by the Employer. Disallowed Elective Deferrals not
withdrawn by the April 15 following the calendar year of notification will be
subject to the IRA contribution limitations of Code Section 219 and Section 408
and may be considered excess contributions to the Participant's IRA. Disallowed
Elective Deferrals may be subject to the six percent tax on excess
contributions under Code Section 4973. If income allocable to a disallowed
Elective Deferral is not withdrawn by April 15 following the year of
notification by the Employer, the income may be subject to the ten percent tax
on early distributions under Code Section 72(t) when withdrawn.
4.7 REPORTING Disallowed Elective Deferrals are reported for tax purposes in
the same manner as excess SEP contributions.
ARTICLE V
ACCOUNTS OF PARTICIPANTS
5.1 INDIVIDUAL RETIREMENT ACCOUNT Each Employee, upon becoming a Participant
under the Plan, shall establish an IRA with the Sponsor. The Employee or Sponsor
shall furnish an account number to the Employer certifying the existence of such
account.
5.2 DETERMINATION OF DEPOSIT When making a contribution to the Plan, the
Employer shall calculate each Participant's proportionate share of the
Employer's contribution as determined in the Adoption Agreement. The Employer
shall then deliver the contribution to the Sponsor indicating the amount to be
credited to each Participant's SEP-IRA.
5.3 CONTROL OF ACCOUNT All contributions made under the Plan by the Employer
shall be irrevocable. After allocation to a Participant's SEP-IRA, the Employer
shall have no further control of such contribution and the terms of the
Participant's IRA shall be fully effective.
5.4 ALLOCATION OF ELECTIVE DEFERRALS The Employer shall contribute to each
Employee's SEP-IRA the amount of the Elective Deferrals designated in his or her
Salary Savings Agreement.
ARTICLE VI
LIMITATIONS ON CONTRIBUTIONS
6.1 LIMITATIONS ON ELECTIVE DEFERRALS A Participant's Elective Deferrals may
be limited to the extent necessary to satisfy the maximum contribution
limitations under Code Section 415(c)(1)(A) if the Employer maintains any
other SEP or any qualified plan to which contributions are made for such Plan
Year.
6.2 OVERALL LIMITATIONS ON CONTRIBUTIONS In addition to the dollar
limitation of Code Section 415(c)(1)(A) ($30,000 in 1991), contributions to this
Plan, when aggregated with contributions to all other SEPs and contributions
plus forfeitures under other qualified defined contribution plans of the
Employer, generally may not exceed 25% of Compensation for any Employee. If
these limits are exceeded on behalf of any Employee for a particular Plan Year,
that Employee's Elective Deferrals for that year must be reduced to the extent
of the excess.
6.3 LIMITATIONS FOR HIGHLY COMPENSATED EMPLOYEES Elective Deferrals by a
Highly Compensated Employee must satisfy the Deferral Percentage Limitation
under Code Section 408(k)(6) and paragraph 1.4 herein. Amounts in excess of the
Deferral Percentage Limitation will be deemed excess SEP contributions on behalf
of the affected Highly Compensated Employee.
6.4 NOTIFICATION OF EXCESS SEP CONTRIBUTIONS The Employer shall notify each
affected Participant, within 2 1/2 months following the end of the Plan Year to
which the excess SEP contributions relate, of any excess SEP contributions to
the Participant's SEP-IRA for the applicable year. Such notification shall
specify the amount of the excess SEP contributions and the calendar year in
which the contributions are includible in income and must provide an explanation
of applicable penalties if the excess contributions are not withdrawn in a
timely fashion.
6.5 NOTIFICATION REQUIREMENTS The notification to each affected Participant
of excess SEP contributions must specifically state in a manner calculated to be
understood by the average Employee:
(a) The amount of the excess SEP contributions attributable to the
Participant's Elective Deferrals;
(b) The calendar year in which the excess SEP contributions are
includible in gross income; and
(c) That the Participant must withdraw the excess SEP contributions (and
allocable income) from the SEP-IRA by April 15 following the year of
notification by the Employer. Those excess contributions not withdrawn by April
15 following the year of notification will be subject to the IRA contribution
limitations of Code Section 219 and Section 408 for the preceding calendar year
and thus may be considered an excess contribution to the Participant's IRA.
Such excess contributions may be subject to the six percent tax on excess
contributions under Code Section 4973. If income allocable to an excess SEP
contribution is not withdrawn by April 15 following the year of notification by
the Employer, the income may be subject to the ten percent tax on early
distributions under Code Section 72(t) when withdrawn.
6.6 EXCESS SEP CONTRIBUTIONS INCLUDIBLE IN INCOME Excess SEP contributions
are includible in the participating Employee's gross income on the earliest
dates any Elective Deferrals made on behalf of the Employee during the Plan Year
would have been received by the Employee had he or she originally elected to
receive the amounts in cash. However, if the excess SEP contributions (not
including allocable income) total less than $100, then the excess contributions
are includible in the Employee's gross income in the year of notification.
Income allocable to the excess SEP contributions is includible in the year of
withdrawal from the IRA.
6.7 EXCISE TAXES AND PENALTIES If the Employer fails to notify any of the
affected Employees within 2 1/2 months following the end of the Plan Year of an
excess SEP contribution, the Employer must pay a tax equal to 10% of the excess
SEP contribution. If the Employer fails to notify employees by the end of the
Plan Year following the Plan Year in which the excess SEP contributions arose,
the SEP no longer will be considered to meet the requirements of Code Section
408(k)(6) and contributions in the Employee's IRA will be subject to the IRA
contribution limitations and thus may be considered excess contributions to the
Employee's IRA.
6.8 WITHDRAWAL RESTRICTIONS The Employer shall notify each Participant who
makes an Elective Deferral for a Plan Year that, notwithstanding the prohibition
on withdrawal restrictions contained elsewhere in this Plan, any amount
attributable to such Elective Deferrals which is withdrawn or transferred before
the earlier of 2 1/2 months after the end of the particular Plan Year or the
date the Employer notifies its Employees that the Deferral Percentage
Limitations have been calculated, will be includible in income and possibly
subject to an early penalty tax.
ARTICLE VII
TOP-HEAVY RULES
7.1 TOP-HEAVY MINIMUM CONTRIBUTION Each Plan Year for which the Plan is Top
Heavy under Code Section 416, each non-key Employee shall receive an allocation
of Employer contributions equal to the lesser of 3% of Compensation or the
percentage of Compensation allocated to the Key Employee receiving the highest
percentage allocation. The Top-Heavy minimum contribution shall be satisfied
under this Plan unless the Employer designates another plan in the Adoption
Agreement.
7.2 CONTRIBUTIONS COUNTED TOWARDS MINIMUM For purposes of satisfying the
minimum contribution requirement under Code Section 416, only Employer
contributions shall be taken into account. Employee Elective Deferrals shall
not be considered.
7.3 TOP-HEAVY DETERMINATION This Plan is Top-Heavy for a Plan Year if, as of
the last day of the previous Plan Year (or current Plan Year if this is the
first year of the Plan) the total of elective and non-elective contributions
made on behalf of Key Employees for all years this Plan has been in existence
exceeds 60% of such contributions for all Employees who were eligible to
participate. If the Employer maintains (or maintained within the prior five
years) any other SEP or defined contribution plan in which a Key Employee
participates (or participated), the contributions or account balances, whichever
is applicable, must be aggregated with the contributions made to this Plan. The
contributions (and
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<PAGE>
account balances, if applicable) of an Employee who ceases to be a Key Employee
or of an individual who has not been in the employ of the Employer for the
previous five years shall be disregarded. The identification of Key Employees
and the Top-Heavy calculation shall be determined in accordance with Code
Section 416 and the regulations thereunder.
ARTICLE VIII
ADMINISTRATION
8.1 PLAN ADMINISTRATOR The Employer shall be the Plan's named fiduciary and
shall serve as Plan Administrator. As Plan Administrator, the Employer shall:
(a) Carry out the provisions of the Plan including determining
eligibility of Employees, allocating contributions, and interpreting the Plan
when necessary,
(b) Deliver all contributions to the Sponsor showing the amount to be
allocated to each Participant's IRA,
(c) Communicate with Employees regarding their participation and
benefits under the Plan,
(d) Advise Employees in writing of all contributions to their IRAs, and
(e) Perform any other duties required of the Plan Administrator.
8.2 SPONSOR The Sponsor shall be depository for individual IRAs established
by Plan Participants. As depository, the Sponsor shall:
(a) Accept for deposit contributions transmitted by the Employer. The
Sponsor need not verify the amount of the contributions received or the amounts
allocated to individual IRAs provided that no contribution for an individual IRA
exceeds the lesser of $30,000 as indexed or 15% of the individual's Compensation
for the Plan Year, and
(b) Administer each individual IRA in accordance with the provisions of
the Sponsor's IRA document.
ARTICLE IX
AMENDMENT AND TERMINATION
9.1 AMENDMENT BY SPONSOR The Sponsor may amend or terminate any or all
provisions of this prototype plan at any time without obtaining the approval or
consent of any Employer or Participant, provided that no amendment shall
authorize or permit any part of an Employer's contribution to be used for or
diverted to purposes other than for the exclusive benefit of Participants. The
Sponsor will inform each adopting Employer of any amendments to or termination
of the prototype SARSEP.
9.2 QUALIFICATION OF PROTOTYPE The Sponsor intends that this Plan will meet
the requirements of Code Section 408(k)(6) and the regulations thereunder as a
qualified Salary Reduction Simplified Employee Pension Plan. Should the
Commissioner of Internal Revenue or any delegate of the Commissioner at any time
determine that the Plan fails to meet the requirements of said Code
Section 408(k)(6), the Sponsor will amend the Plan so as to maintain its
qualified status.
9.3 AMENDMENT BY EMPLOYER The Employer may amend any option elected in the
Adoption Agreement provided that no amendment shall authorize or permit any part
of the Employer's contribution to be used for or diverted to purposes other than
for the exclusive benefit of Participants. If the Employer amends the Adoption
Agreement other than within the available options, the Employer may no longer
participate in this Plan.
9.4 TERMINATION The Employer may terminate its Plan at any time by filing
written notice with the Sponsor. In such event, the Sponsor shall continue to
administer each Participant's IRA as provided under the IRA agreement. The
Sponsor may also terminate the prototype upon written notice to the Employer.
ARTICLE X
GOVERNING LAW
Construction, validity and administration of the prototype plan, and any
Employer Plan as embodied in the prototype document and accompanying Adoption
Agreement, shall be governed by Federal law to the extent applicable and, to the
extent not applicable, by the laws of the State/Commonwealth in which the
principal office of the Sponsor is located.
<TABLE>
<S> <C>
INTERNAL REVENUE SERVICE Department of the Treasury
Prototype SEP with Salary Reduction Feature 002
FFN: 50441601900-002 Case: 9580093 EIN: 74-1894784 Washington, D.C. 20224
Letter Serial No. C410671b
AIM DISTRIBUTORS INC. Person to Contact: Ms. Arrington
11 GREENWAY PLAZA SUITE 1919 Telephone Number: (202) 622-8173
HOUSTON, TEXAS 77046 Refer Reply to: CP:E:EP:T1
Date: 11-13-95
</TABLE>
Dear Applicant:
In our opinion, the amendment to the form of your Simplified Employee Pension
(SEP) arrangement does not adversely affect its acceptability under section
408(k) of the Internal Revenue Code. This SEP arrangement is approved for use
only in conjunction with an Individual Retirement Arrangement (IRA) which meets
the requirements of Code section 408 and has received a favorable opinion
letter, or a model IRA (Forms 5308 and 5305-A).
Employers who adopt this approved plan will be considered to have a retirement
savings program that satisfies the requirements of Code section 408 provided
that it is used in conjunction with an approved IRA. Please provide a copy of
this letter to each adopting employer.
Code section 408(l) and related regulations require that employers who adopt
this SEP arrangement furnish employees in writing certain information about this
SEP arrangement and annual reports of savings program transactions.
Your program may have to be amended to include or revise provisions in order to
comply with future changes in the law or regulations.
If you have any questions concerning IRS processing of this case, call us at the
above telephone number. Please refer to the Letter Serial Number and File Folder
Number shown in the heading of this letter. Please provide those adopting this
plan with your phone number, and advise them to contact your office if they have
any questions about the operation of this plan.
You should keep this letter as a permanent record. Please notify us if you
terminate the term of this plan.
Sincerely yours,
/s/ [ILLEGIBLE]
-----------------------------------------
Chief, Employee Plans Technical Branch 1
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[AIM LOGO APPEARS HERE]
Form 5305-A (Rev. October 1992) Department of the Treasury
Internal Revenue Service
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
(under Section 408(a) of the Internal Revenue Code)
A I M DISTRIBUTORS, INC. CUSTODIAN AGREEMENT
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. NO PART OF THE CUSTODIAL FUNDS may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. NO PART OF THE CUSTODIAL FUNDS may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3) which provides an exception for certain gold and silver coins and
coins issued under the laws of any state.
ARTICLE IV
1. NOTWITHSTANDING ANY PROVISION of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section 1.401(a)
(9)-2, the provisions of which are incorporated by reference.
2. UNLESS OTHERWISE ELECTED by the time distributions are required to begin
to the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. THE DEPOSITOR'S ENTIRE INTEREST in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date (April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last survivor lives of
the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. IF THE DEPOSITOR DIES before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her
interest has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the Depositor or,
if the Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over
the life expectancy of the designated beneficiary or beneficiaries starting by
December 31, of the year following the year of the Depositor's death. If,
however, the beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in which
the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced distributions are treated as having begun on the Depositor's required
beginning date, even though payments may actually have been made before that
date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
5. IN THE CASE OF DISTRIBUTION over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the Custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of distributions
under paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designated
beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2.
In the case of distribution in accordance with paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. THE OWNER OF TWO OR MORE INDIVIDUAL RETIREMENT ACCOUNTS may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524 to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. THE DEPOSITOR AGREES to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408.6.
2. THE CUSTODIAN AGREES to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and the related
regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
ARTICLE VIII
1. PURSUANT TO THE TERMS of this A I M Distributors, Inc. Individual
Retirement Custodial Account Agreement and the related IRA Account Application
(referred to herein as the "IRA Adoption Agreement") (such Agreements being
collectively referred to herein as the "Agreement"), the Depositor directs the
Custodian to invest all custodial account funds after deductions for sales
charges and Custodian fees, in shares issued by the investment company or
companies selected by the Depositor on the related IRA Adoption Agreement, until
the Depositor hereafter gives the Custodian contrary instructions pursuant to
Article XIII below. The investment companies from which the Depositor may select
are enumerated on the applicable list prepared by A I M Distributors, Inc. (the
21
<PAGE>
"Distributor"), a copy of which accompanies the Adoption Agreement. Such
investment companies are part of "The AIM Family of Funds," which are managed
or advised by subsidiaries of A I M Management Group Inc., and any such
investment company will hereafter be referred to as "Investment Company."
2. (i) ANNUAL CASH CONTRIBUTIONS:
The Depositor may make annual cash contributions to the account within the
limits specified in Article I. All contributions shall be hand delivered or
mailed to the Custodian by the Depositor, with an indication of the taxable year
to which such contribution relates. Additionally, if the Depositor's employer
maintains a qualified simplified employee pension (SEP), such employer may
contribute on behalf of the Depositor, the lesser of 15% of the Depositor's
compensation from such employer or $30,000.
(ii) ROLLOVER CONTRIBUTIONS:
In addition to any annual contributions referred to in Paragraph (i) above,
but subject to this Paragraph (ii), the Depositor may contribute to the account,
at any time, a rollover contribution of such cash or other property as shall
constitute a rollover amount or contribution under section 402(a)(5), 402(a)(7),
403(a)(4), 403(b)(8) or 408(d)(3) of the Code. The Custodian will accept for the
account all rollover contributions which consist of cash, and it may, but shall
be under no obligation to, accept any other rollover contribution. In the case
of rollover contributions composed of assets other than cash, the prospective
Depositor shall provide the Custodian with a description of such assets and such
other information as the Custodian may reasonably require. The Custodian may
accept all or any part of such a rollover contribution if it determines that the
assets of which such contribution consists are either in a medium proper for
investment hereunder or that the assets can be promptly liquidated for cash.
The Depositor warrants that any rollover contribution to the account
consists of cash, the same property received in the distribution or, in the case
of amounts distributed to the Depositor from a qualified employer's plan or
annuity, the proceeds from the sale of the same property received in the
distribution. The Depositor also warrants that in the case of a rollover into
the account of amounts distributed to the Depositor from a qualified employer's
plan or annuity, only amounts in excess of the amounts considered to be the
Depositor's employee contributions included in such distribution constitute the
contribution to this account. Additionally, the Depositor affirms that the
contribution to the account does not consist of amounts received from an
inherited individual retirement account or annuity. An individual retirement
account or annuity shall be treated as inherited if it was acquired by reason of
the death of an individual other than the Depositor's spouse. The Depositor also
affirms that in the case of a rollover into the account of amounts distributed
from an individual retirement account or annuity or retirement bond, he has not
during the one year period ending on the date of the distribution received any
other distribution from an individual retirement account or annuity or
retirement bond which constituted a rollover contribution (as described in
section 408(d)(3) of the Code).
3. THE DEPOSITOR SHALL BE FULLY AND SOLELY RESPONSIBLE for all taxes,
interest and penalties which might accrue or be assessed by reason of any excess
deposit, and interest, if any, earned thereon. Any contributions made by or on
behalf of the Depositor in respect of a taxable year of the Depositor shall be
made by or on behalf of the Depositor to the Custodian for deposit in the
custodial account within the time period for claiming any income tax deduction
for such taxable year. It shall be the sole responsibility of the Depositor to
determine the amount of the contributions made hereunder. The Depositor shall
execute such forms as the Custodian may require in connection with any
contribution hereunder.
ARTICLE IX
1. THE CUSTODIAN SHALL from time to time, subject to the provisions of
Articles IV and V, make distributions out of the custodial account to the
Depositor, in such manner and amounts as may be specified in written
instructions of the Depositor. All such instructions shall be deemed to
constitute a certification by the Depositor that the distribution so directed is
one that the Depositor is permitted to receive. A declaration of the Depositor's
intention as to the disposition of an amount distributed pursuant to Article V
hereof shall be in writing and given to the Custodian. The Custodian shall have
no liability with respect to any contribution to the custodial account, any
investment of assets in the custodial account or any distribution therefrom
pursuant to instructions received from the Depositor or pursuant to this
Agreement, or for any consequences to the Depositor arising from such
contributions, investments or distributions including, but not limited to,
excise and other taxes and penalties which might accrue or be assessed by reason
thereof, nor shall the Custodian be under any duty to make any inquiry or
investigation with respect thereto.
2. IF THE DEPOSITOR IS DISABLED (as defined in Section 72(m) of the Code),
all or a portion of the balance in the custodial account may be distributed to
him/her as soon as practicable after the Custodian receives written notice of
the Depositor's disability and a written request for distribution. The Custodian
may require such proof of disability as it deems necessary prior to the time
that amounts are distributed to the Depositor due to such disability.
3. THE DEPOSITOR SHALL BE fully and solely responsible for all taxes and
penalties which might accrue or be assessed for having failed to make the annual
minimum withdrawal required in any year.
ARTICLE X
A Depositor shall have the right to designate a beneficiary or beneficiaries
to receive any amounts remaining in his account in the event of his death. Any
prior beneficiary designation may be changed or revoked at any time by a
Depositor by written designation signed by the Depositor on a form acceptable
to, and filed with, the Custodian; provided, however, that such designation, or
change or revocation of a prior designation shall not become effective until it
has been received by the Custodian, nor shall it be effective unless received by
the Custodian no later than thirty days before the death of the Depositor, and
provided further that the last such designation of beneficiary or change or
revocation of beneficiary executed by the Depositor, if received by the
Custodian within the time specified, shall control. Unless otherwise provided in
the beneficiary designation, amounts payable by reason of the Depositor's death
will be paid in equal shares only to the primary beneficiary or beneficiaries
who survive the Depositor, or, if no primary beneficiary survives the Depositor,
to the contingent beneficiary or beneficiaries who survive the Depositor. If the
Depositor had not, by the date of his death, properly designated a beneficiary
in accordance with the preceding sentences, or if no designated beneficiary
survives the Depositor, then the Depositor's beneficiary shall be the
Depositor's surviving spouse, or if there is no surviving spouse, the
Depositor's estate.
ARTICLE XI
1. ANY ADMINISTRATIVE OR OTHER FEES of the Custodian and its agents for
performing duties pursuant to this Agreement shall be in such amount as shall be
established from time to time. The Depositor agrees to pay the Custodian the
fees specified in its current fee schedule and authorizes the Custodian to
charge the Depositor's custodian account for the amount of such fees.
2. UPON THIRTY DAYS' PRIOR WRITTEN NOTICE, the Custodian may substitute a
new fee schedule. The Custodian's fees, any income, gift, estate and inheritance
taxes and other taxes of any kind whatsoever, including transfer taxes incurred
in connection with the investment or reinvestment of the assets of the custodial
account, that may be levied or assessed in respect of such assets, and all other
administrative expenses incurred by the Custodian in the performance of its
duties including fees for legal services rendered to the Custodian, may be
charged to the custodial account with the right to liquidate Investment Company
shares for this purpose, or at the Custodian's option, shall be billed to the
Depositor directly.
ARTICLE XII
1. THIS AGREEMENT SHALL take effect only when accepted and signed by the
Custodian. As directed, the Custodian shall then open and maintain a separate
custodial account for Depositor and invest the initial contribution hereunder in
shares of the Investment Company. Where the IRA Adoption Agreement is checked
for spousal accounts, separate custodial accounts will be opened and maintained
in each spouse's name. The amounts specified in the IRA Adoption Agreement shall
be credited to each spouse's separate custodial account except that no more than
$2,000 shall be credited to either custodial account.
2. THE CUSTODIAN SHALL invest subsequent contributions as directed. If any
such written instructions are not received as required however, or if received,
are in the opinion of the Custodian unclear, or if the accompanying contribution
exceeds $2,000 for the Depositor and/or $2,000 for the Depositor's spouse, the
Custodian may hold or return all or a portion of the contribution uninvested
without liability for loss of income or appreciation, and without liability for
interest, pending receipt of written instructions or clarification.
3. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, less charges, received on
Investment Company shares held in the custodial account shall (unless received
in additional such shares) be reinvested in shares of the Investment Company,
which shall be credited to the custodial account. If any distribution on such
shares may be received at the election of the Depositor in additional such
shares or in cash or other property, the Custodian shall elect to receive it in
additional Investment Company shares.
4. ALL INVESTMENT COMPANY SHARES ACQUIRED by the Custodian hereunder shall
be registered in the name of the Custodian (with or without identifying the
Depositor) or of its nominees. The Custodian shall deliver, or cause to be
executed and delivered, to the Depositor all notices, prospectuses, financial
statements, proxies and proxy solicitation materials relating to such Investment
Company shares held in the custodial account. The Custodian shall not vote any
Investment Company shares except in accordance with the written instructions
received from the Depositor.
ARTICLE XIII
1. THE CUSTODIAN SHALL keep adequate records of transactions it is required
to perform hereunder. Not later than six months after the close of each calendar
year or after the Custodian's registration or removal pursuant to Article XV
below,
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the Custodian shall render to the Depositor or the Depositor's legal
representative a written report or reports reflecting the transactions effected
by it during such period and the assets and liabilities of the custodial account
at the close of the period. Sixty days after rendering such report(s), the
Custodian shall (to the extent permitted by law) be forever released and
discharged from all liability and accountability to anyone with respect to its
acts and transactions shown in or reflected by such report(s), except with
respect to those as to which the Depositor or the Depositor's legal
representative shall have filed written objections with the Custodian within the
latter such sixty-day period.
2. THE CUSTODIAN SHALL receive and invest contributions as directed by the
Depositor, hold and distribute such investments, and keep adequate records and
reports thereon, all in accordance with this Agreement. The parties do not
intend to confer any other fiduciary duties of the Custodian, and none shall be
implied. The Custodian shall not be liable (and assumes no responsibility) for
the collection of contributions, the deductibility or propriety of any
contribution under this Agreement, or the purposes or propriety of any
distribution from the account, which matters are the responsibility of the
Depositor or the Depositor's legal representative.
3. THE DEPOSITOR, to the extent permitted by law, shall always fully
indemnify the Custodian and save it harmless from any and all liability
whatsoever which may arise in connection with this Agreement and matters which
it contemplates, except that which arises due to the Custodian's negligence and
willful misconduct. The Custodian shall not be obligated or expected to commence
or defend any legal action or preceding in connection with this Agreement or
such matters unless agreed upon by the Custodian and Depositor or said legal
representative, and unless fully indemnified for so doing to the Custodian's
satisfaction.
4. THE CUSTODIAN MAY conclusively rely upon and shall be protected in acting
upon any written order from the Depositor or the Depositor's legal
representative or any other notice, request, consent, certificate or other
instruments or paper believed by it to be genuine and to have been properly
executed, and as long as it acts in good faith in taking or omitting to take any
other action in reliance thereon.
ARTICLE XIV
1. THE CUSTODIAN MAY resign at any time upon thirty days' notice in writing
to the Depositor, and may be removed by the Depositor at any time upon thirty
days' notice in writing to the Custodian. Upon such resignation or removal, the
Depositor shall appoint a successor custodian to serve under this Agreement.
Upon receipt by the Custodian of written acceptance of such appointment by the
successor custodian, the Custodian shall transfer to such successor the assets
of the custodial account and all necessary records (or copies thereof)
pertaining thereto, provided that (at the Custodian's request) any successor
custodian shall agree not to dispose of any such records without the Custodian's
consent. The Custodian is authorized, however, to reserve such assets as it may
deem advisable for payment of any other liabilities constituting a charge on or
against the assets of the custodial account or on or against the Custodian, with
any balance of such reserve remaining after the payment of all such items to be
paid over to the successor custodian.
2. THE CUSTODIAN SHALL NOT be liable for the acts or omissions of such
successor custodian.
3. THE CUSTODIAN, AND EVERY SUCCESSOR CUSTODIAN appointed to serve under
this Agreement, must be a bank (as defined in Section 408(n) of the Code) or
such other person who qualifies with the Internal Revenue Service to serve in
the manner prescribed by Code section 408(a)(2) and satisfies the Custodian,
upon request, as to such qualification.
4. AFTER THE CUSTODIAN HAS transferred the custodial account assets
(including any reserve balance as contemplated above) to the successor
custodian, the Custodian shall be relieved of all further liability with respect
to this Agreement, the custodial account and the assets thereof.
ARTICLE XV
1. THE CUSTODIAN SHALL terminate the custodial account and pay the proceeds
of the account to the depositor if within thirty days after the resignation or
removal of the Custodian pursuant to Article XV above, the Depositor has not
appointed a successor custodian which has accepted such appointment unless
within that time the Distributor appoints such successor and gives written
notice thereof to the Depositor and the Custodian. The Distributor shall have
the right, but not the duty, to appoint such a successor. Termination of the
custodial account shall be effected by distributing all of the assets therein in
cash or in kind to the Depositor in a lump sum, subject to the Custodian's right
to reserve funds as provided in said Article XV.
2. UPON TERMINATION of the custodial account in any manner provided for in
this Article XVI, this Agreement shall terminate and have no further force and
effect, and the Custodian shall be relieved from all further liability with
respect to this Agreement, the custodial account and all assets thereof so
distributed.
ARTICLE XVI
1. ANY NOTICE FROM THE CUSTODIAN TO THE DEPOSITOR provided for in this
Agreement shall be effective when mailed if sent by first class mail to the
Depositor at the Depositor's last known address as shown on the Custodian's
records. Any notice required or permitted to be given to the Custodian, shall
become effective upon actual receipt by the Custodian at such address as the
Custodian shall provide the Depositor from time to time in writing.
2. THIS AGREEMENT is accepted by the Custodian and shall be construed and
administered in accordance with the laws of The Commonwealth of Massachusetts.
The Custodian and the Depositor hereby waive and agree to waive right to trial
by jury in an action or proceeding instituted in respect to this custodial
account. The Depositor further agrees that the venue of any litigation between
him and the Custodian with respect to the custodial account shall be in the
County of Suffolk, The Commonwealth of Massachusetts.
3. THIS AGREEMENT is intended to qualify under section 408 of the Code as an
Individual Retirement Account and to entitle the Depositor to any retirement
savings deduction which he may qualify for under section 219 of the Code, and if
any provision hereof is subject to more than one interpretation or any term used
herein is subject to more than one construction, such ambiguity shall be
resolved in favor of that interpretation or construction which is consistent
with that intent.
4. ALL PROVISIONS IN THIS AGREEMENT ARE subject to the Code and to
regulations promulgated thereunder. In the event that any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
5. THE CUSTODIAN SHALL have no duties whatsoever except such duties as it
specifically agrees to in writing, and no implied covenants or obligations shall
be read into this Agreement against the Custodian. The Custodian shall not be
liable under this Agreement, except for its own bad faith, gross negligence or
willful misconduct.
6. NO INTEREST, RIGHT OR CLAIM IN OR TO ANY PART of the custodial account or
any payment therefrom shall be assignable, transferable, or subject to sale,
mortgage, pledge, hypothecation, communication, anticipation, garnishment,
attachment, execution, or levy of any kind and the Custodian shall not recognize
any attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute or
anticipate the same, except as required by law.
7. THE DEPOSITOR HEREBY DELEGATES to the Custodian the power to amend this
Agreement from time to time as it deems appropriate, and hereby consents to all
such amendments, provided, however, that all such amendments are in compliance
with the provisions of the Code and the regulations promulgated thereunder. All
such amendments shall be effective as of the date specified in a written notice
of amendment which will be sent to the Depositor.
INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF FORM
This model custodial account agreement may be used by an individual who
wishes to adopt an individual retirement account under section 408(a). When
fully executed by the Depositor and the Custodian not later than the time
prescribed by law for filing the Federal income tax return for the Depositor's
tax year (not including any extensions thereof), a Depositor will have an
individual retirement account (IRA) custodial account which meets the
requirements of section 408(a). This account must be created in the United
States for the exclusive benefit of the Depositor or his/her beneficiaries.
DEFINITIONS
CUSTODIAN. -- The Custodian must be a bank or savings and loan association,
as defined in section 408(n), or other person who has the approval of the
Internal Revenue Service to act as custodian.
DEPOSITOR. -- The Depositor is the person who establishes the custodial
account.
IRA FOR NON-WORKING SPOUSES
Contributions to an IRA custodial account for a non-working spouse must be
made to a separate IRA custodial account established by the non-working spouse.
This form may be used to establish the IRA custodial account for the
non-working spouse.
An employee's social security number will serve as the identification number
of his or her individual retirement account. An employer identification number
is only required for each participant-directed individual retirement account. An
employer identification number is required for a common fund created for
individual retirement accounts.
For more information, obtain a copy of the required disclosure statement
from your custodian or get Publication 590, Individual Retirement Arrangements.
(IRAs).
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SPECIFIC INSTRUCTIONS
ARTICLE IV -- Distribution made under this Article may be made in a single
sum, periodic payment, or a combination of both. The distribution option should
be reviewed in the year the Depositor reaches age 70 1/2 to make sure the
requirements of section 408(a)(6) have been met.
ARTICLE IX -- This article and any that follow it may incorporate additional
provisions that are agreed upon by the Depositor and the Custodian to complete
the agreement. These may include, for example: definitions, investment powers,
voting rights, exculpatory provisions, amendment and termination, removal of
Custodian, Custodian's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the Depositor, etc. Use additional pages if
necessary and attach them to this form.
Note: This form may be reproduced and reduced in size for adoption to
passbook or card purposes.
THE AIM FAMILY OF FUNDS --Registered Trademark--
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
DISCLOSURE STATEMENT
Under applicable federal regulations, a custodian of an individual
retirement account is required to furnish each depositor who has established or
is establishing an individual retirement account with a statement which
discloses certain information regarding the account. Boston Safe Deposit and
Trust Company (hereinafter referred to as the "Custodian") is providing this
Disclosure Statement to you in accordance with that requirement, and this
Disclosure Statement contains general information about the The AIM Family of
Funds --Registered Trademark-- Individual Retirement Custodial Account
(hereinafter referred to as "IRA"). This Disclosure Statement should be reviewed
in conjunction with both the Individual Retirement Custodial Account agreement
(From 5305-A and any attachments thereto, hereinafter referred to as the
"Custodial Agreement") and the Adoption Agreement for your IRA. You should
review this Disclosure Statement and the IRA documents with your attorney or
tax advisor. The Custodian cannot give tax advice or determine whether or not
the IRA is appropriate for you.
A. SEVEN DAY RIGHT TO REVOKE YOUR IRA.
You may revoke your IRA at any time within seven business days after the
date the IRA is established, by giving proper notice. For purposes of
revocation, it will be assumed that you received the Disclosure Statement no
later than the date of your check with which you opened your IRA. Written notice
must be hand delivered or sent by first class mail, in which case, the
revocation will be effective as of the date the notice is postmarked (or if sent
by certified or registered mail, the date of certification or registration).
Notice of revocation should be made to: A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 1919, P.O. Box 4739, Houston, Texas 77210-4739, Attention:
Shareholder Services Department, area code (800) 959-4246. If you revoke your
IRA, you are entitled to a refund of your entire contribution to the IRA,
without adjustment for such items as sales commissions, administrative expenses
or fluctuation in market value. If you do not revoke within seven business days
after the establishment of the IRA, you will be deemed to have accepted the
terms and conditions of the IRA and cannot later revoke the IRA without certain
potential penalties.
B. STATUTORY REQUIREMENTS.
An IRA is a trust or custodial account created or organized in the United
States for your exclusive benefit or that of your beneficiaries. It must be
created by a written governing instrument that meets the following requirements:
(1) THE TRUSTEE OR CUSTODIAN MUST BE A BANK, federally insured credit union,
savings and loan association or another person eligible to act as trustee or
custodian;
(2) EXCEPT FOR ROLLOVER CONTRIBUTIONS (as described in Part F below), no
contribution will be accepted unless it is in cash or cash equivalent,
including, but not by way of limitation, personal checks, cashier's checks, and
wire transfers;
(3) EXCEPT FOR ROLLOVERS, simplified employee pension ("SEP") contributions,
and spousal IRA contributions described below, contributions of more than $2,000
for any tax year may not be made;
(4) YOU WILL HAVE A NONFORFEITABLE INTEREST IN THE ACCOUNT;
(5) NO PART OF THE TRUST OR CUSTODIAL FUNDS will be invested in life
insurance contracts, nor may the assets be commingled with other property except
in a common trust fund or common investment fund. Furthermore, as provided in
section 408(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
your IRA may not be invested in "collectibles," such as art works, antiques,
metals, gems, stamps, coins (with an exception for certain U.S.-minted gold and
silver coins), and certain other types of tangible personal property. An
investment in a collectible would be treated as a distribution from your IRA
which would be includible in your gross income, and, if you had not attained the
age of 59 1/2, the distribution would also be subject to the premature
distribution penalty as discussed in Part E(4) below;
(6) YOUR ENTIRE INTEREST IN THE ACCOUNT MUST BE, or begin to be, distributed
on or before April 1 of the calendar year following the calendar year in which
you reach age 70 1/2. The distribution may be made in a single sum, or you may
receive periodic distributions, so long as your entire interest is distributed
in equal or substantially equal payments over any of the following periods:
(a) your life;
(b) the lives of you and your designated beneficiary;
(c) a period certain not extending beyond your life expectancy;
(d) a period certain not extending beyond the life expectancy of you and
your designated beneficiary.
If the distributions from your IRA are to be made over one of the foregoing
periods, the amount distributed each year must meet the minimum distribution
requirements set forth in your IRA Custodial Agreement, or you will incur a
penalty as described in Part E(8) below;
(7) IF YOU DIE AFTER DISTRIBUTIONS HAVE commenced but before your entire
interest has been distributed to you, payments must continue at least as rapidly
as under the method of distribution in effect, at your death. If you die before
distributions have commenced, generally your entire interest must be distributed
within five years of your death. However, if your interest is payable to a
designated beneficiary, payments may be made over the life or a period not
exceeding the life expectancy of the beneficiary; provided, however, that such
payments must commence within one year of your death unless your designated
beneficiary is your surviving spouse, in which case payments need not commence
until the date on which you would have attained age 70 1/2. You should advise
the Custodian as to your beneficiary and the method of distribution desired.
C. INVESTMENT OF YOUR IRA.
Under the terms of the Custodial Agreement, your contributions will be
invested by the Custodian in full and fractional shares of the investment
company or companies that you select. As provided in the Custodial Agreement,
you may only invest your IRA Funds in shares of investment companies which are
part of "The AIM Family of Funds --Registered Trademark--," which are managed
or advised by subsidiaries of A I M Management Group Inc. You will be provided
with a list of the investment companies from which you may choose to invest.
Subject to the foregoing and to any additional restrictions described in the
Custodial Agreement, you have complete control over the investment of your IRA
Funds. The Custodian will not provide any form of investment advice or make
investment recommendations of any type, so you will make all investment
decisions on the basis of information you obtain from other sources. When you
make a decision on how you wish to invest Funds held in your IRA, you should
provide the Custodian with specific instructions, detailing your investment
decision so that the Custodian can effectuate such investments as provided in
your IRA Custodial Agreement. If you fail to direct the Custodian as to the
Investment of all or any portion of your IRA account, the Custodian shall hold
such uninvested amount in your account and shall incur no liability for
interest or earnings thereon. All dividends and capital gain distributions
received on shares of an investment company held in your IRA will be reinvested
in shares of that investment company, if available, which shall be credited to
the Custodian account. Detailed information about the shares of the AIM fund(s)
you select must be furnished to you in the form of prospectuses governed by
rules of the Securities and Exchange Commission.
D. LIMITATIONS AND RESTRICTIONS ON IRA CONTRIBUTIONS AND DEDUCTIONS.
Except in the case of rollover contributions (see Part F below), generally
you may contribute up to the lesser of $2,000 or 100% of your compensation
(earned income) to your IRA for any taxable year. A non-working spouse may
contribute up to $2,000 to a separate IRA.
Section 219 of the Code contains special provisions governing whether
amounts contributed to your IRA will be deductible from gross income for federal
income tax purposes. To the extent you are not eligible or elect not to make
deductible IRA contributions, you may make nondeductible IRA contributions
within the aforementioned limits which are reduced by the amount of any
deductible contributions. The following is a summary of the rules regarding the
deductibility of contributions to your IRA. You should consult your tax advisor
to determine the specific application of such rules to your IRA contributions
for any particular taxable year.
(1) IF NEITHER YOU, NOR YOUR SPOUSE, IS an "active participant" (as
determined under section 219(g) of the Code and any regulations or rulings
thereunder) in a retirement plan during any part of the taxable year, you may
take a deduction for contributions to your IRA for such taxable year in an
amount equal to the lesser of $2,000 or 100% of your compensation (earned
income) for such taxable year.
(2) IF EITHER YOU, OR YOUR SPOUSE (unless you file separate income tax
returns as noted below), is considered an "active participant" in a retirement
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plan for any part of the taxable year, the extent, if any, to which
contributions to your IRA will be deductible depends on the amount of your
adjusted gross income ("AGI"). The maximum IRA deduction as specified in
Paragraph (1) above will be reduced in the same ratio that the excess of your
AGI over $25,000 (for a single individual), $40,000 (for a married couple filing
jointly) and zero (for a married couple filing separately) bears to $10,000.
Thus, if you are an active participant in a retirement plan, no IRA deduction
will be permitted if:
(a) You are a single individual with AGI in excess of $35,000,
(b) you are married and file a joint return with AGI in excess of
$50,000, or
(c) you are married, file separate returns and either you or your spouse
have AGI in excess of $10,000.
(3) IF YOU ARE MARRIED and your spouse has no compensation for the taxable
year, or elects to be treated as having no compensation for such year, you are
permitted an additional deduction in the amount of $250 for contributions to an
IRA for the benefit of your spouse provided that your spouse has not attained
age 70 1/2 and you file a joint income tax return for such year, subject to the
provisions of (1) or (2) above, whichever is applicable. (see below)
You will be considered an "active participant" for any particular taxable
year if you are covered by a retirement plan for any part of such year.
Generally, you will be considered 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 such year. 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 SEP or a plan which promises you a retirement
benefit which is based upon the number of years of service you have with the
employer, 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
should note that if you are married but file a separate tax return, and you did
not live with your spouse at any time during the taxable year, your spouse's
active participation does not affect your ability to make deductible
contributions.
No deduction will be allowed under (1) or (2) above for any contribution
which is made for the taxable year during which you attain age 70 1/2 or for any
subsequent year. You are permitted to contribute and deduct up to $4,000 for
contributions to your IRA and a spousal IRA, subject to the provisions of (1)
and (2) above. However, in no event shall the contribution to either IRA exceed
$2,000. It should be noted that if both you and your spouse work, each may
contribute up to $2,000 of compensation (earned income) to his or her own IRA.
If your employer maintains a SEP, your employer may contribute to your IRA
up to the lesser of 15% of your compensation from such employer or $30,000.
Since SEP contributions are excluded from your gross income, such contributions
are not deductible for federal income tax purposes.
If contributions to your IRA are deductible as outlined above, you may claim
such deduction even if you do not itemize your deductions on your federal income
tax return. You must make contributions to your IRA during the taxable year for
which you claim the deduction or by the deadline for filing your federal income
tax return for such year (without regard to any filing deadline extension). For
example, if you are a calendar-year taxpayer, you must make contributions no
later than April 15th in order to take a deduction for the previous year.
If any portion of a contribution to your IRA is nondeductible as outlined
above, you must so designate on your federal income tax return, as required
under section 408(o)(4) of the Code and file From 8606 with your tax return.
E. FEDERAL INCOME TAX STATUS OF THE IRA AND CERTAIN DISTRIBUTIONS.
(1) IN GENERAL. Except as described below, your IRA and earnings thereon are
exempt from federal income tax until distributions are made from the IRA.
(2) TAX TREATMENT OF DISTRIBUTIONS. If all contributions to your IRA (other
than rollover contributions) have been deductible for federal income tax
purposes then all distributions from your IRA will be taxable as ordinary
income. However, if you have made any nondeductible IRA contributions,
distributions from your IRA will be treated as partially a return of deductible
contributions, if any, (taxable), partially a return of nondeductible
contributions (nontaxable) and partially a distribution of earnings (taxable).
The portion of an IRA distribution which will be excludable from income will be
determined by multiplying the total amount distributed by a fraction, the
numerator of which is the aggregate of all your nondeductible IRA contributions,
and the denominator of which is the aggregate balance of all of your IRAs
(including rollover IRAs and SEPs). For purposes of the foregoing, (a) all of
your IRAs will be treated as a single IRA, (b) all distributions during a
taxable year will be treated as a single distribution and (c) the aggregate
balance of your IRAs will be determined as of the end of the calendar year with
or within which your taxable year ends, after adding back any distributions for
such year.
Distributions from your IRA are not eligible for any special tax treatment
such as five-or ten-year averaging or capital gains treatment.
(3) EXCESS CONTRIBUTIONS. If contributions to your IRA are in excess of the
limits stated in Part D above, you will be assessed a 6% nondeductible excise
tax on such excess amounts. This tax is payable for each year the excess is
permitted to remain in your IRA. However, if the excess contribution has not
been taken as a deduction, and if the excess and all earnings thereon are
returned before the due date for filing your income tax return for the year in
which the excess contribution was made, the 6% excise tax will not be assessed.
The earnings on such excess contribution that are returned to you will be
taxable as ordinary income and will be deemed to have been earned and taxable in
the tax year during which the excess contribution was made. In addition, if you
are not disabled or have not reached age 59 1/2, the earnings will be subject to
the 10% premature withdrawal penalty discussed below. The 6% excess contribution
tax may be eliminated for future tax years by withdrawing the excess
contribution from your IRA before the due date for filing your tax return for
that year or by under-contributing for a subsequent year by an amount equal to
the excess contribution. If the total contributions for the year to your IRA are
$2,250 or less, and there are no employer contributions for the year, you may
withdraw any excess contributions after the due date for filing your tax return,
including extensions, and not include the amount withdrawn in your gross income.
This applies only to the part of the excess that you did not take a deduction
for. It is not necessary to withdraw the interest or other income earned on the
excess. You will have to pay the 6% tax on the excess amount for each year the
excess contribution was in the IRA.
If the contributions to your IRA for any year are more than $2,250, you must
include in your gross income any excess over $2,250, unless it is an excess
rollover contribution attributable to erroneous information. You may also have
to pay a 10% tax on premature distributions on the amount you withdraw, unless
you are age 59 1/2 or disabled.
If less than the maximum amount of contributions has been made in years
before the year you make an excess contribution, the prior year's difference may
not be used to reduce the excess contribution. Qualified rollover contributions,
as described in Part F below, are not considered excess contributions.
(4) PREMATURE DISTRIBUTIONS. In addition to any regular income tax that may
be payable, distributions from your IRA that occur before you reach age 59 1/2
(except in the event of disability, death, rollover, medical expenses in excess
of 7.5% of adjusted gross income, medical insurance premiums in the event of
unemployment or as a qualifying distribution of an excess contribution), will be
assessed a 10% additional income tax on the amount distributed which is
includible in your gross income. However, the additional 10% income tax will not
be imposed if the distribution is one of a scheduled series of level payments to
be made over your life or life expectancy or over the joint lives or joint life
expectancies of you and your beneficiary. Amounts treated as distributions from
the IRA because of pledging the IRA as described below, or prohibited
transactions as described below, will also be considered premature distributions
if they occur before you reach age 59 1/2 (assuming you are not disabled).
(5) EXCESS DISTRIBUTIONS If the aggregate of your distributions from
qualified plans and individual retirement accounts exceed a certain limit for
any calendar year, a 15% excise tax will be imposed on such excess
distributions. Generally, the limit is the greater of $150,000 (available only
if a special grandfather provision is not elected on a return filed for a
pre-1989 tax year) or $112,500 as adjusted for cost-of-living increases. For any
such excess distributions prior to your attainment of age 59 1/2, the 15% excise
tax will be offset by the 10% additional income tax on early distributions.
(6) PLEDGING THE IRA. If you pledge your IRA as security for a loan, the
portion so pledged is treated as being distributed to you in that year. In
addition to any regular income tax that may be payable on the distribution, the
premature distribution penalty as discussed above may also be applicable.
(7) PROHIBITED TRANSACTIONS. If you or your beneficiary engages in a
prohibited transaction, as described in section 4975 of the Code with respect to
your IRA, your IRA will lose its exemption from tax and you must include the
fair market value of your IRA in your gross income for the year during which the
prohibited transaction occurred. In addition to any regular income tax that may
be payable, the premature distribution penalty as discussed above may also be
applicable.
(8) INSUFFICIENT OR LATE DISTRIBUTIONS. In addition to the regular income
tax that may be payable on distributions from your IRA, you will be assessed
penalties on certain accumulations if funds in your IRA are not distributed in
accordance with the rules described in Part B above. If the amount distributed
from your IRA during the year is less than the minimum amount required to be
distributed during such year, an excise tax will be imposed. The tax imposed is
equal to 50% of the amount by which the minimum required distribution exceeds
the amount actually distributed during the year.
(9) ESTATE AND GIFT TAX STATUS OR DISTRIBUTIONS. Generally, for estate tax
purposes, the value of your IRA will be fully includible in your gross estate in
the event of your death. For gift tax purposes, beneficiary designations will
not be treated as gifts. Also, contributions to an IRA on behalf of a spouse who
has no earned income or elects to be treated as having no earned income will
qualify for
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the annual present interest gift exclusion. You should consult your tax advisor
with respect to the application of community property laws on estate and gift
tax issues relating to your IRA.
(10) INHERITED IRAs. Your IRA will be treated as an inherited IRA if, upon
your death, it is acquired by a beneficiary other than your surviving spouse. An
inherited IRA may not be rolled over to a qualified plan or to another IRA, nor
may an inherited IRA accept any regular or rollover deposits. Only a beneficiary
who is your surviving spouse will be allowed to roll over the IRA funds into his
or her own IRA.
(11) FEDERAL INCOME TAX WITHOLDING. The taxable portion of distributions
from your IRA is subject to federal income tax withholding unless you elect not
to have withholding applied. If you elect not to have withholding applied to
taxable distributions from your IRA, or if insufficient federal income tax is
withheld from any distribution, you may be responsible for payment of estimated
taxes, as well as for penalties under the estimated tax rules, if withholding
and estimated tax payments were not sufficient. Additional information regarding
withholding and the necessary election forms will be provided no later than at
the time a distribution is requested.
F. ROLLOVER CONTRIBUTIONS.
A rollover is a tax-free distribution of cash or other assets from one
retirement program to another. There are two kinds of rollover contributions to
an IRA. In one, you contribute amounts distributed to you from one IRA to
another IRA. With the other, you contribute amounts distributed to you from your
employer's qualified plan or 403(b) plan to an IRA. A rollover is an allowable
IRA contribution which is not subject to the limits on regular contributions
discussed in Part D above. However, you may not deduct a rollover contribution
to your IRA on your tax return.
If you receive a distribution from the qualified plan of your employer or
former employer, the distribution must be an "eligible rollover distribution" in
order for you to be able to roll all or part of the distribution over to your
IRA. The portion you contribute to your IRA will not be taxable to you until you
withdraw it from the IRA. Your employer or former employer will give you the
opportunity to roll over the distribution directly from the plan to the IRA. If
you elect, instead, to receive the distribution, you must deposit it into the
IRA within 60 days after you receive it.
An "eligible rollover distribution" is any distribution from a qualified
plan that would be taxable other than (1) a distribution that is one of a series
of periodic payments for an employee's life or over a period of 10 years or
more, (2) a required distribution after you attain age 70 1/2 and (3) certain
corrective distributions.
If the entire amount in your IRA has been contributed in a tax-free rollover
from your employer's or former employer's qualified plan or 403(b) plan, you may
later roll over the IRA to a new employer's plan if such plan permits rollovers.
Your IRA would then serve as a conduit for those assets. However, you may later
roll those IRA funds into a new employer's plan only if you make no further
contributions to that IRA, or commingle the IRA rollover funds with existing IRA
assets.
G. AMENDMENTS.
The Custodian of your IRA may amend the agreements establishing your IRA at
any time. The Custodian will comply with the amendment procedures set forth in
your Custodial Agreement.
H. FINANCIAL DISCLOSURE.
Because the value of assets held in your IRA is subject to market
fluctuation, the value of your IRA can neither be guaranteed nor projected.
There is no assurance of growth in the value of your IRA or guarantee of
investment results. You will, however, be provided with periodic statements of
your IRA, including current market values of investments.
Certain fees will be charged by the Custodian in connection with your IRA.
Such fees are disclosed on the Custodian's fee schedule, a copy of which has
been provided to you. Upon thirty days' prior written notice, the Custodian may
substitute a new fee schedule. Any fees or other expenses incurred in connection
with your IRA will be deducted from your IRA (with liquidation of Fund Shares,
if necessary), or at the Custodian's option, such fees or expenses may be billed
to you directly.
For its services to the various funds, in The AIM Family of
Funds--Registered trademark--, Boston Safe Deposit and Trust Company receives a
custodian fee. This fee is in addition to fees it receives for acting as
Custodian under the IRA. Boston Safe Deposit and Trust Company and A I M
Distributors, Inc. also will receive additional fees for performing specific
services with respect to the various funds in the AIM Family of Funds. Any such
fees will be fully disclosed to you. Potential investors should obtain a copy of
the current Prospectus relating to the fund(s) selected for investment prior to
making an investment. Also, copies of the Statement of Additional Information
relating to such fund(s) will be provided upon your request to A I M
Distributors, Inc.
I. MISCELLANEOUS.
Each year you will be provided a statement(s) of account which will give the
amount of contributions to the IRA, the year to which each contribution relates,
and the total value of the IRA as of the end of the year. Information relating
to contributions and distributions must be reported annually to the Internal
Revenue Service and to you. You must also file Form 5329 (Return for Individual
Retirement Savings Arrangement) with the Internal Revenue Service for each
taxable year during which you are assessed any penalty or tax as discussed in
Part E above.
Your IRA has been approved by the Internal Revenue Service. Such approval is
a determination as to the form of the IRA, and does not represent a
determination of the IRA's merits as an investment.
Further information about IRAs can be obtained from any district office of
the Internal Revenue Service or from the Custodian.
All provisions in this Disclosure Statement are subject to the Code and to
the regulations promulgated thereunder. This Disclosure Statement constitutes a
nontechnical restatement and summary of certain provisions of the Code which may
affect your IRA. This is not a legal document. Your legal rights and obligations
are governed by the federal tax laws and regulations and your Custodial
Agreement and Adoption Agreement with the Custodian.
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SEP AND SARSEP IRA APPLICATION [AIM LOGO APPEARS HERE]
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1. INVESTOR INFORMATION (Please print or type.)
Name Birth Date / /
--------------------------------------------------- -- -- --
First Name Middle Last Name Month Day Year
Address
---------------------------------------------------------------------
Street City State Zip Code
Social Security Number
---------------------
Daytime Telephone Evening Telephone
-------------------------- ----------------
- --------------------------------------------------------------------------------
2. TYPE OF ACCOUNT
[ ] SEP - Employer contributions only.
[ ] SARSEP - Employee salary-reduction SEP.
[ ] Combined SEP/SARSEP - Employer and Employee contributions.
Name of Employer Telephone
-------------------------------- ------------------
- --------------------------------------------------------------------------------
3. FUND INVESTMENT
Indicate Fund(s) and contribution amount(s). Make check payable to Boston
Safe Deposit and Trust Company. Minimum $25 per fund per contribution
submission.
<TABLE>
<CAPTION>
Fund $ or % of Assets Class of Shares (check one)
<S> <C> <C>
[ ] AIM Balanced Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Charter Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Constellation Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Global Aggressive Growth Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Global Growth Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Global Income Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Growth Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Global Utilities Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM High Yield Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Income Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Intermediate Government Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM International Equity Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Limited Maturity Treasury Shares $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Money Market Fund $ [ ] Class A
----------------------------
[ ] AIM Value Fund $ [ ] Class A [ ] Class B [ ] Class C
----------------------------
[ ] AIM Weingarten Fund $ [ ] Class A [ ] Class B
----------------------------
Total $ [ ] Class A [ ] Class B
----------------------------
</TABLE>
If no class of shares is selected, Class A shares will be purchased.
All dividends and capital gains will be reinvested in the fund(s)
automatically.
- --------------------------------------------------------------------------------
4. TELEPHONE EXCHANGE
Telephone Exchange Privilege. Unless indicated below, I authorize the
Transfer Agent to accept instructions from any person to exchange shares in
my account(s) by telephone in accordance with the procedures and conditions
set forth in the Fund's current prospectus.
[ ] I do not want the Telephone Exchange Privilege.
27
<PAGE>
- --------------------------------------------------------------------------------
5. BENEFICIARY INFORMATION
I hereby designate the following beneficiary to receive the balance in my
IRA custodial account upon my death. To be effective, the designation of
beneficiary and any subsequent change in designation of beneficiary must be
filed with the Custodian prior to my death. If no beneficiary is designated
or no designated beneficiary or contingent beneficiary survives me, the
balance in my IRA will be distributed to the legal representatives of my
estate. This designation revokes any prior designations. I retain the right
to revoke this designation. In the event that I die and no primary
beneficiary listed below (or such beneficiary's heirs, if applicable) is
alive, distribute all Fund accounts in my IRA to the following contingent
beneficiary, or contingent beneficiary's heirs, if applicable.
PRIMARY BENEFICIARY(IES)
Name % Relationship
------------------------------------ ---- --------------
Beneficiary's Social Security Number Birth Date / /
------------- -- -- --
Name % Relationship
------------------------------------ ---- --------------
Beneficiary's Social Security Number Birth Date / /
------------- -- -- --
CONTINGENT BENEFICIARY
Name % Relationship
------------------------------------ ---- --------------
Social Security Number Birth Date / /
--------------------------- -- -- --
- --------------------------------------------------------------------------------
6. AUTHORIZATION AND SIGNATURE
I hereby adopt the A I M Distributors, Inc. Individual Retirement Account
appointing Boston Safe Deposit and Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the IRA custodial
agreement and disclosure statement and consent to the custodial account fees
as specified. I understand that a $10 annual AIM Fund IRA Maintenance Fee
will be deducted in early December from my AIM IRA account. Under the
Interest and Dividend Tax Compliance Act of 1983, the Fund is required to
have the following certification. Under the penalties of perjury, I certify
that (i) the number shown in Section 1 is my correct Social
Security/Taxpayer Identification Number and (ii) I am not subject to backup
withholding because the Internal Revenue Service (a) has not notified me
that I am subject to backup withholding as a result of failure to report all
interest or dividends, or (b) has notified me that I am no longer subject to
backup withholding. Please refer to the Fund prospectus for complete
instructions regarding backup withholding.
Your Signature Date / /
---------------------------------------------- -- -- --
- --------------------------------------------------------------------------------
7. DEALER INFORMATION (To be completed by securities dealer.)
Name of Broker/Dealer Firm Branch #
----------------------- ------------------
Home Office
-----------------------------------------------------------------
Address
---------------------------------------------------------------------
Rep. Name Rep. #
----------------------------------------- --------------------
Authorized Signature Telephone
------------------------------ -----------------
Branch Address
------------------------------------------------
Street City State Zip Code
[ ] Authorized for NAV purchase
28 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43102-10/95
<PAGE>
SARSEP IRA ENROLLMENT AND SALARY [ AIM LOGO APPEARS HERE]
SAVINGS AGREEMENT
- --------------------------------------------------------------------------------
8. INVESTOR INFORMATION (Please print or type.)
Name Date / /
---------------------------------------------------- -- -- --
First Name Middle Last Name Month Day Year
Address
---------------------------------------------------------------------
Street City State Zip Code
Birth Date / / Hire Date / /
--- --- --- --- --- ---
Month Day Year Month Day Year
- -------------------------------------------------------------------------------
Social Security Number
------------------------------------------------------
[ ] I HEREBY ELECT TO BECOME A PARTICIPANT IN THE SARSEP.
As a Participant, I hereby authorize the Company to deduct ______% of my
Compensation or a flat dollar amount of $ __________ per pay period which I
understand will be contributed by the Employer to my IRA. I understand that
my annual SARSEP contribution cannot exceed the lesser of 15% of my
compensation or $9,240, or an amount as limited by IRS regulations. The
minimum contribution is $25 PER FUND PER CONTRIBUTION SUBMISSION.
[ ] I AM PRESENTLY A PARTICIPANT IN THE SARSEP.
As a Participant, I hereby authorize the Company to change the amount it
deducts from my Compensation from _______% to _______% or if a dollar amount
has been specified, from $_______________ per pay period to $_______________
per pay period. I understand that this change will be effective 30 days from
the first day of the month following receipt of this notice.
[ ] I HEREBY WITHDRAW MY AUTHORIZATION TO CONTINUE PAYROLL DEDUCTIONS UNDER THE
SARSEP.
I understand this directive will be effective 30 days from delivery of this
notice to the Employer. I further understand that I may not again authorize
payroll deductions for a period of 90 days from the date of this notice.
[ ] CASH BONUS ELECTION (IF APPLICABLE)
I hereby authorize the Company to deduct ________% from my cash bonus as an
additional contribution to my IRA. I understand that my total annual
contribution cannot exceed the lesser of 15% of my compensation or $9,240,
or an amount as limited by IRS regulations.
--------------------------------------
Participant's Signature
29 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43103-10/95
<PAGE>
30
<PAGE>
SEP AND SARSEP TOP-HEAVY TEST [AIM LOGO APPEARS HERE]
Plan Year End
--------------------------
- --------------------------------------------------------------------------------
1. A Top-Heavy Test must be performed at the end of each plan year. A Plan
becomes top heavy when 60% of the Plan's aggregate SEP and/or SARSEP
contributions or 60% of the aggregate market value of the Plan as of the
last day of the Plan year is allocated to key employees. You may test using
either market values or contributions, but you may find it easier to test
based on contributions.
<TABLE>
<CAPTION>
Key Employees' Names Contributions Market Value
(SEP and SARSEP) 12/31 or Fiscal Year End
<S> <C> <C>
$ $
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
(A) Total $ $
--------------------- -------------------------------
</TABLE>
<TABLE>
<CAPTION>
Non-Key Employees' Names Contributions Market Value
(SEP and SARSEP) 12/31 or Fiscal Year End
<S> <C> <C>
$ $
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
(B) Total S $
--------------------- -------------------------------
(C) Plan Totals (line A + line B) $ $
--------------------- -------------------------------
(D) Top-Heavy Percentage
(line A divided by line C) --------------------- -------------------------------
(If greater than 60%, plan is "top heavy")
</TABLE>
Note: If you have additional key or non-key employees, please attach additional
pages as necessary.
If the Plan is top heavy, the employer must make a minimum contribution on
behalf of all non-key eligible employees. The contribution must equal the
highest percentage deferred by a key employee, up to a maximum of 3%, based on
the non-key employee's compensation. These contributions can be made to any
qualified retirement plan (SEP or SARSEP IRA), as indicated in the adoption
agreement. Key employees may also receive the top-heavy contribution.
31 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43104-10/95
<PAGE>
32
<PAGE>
SARSEP IRA ACTUAL DEFERRAL [AIM LOGO APPEARS HERE]
PERCENTAGE (ADP) TEST
Plan Year End
----------------------
- --------------------------------------------------------------------------------
1. THE ACTUAL DEFERRAL PERCENTAGE (ADP) TEST
The Actual Deferral Percentage (ADP) Test is an annual test which restricts
the amount that Highly Compensated Employees may contribute through salary
deferral to their SARSEP accounts. Each Highly Compensated Employee may
defer no more than 125% of the deferral percentage of the Non-Highly
Compensated (NHC) group of employees. The test must be performed annually as
of the last day of the plan year.
- --------------------------------------------------------------------------------
2. INSTRUCTIONS
(1) Separate eligible employees into two groups: Highly Compensated and
Non-Highly Compensated. The definition of Highly Compensated is provided
in the Question and Answer Section on page 13.
(2) List each ELIGIBLE employee in their respective group indicating their
compensation and salary deferral. IMPORTANT: You must also include all
eligible employees who elect not to make salary deferral contributions.
Indicate their deferral amount ($) in Column 4 as zero.
(3) Compute each eligible employees' deferral percentage in Column 4.
(4) Add up the deferred percentage of each employee in the Highly
Compensated group and the Non-Highly Compensated group separately.
Divide by the number of eligible employees in each group.
(5) Compare the two groups' average deferral percentages. Each Highly
Compensated participant cannot defer more than 125% of the average
deferral percentage of the Non-Highly Compensated group.
- --------------------------------------------------------------------------------
3. DEFINITIONS
(1) EMPLOYEE: For the purposes of this worksheet we are listing only
employees eligible for this SARSEP. An employee who was eligible at any
time during the Plan Year, but who terminates prior to the end of the
Plan Year is included for this test. Additionally, an eligible employee
who elects not to make Elective Deferrals shall be treated as having a
0% Deferral Percentage.
(a) HIGHLY COMPENSATED EMPLOYEE An Employee (and certain family
members) who meet the criteria listed in Sections 1.11 and 1.12
of the SEP and SARSEP IRA Plan Document. (Also see Question and
Answer Section on page 13.)
(b) NON-HIGHLY COMPENSATED EMPLOYEE: An Employee who doesn't meet
the definition of Highly Compensated.
(2) ELECTIVE DEFERRALS: All contributions made to the SARSEP at the election
of an eligible employee (Participant) in lieu of cash compensation or
bonuses pursuant to a salary savings agreement or cash option election.
(3) COMPENSATION: Total wages, salaries, fees, bonuses or other taxable
remuneration paid to Participant from the Employer during the period in
which the individual actually participated in the Plan. Compensation
shall be limited to $160,000 (or any higher limit announced by the IRS).
The Compensation limit must be adjusted proportionately for Plan Years
of less than 12 months.
33
<PAGE>
- --------------------------------------------------------------------------------
4. ELIGIBLE NON-HIGHLY COMPENSATED (NHC) EMPLOYEES
NOTE: Please read the Definitions before completing worksheet.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Deferral
Employee Name Elective Deferrals Compensation Percentage
column 2 divided
by column 3
<S> <C> <C> <C>
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
</TABLE>
(5) Total of all Deferral Percentages (column 4)
---------------
(6) Number of eligible Non-Highly Compensated Employees (column 1)
-------------
(7) Average Deferral Percentage for Non-Highly Compensated
Employees (line 5 divided by line 6)
--------------------
- --------------------------------------------------------------------------------
5. ELIGIBLE HIGHLY COMPENSATED (HC) EMPLOYEES
NOTE: Please read the Definitions before completing worksheet.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Deferral
Employee Name Elective Deferrals Compensation Percentage
column 2 divided
by column 3
<S> <C> <C> <C>
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
</TABLE>
(A) Total of all Deferral Percentages (column 4)
------------------
(B) Number of eligible Highly Compensated Employees (column 1)
----------------
(C) Average Deferral Percentage for Highly Compensated Employees
(line A divided by line B)
--------------------
(D) EACH HIGHLY COMPENSATED PARTICIPANT MAY NOT DEFER MORE THAN 125% X LINE 7,
SECTION 4
125% X _________________ = ______________ ADP FOR EACH HIGHLY COMPENSATED
PARTICIPANT
34 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43105-3/96
<PAGE>
SEP/SARSEP TRANSMITTAL FORM [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. EMPLOYER INFORMATION (Please print or type.)
Name of Employer
------------------------------------------------------------
Address
---------------------------------------------------------------------
City State Zip Code
------------------------------ --------------- --------------
- --------------------------------------------------------------------------------
2. EMPLOYER'S AUTHORIZATION (Signature(s) of authorized employer
representative)
We hereby authorize Boston Safe Deposit and Trust Company to invest
contributions in accordance with the instructions below.
Date / /
- ------------------------------------------------------------ -- -- --
Month Day Year
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name of Social Security Selected Contribution per Fund**
Participant Number AIM Funds* (Minimum $25 per Fund)
SEP SARSEP
<S> <C> <C> <C> <C>
1 $ $
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
2
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
3
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
4
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
5
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
6
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
</TABLE>
*Indicate funds used by each participant.
**Indicate dollar($) amount contributed per fund.
35
<PAGE>
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name of Social Security Selected Contribution per Fund**
Participant Number AIM Funds* (Minimum $25 per Fund)
SEP SARSEP
<S> <C> <C> <C> <C>
7 $ $
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
8
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
9
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
10
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
11
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
Total Employer Contributions $
------------
Total Employee Salary
Deferral Contributions $
-----------
Total Employer and
Employee Contributions $
-----------
</TABLE>
If a contribution for a participant is to be invested in more than one fund, $25
or more must be invested in each fund selected. Attach form, check (payable to
Boston Safe Deposit and Trust) and SEP and SARSEP applications and mail to:
AIM Fund Services, Inc.
Attn: Retirement Plans Operations
P.O. Box 2646
Houston, Texas 77252-2646
*Indicate funds used by each participant.
**Indicate dollar($) amount contributed per fund.
36 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43106-10/95
<PAGE>
EXHIBIT 14(c)
AIM PROFIT SHARING/MONEY PURCHASE PENSION PLAN
ENROLLMENT & BENEFICIARY DESIGNATION FORM [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. EMPLOYEE INFORMATION (Please Print)
Company Name Trust Tax ID #
------------------------------ ---------------
Last Name First Middle
------------- ------------ -----------------------
Social Security Number
----------------------------------------------------
Address
-------------------------------------------------------------------
Home Phone Work Phone
--------------------------- ------------------------
- --------------------------------------------------------------------------------
2. INVESTMENT SELECTION
I elect to have my Employer contributions invested as indicated below. If
any existing assets are being transferred to AIM, they will be invested the
same as your future contributions. (Write in the name of each AIM Fund you
choose to invest in as permitted by the Plan.)
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
100% Total (Minimum $25 per fund, per payroll deferral)
- --------------------------------------------------------------------------------
3. PRIMARY BENEFICIARY(IES)
I name the following person(s) to receive benefits payable from my
company's retirement plan upon my death:
<TABLE>
<S> <C> <C>
Name Relationship Percentage of Benefits
----------------------------------------------- ----------------------------------- [ %]
Social Security Number Birthdate / /
----------------------------- ------------ ------------- -----------
Street Address City State Zip Code
----------------------- ----------------- --- -------------------
Name Relationship Percentage of Benefits
----------------------------------------------- ----------------------------------- [ %]
Social Security Number Birthdate / /
----------------------------- ------------ ------------- ----------- Percentages must
Street Address City State Zip Code total 100%
----------------------- ----------------- --- -------------------
</TABLE>
Attach additional sheets if you wish to name more than two primary
beneficiaries.
- --------------------------------------------------------------------------------
4. CONTINGENT BENEFICIARY(IES)
If my primary beneficiary(ies) is/are deceased at the time of my death, the
following person(s) shall receive benefits payable from my Company
Retirement Plan upon my death:
<TABLE>
<S> <C> <C>
Name Relationship Percentage of Benefits
----------------------------------------------- ----------------------------------- [ %]
Social Security Number Birthdate / /
----------------------------- ------------ ------------- -----------
Street Address City State Zip Code
----------------------- ----------------- --- -------------------
Name Relationship Percentage of Benefits
----------------------------------------------- ----------------------------------- [ %]
Social Security Number Birthdate / /
----------------------------- ------------ ------------- ----------- Percentages must
Street Address City State Zip Code total 100%
----------------------- ----------------- --- -------------------
</TABLE>
Attach additional sheets if you wish to name more than two contingent
beneficiaries.
- --------------------------------------------------------------------------------
5. SPOUSAL CONSENT
(This section must be completed only if you are married and selecting a
primary beneficiary other than your spouse.)
I, the spouse of the above-named employee, consent to my spouse's
designation. I understand that if a primary beneficiary other than myself
has been named, no benefit will be paid to me from the Plan upon my
spouse's death unless I am named also as an additional primary beneficiary
or as a contingent beneficiary, and the primary beneficiary(ies) is/are
deceased.
Spouse's Signature Date / /
-------------------------------- ----- ----- -----
Signature of Witness (other than spouse) Date / /
---------- ----- ----- -----
- --------------------------------------------------------------------------------
6. EMPLOYEE AUTHORIZATION (Please sign and date this form)
I understand that my designation becomes effective on the day I submit this
form and replaces any earlier beneficiary designation I have made under the
Plan. If I am married at the time of my death, my spouse will receive my
Plan benefits, regardless of whom I have named as beneficiary, if Section 4
of this form is not complete.
Employee Signature Date / /
-------------------------------- ----- ----- -----
A I M Distributors, Inc. *40700-12/96
<PAGE>
PROFIT SHARING/MONEY PURCHASE
PLAN APPLICATION [AIM LOGO APPEARS HERE]
Complete Sections 1-9. Please print or type.
- -------------------------------------------------------------------------------
1. EMPLOYER INFORMATION
Name of Employer/Business
---------------------------------------------------
Plan Name
-------------------------------------------------------------------
Address
-------------------------------------------------------------------
Street City State Zip Code
Trust Tax I.D# Daytime Telephone - -
---- -------------- ---- ---- --------
- --------------------------------------------------------------------------------
2. DEALER INFORMATION: To be completed by securities dealer.
Dealer's Name
--------------------------------------------------------------
Main Office Address
--------------------------------------------------------
Rep. Name and Number
--------------------------------------------------------
Branch Rep. Signature
---------------------------- --------------------------
Home Office Address
---------------------------------------------------------
Telephone - -
---- ---- ---------
- --------------------------------------------------------------------------------
3. PLAN TRUSTEES
Name Plan Adm./Contact Person
------------------------- ----------------------
Name Plan Adm. Telephone - -
------------------------- ----- ----- -----
- --------------------------------------------------------------------------------
4. TYPE OF CONTRIBUTION
Note: If you have paired AIM Profit Sharing and Money Purchase Pension
Plans, you must submit separate applications and separate contribution
checks. [ ] Profit Sharing Plan [ ] Money Purchase Plan
- --------------------------------------------------------------------------------
5. TYPE OF ACCOUNT ESTABLISHMENT
[ ] Establish separate accounts for each participant. (Attach participant
listing.)
[ ] Establish a pooled account for all participants. (Record keeper is
responsible for allocating plan assets to each participant.)
- --------------------------------------------------------------------------------
6. FUND INVESTMENT
Indicate fund(s) and contribution amount(s). Make check payable to Boston
Safe Deposit and Trust Company.
<TABLE>
<CAPTION>
Class of
Shares Class of Shares
Fund $ or % of (Check one) Fund $ or % of (Check one)
Assets Assets
<S> <C> <C> <C> <C> <C>
[ ] AIM Balanced Fund $ [ ] A [ ] B [ ] AIM Intermediate Government Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Blue Chip Fund $ [ ] A [ ] B [ ] AIM Growth Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Capital Develop-
ment Fund $ [ ] A [ ] B [ ] AIM High Yield Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Charter Fund $ [ ] A [ ] B [ ] AIM Income Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Constellation
Fund $ [ ] A [ ] AIM International Equity Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Global Aggressive
Growth Fund $ [ ] A [ ] B [ ] AIM Limited Maturity Treasury Shares $ [ ] A
----------- ----------
[ ] AIM Global Growth
Fund $ [ ] A [ ] B [ ] AIM Money Market Fund $ [ ] A [ ] B [ ] C
----------- ----------
[ ] AIM Global Income
Fund $ [ ] A [ ] B [ ] AIM Value Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Global Utilities
Fund $ [ ] A [ ] B [ ] AIM Weingarten Fund $ [ ] A [ ] B
----------- ----------
Total from both columns $
----------
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, where Class C shares will be
purchased. If you are funding your retirement account through a transfer,
please indicate the contribution amounts both in this section and in Section
3 of the Asset-Transfer Form.
<PAGE>
- -------------------------------------------------------------------------------
7. TELEPHONE EXCHANGE PRIVILEGE
Unless indicated below, the plan authorizes the Transfer Agent to accept
instructions from any person to exchange shares in its plan account(s) by
telephone, in accordance with the procedures and conditions set forth in the
Fund's current prospectus.
[ ] The plan DOES NOT want the telephone exchange privilege.
- --------------------------------------------------------------------------------
8. REDUCED SALES CHARGE (optional)
RIGHT OF ACCUMULATION
The plan applies for Right of Accumulation reduced sales charges based on
the following accounts in The AIM Family of Funds--Registered Trademark--.
Fund(s) Account No(s).
----------------------- -------------------------------
LETTER OF INTENT
The plan agrees to the Letter of Intent provisions as stated in Fund's
prospectus(es). The plan agrees to invest during a 13-month period a dollar
amount of at least:
[ ]$25,000 [ ]$50,000 [ ]$100,000 [ ]$250,000 [ ]$500,000 [ ]$1,000,000
- --------------------------------------------------------------------------------
9. DUPLICATE ACCOUNT STATEMENT
Name
------------------------------------------------------------------------
Address
---------------------------------------------------------------------
(AIM will only send one duplicate statement. Check one of the following
boxes.)
[ ]Plan Administrator [ ]Record Keeper [ ]Benefit Consultant [ ]Trustee
- --------------------------------------------------------------------------------
10. AUTHORIZATION AND SIGNATURE
The trustee(s) hereby adopts the AIM Distributors, Inc. Money
Purchase/Profit Sharing Plan appointing Boston Safe Deposit and Trust
Company as Custodian. The trustee(s) has received and read the current
prospectus of the investment company(ies) selected in this agreement. The
trustee(s) understands that a $10 annual maintenance fee for each
participant in the AIM Money Purchase/Profit Sharing Plan will be
deducted in early December. The trustee(s) acknowledges reading and
completing the AIM Funds Money Purchase/Profit Sharing Plan Adoption
Agreement(s) and Trust Agreement.
Under the Interest and Dividend Tax Compliance Act of 1983, the Fund is
required to have the following certification. Please refer to the Fund
prospectus for complete instructions regarding backup withholding. Under the
penalties of perjury, the trustee(s) certifies that (i) the number shown in
Section 1 is its correct Taxpayer Identification Number and (ii) the plan is
not subject to backup withholding because the Internal Revenue Service (a)
has not notified the plan that it is subject to backup withholding as a
result of failure to report all interest or dividends, or (b) has notified
the plan that it is no longer subject to backup withholding (does not apply
to real estate transactions, mortgage interest paid, the acquisition or
abandonment of secured property, contributions to an individual retirement
arrangement (IRA), and payments other than interest and dividends).
Certification Instructions - You must cross out item(b) above if you have
been notified by the IRS that you are currently subject to backup
withholding because of underreporting of interest or dividends on your tax
return.
[ ] Exempt from Backup Withholding (i.e. exempt entity as described in
Application Instructions)
Signature of Plan Trustee Date / /
----------------------------- ---- ---- ------
Signature of Plan Trustee Date / /
----------------------------- ---- ----- -------
Signature of Plan Trustee Date / /
----------------------------- ---- ----- -------
- --------------------------------------------------------------------------------
11. INSTRUCTIONS
Make check payable to Boston Safe Deposit and Trust Company.
Return completed application and check to A I M Distributors, Inc., P.O.
Box 4739, Houston, TX 77210-4739.
[AIM LOGO APPEARS HERE] A I M Distributors, Inc. 42600-12/96
<PAGE>
[AIM LOGO APPEARS HERE]
AIM FAMILY OF FUNDS
PROTOTYPE MONEY PURCHASE PENSION AND PROFIT SHARING PLANS
MONEY PURCHASE PENSION AND PROFIT SHARING PLAN DOCUMENT, TRUST AGREEMENT,
ADOPTION AGREEMENTS, SUMMARY PLAN DESCRIPTIONS AND APPLICATIONS
AIM DISTRIBUTORS, INC.
<PAGE>
AIM DISTRIBUTORS, INC.
PROTOTYPE PAIRED DEFINED CONTRIBUTION PLANS
PROFIT SHARING/MONEY PURCHASE PENSION PLANS
TABLE OF CONTENTS
I. Adopting the AIM Profit Sharing Plan: Adoption Agreement #001
II. Adopting the AIM Money Purchase Pension Plan: Adoption Agreement #002
III. Money Purchase Pension and Profit Sharing Plan Basic Document #01
IV. Determination Letters
V. Trust Agreement
VI. Employee Notices
- Model Summary Plan Description for Profit Sharing Plan
- Model Summary Plan Description for Money Purchase Plan
VII. Forms
- Money Purchase Pension and Profit Sharing Plan Account Application
- Participant Enrollment & Beneficiary Designation
- Asset Transfer Form
- Contribution Transmittal Form
1
<PAGE>
ESTABLISHING
YOUR
PROTOTYPE DEFINED CONTRIBUTION PLANS
PROFIT SHARING AND MONEY PURCHASE PENSION PLANS
The Prototype Paired Defined Contribution Plans sponsored by AIM Distributors,
Inc. are a Profit Sharing Plan and a Money Purchase Pension Plan. Both of these
plans are provided under one plan document with separate adoption agreements.
An employer can adopt either one or both of these plans.
AIM Distributors, Inc. will not act as trustee, plan administrator, nor record
keeper. Before establishing a qualified plan, you should consult with a tax
advisor or attorney. Failure to properly complete these documents could result
in plan disqualification.
To establish the AIM Prototype Profit Sharing and/or Money Purchase Pension
Plan the following forms need to be completed:
1. PLAN ADOPTION AGREEMENT(S). (Section I & II.)
You must complete the appropriate adoption agreement, Profit Sharing
Agreement #001, or Money Purchase Pension Agreement #002, and all
other documents stated in the plan set up instructions.
To establish both a Money Purchase Pension and a Profit Sharing Plan
(Paired Plans), you must complete both the Profit Sharing Adoption
Agreement (Agreement #001) and the Money Purchase Adoption Agreement
(Agreement #002) found in Sections I & II.
2. FIDELITY BOND REQUIREMENT: All qualified plans are required to be covered
by a Fidelity Bond equal to at least 10% of the asset value of the plan,
and not less than $1,000 nor greater than $500,000. Fidelity bonds can be
obtained through your business insurance agent.
3. TRUST AGREEMENT DOCUMENT (Section III.)
Complete and sign pages 77 and 78 of the Trust Document.
4. AIM PROFIT SHARING/MONEY PURCHASE PLAN ACCOUNT APPLICATION (Section VII.)
Complete a separate application for each plan established: Profit
Sharing and/or Money Purchase Pension Plan.
5. PARTICIPANT ENROLLMENT AND DESIGNATION OF BENEFICIARY FORM (Section VII
Employer retains)
Each eligible employee must complete an enrollment and beneficiary
form and return it to the plan administrator to be retained with plan
records. A copy of the employee's enrollment form should be forwarded
to AIM only if you are requesting that individual mutual fund accounts
be established for each employee.
2
<PAGE>
Do not return the employee enrollment forms if you are
establishing "pooled" investment accounts for the plan. AIM will
only establish "individual" mutual fund participant accounts for
plans with less than 50 participants.
6. TO TRANSFER ASSETS FROM AN EXISTING PLAN: Complete the Asset Transfer
Form in Section V as well as the documents indicated on the previous
page.
7. FEES: There is an annual custodial account fee of $10.00 for each
participant account or each "pooled" account establish at AIM.
After completion, return only the AIM Money Purchase Pension and Profit Sharing
Account Application and a copy of the participant enrollment forms (individual
mutual fund accounts only) with your contribution to establish the plan. Do not
return participant enrollment forms if establishing "pooled" AIM Fund
investment accounts.
Enclose your initial contribution check payable to: Boston Safe Deposit &
Trust Company.
DO NOT return the Adoption Agreement(s), Summary Plan Description(s),
Beneficiary Form, or Trust Agreement to AIM. These documents must be retained
with your permanent plan records.
Return to:
AIM Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
DEADLINE: New Plans must execute all plan documents prior to the last day of
the plan year (fiscal or calendar year). The plans contribution must be made
by the due date of the business tax return including extensions for the
contribution to be tax deductible.
NOTICE TO EMPLOYEES
Once you have adopted the AIM Money Purchase Pension and/or Profit Sharing Plan
you will need to communicate the adoption and principal provisions of the plan
to employees. This is done by providing the following information to employees:
1. SUMMARY PLAN DESCRIPTION
The employer must give each eligible employee a Summary Plan Description
(SPD) of the plan and file the Summary Plan Description with the Department
of Labor within 120 days of establishing the plan. You must complete the
SPD to indicate the plan features you have designated in the adoption
agreement. AIM has partially completed the SPD in accordance with the
features we pre-marked. Any future amendments to the adoption agreement
must also be made to the SPD.
There is a sample letter provided for filing the SPD with the Department
of Labor.
These notices are provided in Section VII.
3
<PAGE>
ADOPTING THE AIM PROFIT SHARING PLAN
ADOPTION AGREEMENT #001
4
<PAGE>
ADOPTING THE AIM PROFIT SHARING PLAN ADOPTION
AGREEMENT #001
TO ADOPT THE AIM SPONSORED PROFIT SHARING PLAN YOU WILL NEED TO COMPLETE
THE FOLLOWING FORMS:
- The Profit Sharing Adoption Agreement and Summary Plan Description
(SPD) and Trust Agreement
- A Profit Sharing Plan Account Application
- An Enrollment and Beneficiary Designation Form for each participant.
PLAN STRUCTURE:
If you are establishing "pooled" investment accounts, utilizing a third
party administrator for record keeping:
- Submit only the AIM Profit Sharing and/or Money Purchase Pension Plan
Account Application indicating all the AIM Funds permitted as
investment options by the Plan and the investment amount for each
fund. You must identify the Plan's trustees. If you are not making
your full contribution at this time, we require a minimum $1,000
initial contribution.
If you want AIM to establish separate mutual fund accounts for each plan
participant:
- Submit the AIM Profit Sharing Account Applications with the
participant enrollment forms (Section VII).
- Identify each participant's name, mailing address, SS # and their AIM
Fund'(s) investment election on the enrollment form.
- The plan administrator must submit all contributions with a breakdown
identifying each participant and their total contribution allocated to
the funds the participant has chosen.
- The minimum contribution per participant is $25 per fund, per
contribution submission.
- The maximum number of individual, participants accounts AIM will
establish is 50, utilizing no more than 6 AIM Funds.
- Duplicate statements will be issued to your recordkeeper or
administrator, if requested.
RETURN TO: AIM Fund Services
P.O. Box 4739
Houston, TX 71210-4739
ADOPTION AGREEMENT
To make it easy for you, the Profit Sharing Plan Adoption Agreement has been
partially completed to reflect the features most frequently chosen. Please
review the completed plan adoption agreement with your legal or tax advisor to
ensure that the plan provisions are appropriate.
NOTE: If desired, you may change any of the prechecked elections by making the
appropriate change and placing your initials and date next to the section being
changed.
[X] PRE-CHECKED SECTIONS:
The key sections in this Adoption Agreement which have been completed are as
follows:
5
<PAGE>
- - All employees who are Age 21 and have fulfilled one year of service are
eligible to share in plan for contributions. (Years of service cannot
exceed 2 years: all contributions are then 100% vested.)
- - An employee who completes 1,000 hours of service within 12 consecutive
months of their date of hire is credited with a year of service for initial
eligibility. Only 500 hours of service are required in any year thereafter
for a participant to be eligible for a plan contribution. There is no
requirement that a participant be employed on the last day of the plan year
to receive a contribution in the year they separate from service.
- - After fulfilling age and service eligibility requirements, employees may
enter the plan on the first day of a plan year on the first day of the
seventh month of the plan year. (Calendar Year = January 1 & July 1 entry
dates)
- - All union and non U.S. resident alien employees are excluded from
participation. Please note that all other employees of the plan sponsors,
as well as employees of certain companies related to the plan sponsor, are
eligible to participate.
- - Please note that all other employees of the plan sponsors, as well as
employees of certain companies related to the plan sponsor, are eligible to
participate.
- - The employees annual contribution will be discretionary.
- - The plan is not integrated with Social Security. If you choose to integrate
your contribution, AIM will not compute the integration allocation.
- - Normal retirement age of 65.
- - No Loans and No Hardship Distributions are permitted.
- - No Life Insurance may be purchased by the plan.
- - The Employer is the Plan Administrator responsible for administration of
the Plan. (If you appoint another entity as the Plan Administrator, that
entity must sign Section XV of the Adoption Agreement to accept the
responsibility of Plan Administrator.
[X] SECTIONS TO BE COMPLETED BY EMPLOYER
The following sections of the Adoption Agreement must be completed by the
employer.
Section II: Employer Data (Page 1 & 2) - Complete A through G. If
applicable, Complete H and I. (Name, address, TIN, etc.)
Section IX: Vesting - Choose the vesting schedule desired.
SECTION XIV: Allocation Limitation - complete this section.
Section XVI: Self Trusteed Plan - You must designate a trustee or trustees
of this plan. The trustee(s) must sign the Adoption Agreement.
NEITHER AIM NOR BOSTON SAFE DEPOSIT & TRUST COMPANY WILL ACT
AS THE PLAN TRUSTEE. The trustees must sign the Adoption
Agreement on page 12.
Section XVII: Employer Signature - Read the employer acknowledgment and
execute this section.
6
<PAGE>
Fidelity Bond - Contact your insurance company regarding the purchase of a
fidelity bond which will cover the plan administrator and plan fiduciaries. The
bond must be for at least $1,000 or an amount equal to 10% of the plan's assets
not to exceed $500,000.
FAILURE TO PROPERLY COMPLETE THESE DOCUMENTS COULD RESULT IN DISQUALIFICATION
OF YOUR PLAN AND LOSS OF TAX BENEFITS. DEADLINE: NEW PLANS MUST BE EXECUTED BY
THE LAST DAY OF THE PLAN'S TAX YEAR (CALENDAR OR FISCAL).
PLAN ADMINISTRATION: NEITHER AIM DISTRIBUTORS, NOR AIM FUND SERVICES WILL ACT AS
THE PLAN ADMINISTRATOR. AIM WILL NOT REVIEW PLAN DOCUMENTS, CALCULATE
CONTRIBUTION ALLOCATIONS, PROVIDE RECORD KEEPING SERVICES, PERFORM
DISCRIMINATION TEST, OR FILE FORM 5500. ALL ADMINISTRATIVE, TAX REPORTING AND
ACCOUNTING FUNCTIONS ARE THE RESPONSIBILITY OF THE PLAN SPONSOR OR APPOINTED
THIRD PARTY.
7
<PAGE>
PROFIT SHARING ADOPTION AGREEMENT
FOR PROTOTYPE PAIRED DEFINED CONTRIBUTION PLAN
#001 SPONSORED BY
AIM DISTRIBUTORS, INC.
ADOPTION AGREEMENT #001
This is the Adoption Agreement for paired defined contribution plan #001 of
basic plan document #001, which is a combined prototype profit sharing/money
purchase pension plan. This Adoption Agreement may be adopted either singly or
in combination with paired defined contribution plan #002, a prototype money
purchase pension plan.
NOTE: Before executing this Adoption Agreement, the Employer should consult
with a tax advisor or attorney. Failure to properly complete this
Adoption Agreement may result in Plan disqualification.
- -----------------------------------
The Employer hereby establishes a profit sharing plan and a trust upon the
respective terms and conditions contained in the prototype paired defined
contribution plan (the "Plan") and the Trust Agreement annexed hereto and
appoints as Trustee of such trust the person(s) who have executed this Adoption
Agreement evidencing their acceptance of such appointment. The Plan and, the
Trust Agreement, if applicable, shall be supplemented and modified by the terms
and conditions contained in this Adoption Agreement and shall be effective on
the Effective Date.
The Sponsor will inform the Employer of any amendments made to the Plan or the
discontinuance or abandonment of the Plan.
- -----------------------------------
1. SPONSOR DATA
------------
A. AIM DISTRIBUTORS, INC.
Name of Sponsor (or authorized representative)
B. 11 GREENWAY PLAZA- SUITE 1919
Address
HOUSTON, TX 77046
C. (713) 347-1919
Telephone Number
- -----------------------------------
II. EMPLOYER DATA
A. ___________________________________________________
Name of Employer and Employer Identification Number
B. ___________________________________________________
Address
C. (_____)____________________________________________
Telephone Number
D. ___________________________________________________
Employers Taxable Year End
E. ___________________________________________________
Plan Year End
F. The Employer is: [ ] A corporate entity
[ ] A non corporate entity
[ ] A corporation electing to be taxed under
Subchapter S
8
<PAGE>
G. ___________________________________________________
Effective Date (should be first day of a Plan Year)
H. If this is an amendment of an existing plan, complete the following:
______________________________________________________________________
Effective Date of Amendment (should be first day of a Plan Year)
______________________________________________________________________
Name of Prior Plan
______________________________________________________________________
Effective Date of Prior Plan
I. ______________________________________________________________________
Limitation Year, if different from E., above
III. ELIGIBILITY
A. Employees shall be eligible to participate in the Plan upon
completion of the eligibility requirements (complete 1 and 2)
(Plan section 3.1):
1. Years of Service. The Employee must complete (check one box):
[X] One Year of Service.
[ ] ____ Years of Service. (You can require less than or more
than one Year of Service, but not more than two (2). If
you select more than one Year of Service, the Employee
must be 100% vested once he becomes eligible, and you must
select vesting schedule B in section X of this Adoption
Agreement. If the Year of Service is or includes a
fractional year, an Employee will not be required to
complete any specified number of Hours of Service (sec IV,
A of this Adoption Agreement) to receive credit for such
fractional year.
2. Age. The Employee must attain age 21 (not greater than age
21).
B. The following Employees will not be eligible to participate in the
Plan (Plan section 3.1):
[X] Union Employees. Employees included in a unit of employees
covered by a collective bargaining agreement between the Employer
and Employee representatives (as defined in section 3.1(b)(i) of
the Plan), if retirement benefits were the subject of good faith
bargaining.
[X] Nonresident Aliens. Employees who are nonresident aliens and who
receive no earned income from the Employer which constitutes
income from sources within the United States. For purposes of
this section III, the term "Employee" includes all employees of
this Employer or any employer aggregated with this Employer under
sections 414(b), (c) or (m) or (o) of the Code and individuals who
are Leased Employees required to be considered Employees of any
such employer under section 414(n) or (o) of the Code. Therefore,
all employees of companies in a controlled group of businesses
will be eligible to participate in this plan.
- -----------------------------------
9
<PAGE>
IV. CREDITED SERVICE
A. The Plan provides that a Year of Service requires at least 1,000 Hours
of service during a Plan Year. If a lower number of hours is desired,
state the number here: 1,000 (Plan section 2.42).
B. The Plan permits Hours of Service to be determined by the use of
service equivalencies under one of the methods selected below (choose
one method)(Plan section 2.19):
1. [X] On the basis of actual hours for which an Employee is paid or
entitled to payment.
2. [ ] On the basis of days worked. An Employee will be credited with
ten (10) Hours of Service if under section 2.19 of the plan such
Employee would be credited with at least one (1) Hour of Service
during the day.
3. [ ] On the basis of weeks worked. An Employee will be credited
with forty-five (45) Hours of Service if under section 2.19 of the
Plan such Employee would be credited with at least one (1) Hour of
Service during the week.
4. [ ] On the basis of semimonthly payroll periods. An Employee will
be credited with ninety-five (95) Hours of Service if under section
2.19 of the Plan such Employee would be credited with at least one
(1) Hour of Service during the semimonthly payroll period.
5. [ ] On the basis of months worked. An Employee will be credited
with one hundred ninety (190) Hours of Service if under section
2.19 of the Plan such Employee would be credited with at least one
(1) Hour of Service during the month.
C. Service with a predecessor employer (choose 1 or 2)(Plan sections 3.3
and 8.5):
1. [X] No credit will be given for service with a predecessor
employer.
- or -
2. [ ] Credit will be given for service with the following
predecessor employer(s):
----------------------------------
NOTE: The Plan provides that if this is a continuation of a
predecessor plan, service under the predecessor plan must be
counted.
- ----------------------------------
V. COMPENSATION
A. Compensation (choose 1 or 2)(Plan section 2.7):
1. [ ] shall include
- or -
2. [X] shall not include
Employer Contributions made pursuant to a salary reduction agreement
which are not includable in the gross income of the Employee under
sections 125, 402(e)(3), 402(h) or 403(b) of the Code.
B. The effective date of the election in A. above shall be
___________________________ (but not earlier than the first day of the
first Plan Year beginning after 1986).
- ----------------------------------
10
<PAGE>
VI. CONTRIBUTIONS
A. Profit sharing plan formulas (choose 1 or 2)(Plan section 4.19(b)):
1. [X] Discretionary pursuant to Employer resolution. If no
resolution is adopted, then _0_% of Participants'
compensation.
-or-
2. [ ] ___% of Participants' Compensation, plus discretionary
amount, if any, by Employer resolution.
NOTE: Each of these formulas is subject to maximum limitations on
contributions as provided in the Plan and the Internal Revenue Code.
In no event may the Employer Contribution exceed 15% of the aggregate
compensation of all Participants for the year, plus up to 10% credit
carryover in certain circumstances. Additional limitations are
included in the Plan where the Employer also has another qualified
retirement plan. The limit on contributions and forfeitures allocated
to an individual participant's account, per year is generally the
lesser of 25% of compensation or $30,000.
- --------------------------------
VII. ALLOCATION OF EMPLOYER CONTRIBUTIONS
A. Formula (choose 1 or 2)(Plan section 5.3(b)). NOTE: If you provide
for hardship withdrawals you must use Formula 1.
1. [X] Nonintegrated Plan -- Employer contributions shall be
allocated to the accounts of all eligible Participants
prorated upon compensation.
-or-
2. [ ] Integrated Plan -- Employer contributions and forfeitures
shall be integrated with Social Security and allocated in
accordance with the provisions of Plan section 5.3(b). The
Plan's Integration Level shall be (choose (a),(b) or (c))):
(a) [ ] Taxable Wage Base. (The maximum amount considered as
wages for such year under section 3121(a)(1) of the
Internal Revenue Code (the Social Security taxable wage
base) as of the beginning of the Plan Year).
-or-
(b) [ ] $______ (a dollar amount not to exceed the Taxable
Wage Base).
-or-
(c) [ ] _____% of the Taxable Wage Base (not to exceed 100%).
NOTE: If you maintain any other plan in addition to this Plan,
only one plan may be integrated with Social Security.
B. Contribution Eligibility (Plan section 4.1(c)):
The Plan provides that all Participants will share in Employer
Contributions for the Plan Year, except the following (if elected):
[ ] Participants who terminate employment during the Plan year with
not more than 500 Hours of Service and who are not Employees as
of the last day of the Plan Year (other than Participants who
die, retire or become Totally and Permanently Disabled).
If a fewer number of hours than 500 is desired, state the number
here: _____.
11
<PAGE>
- --------------------------
VIII. DISTRIBUTIONS.
A. Normal Retirement Age is (choose 1 or 2)(Plan section 2.26):
1. [X] The date a Participant reaches age 65 (not more than 65
or less than 55). If no age is indicated, normal
retirement age shall be 65.
2. [ ] The later of age ____ (not more than 65) or the ____
(not more than 5th) anniversary of the day the
Participant commenced participation in the Plan. The
participation commencement date is the first day of the
first Plan Year in which the Participant commenced
participation in the Plan.
B. Early Retirement Date (choose 1 or 2)(Plan section 2.10):
1. [ ] Early Retirement Date is the first day of the month
coincident with or next following the date upon which a
Participant reaches age 55 (not less than 55) and
completes 5 years of service (not more than 15).
2. [X] Early Retirement will not be permitted under the Plan.
C. All distributions will be in the form of a lump sum in accordance with
the Safe Harbor Rules in Article 9, Section 9.6 of the Plan Document.
- --------------------------
IX. OPTIONAL FEATURES
A. Hardship withdrawals (choose 1 of 2)(Plan section 12.2):
1. [ ] The Plan permits hardship withdrawals.
- or -
2. [X] The Plan does not permit hardship withdrawals.
NOTE: The Plan may not provide hardship withdrawals if integration
with Social Security is elected in section VII.A.2.
B. Loans (choose 1 or 2)(Plan ARTICLE 13):
1. [ ] The Plan permits loans to Participants.
- or -
2. [X] The Plan does not permit loans to Participants.
NOTE: The Plan may not permit loans to Owner-Employees of
noncorporate entities or to Shareholder-Employees of
subchapter S corporations. If Plan loans are permitted, the
Trustee designated in section XVI of this Adoption Agreement
may not be the Sponsor's designated Trustee.]
C. Insurance (choose 1 or 2)(Plan ARTICLE 14):
1. [ ] The Plan permits Participants to designate a portion of
their Account to purchase life insurance contracts. (MUST
NOT be selected if Sponsor's designated trustee is appointed
as Trustee).
12
<PAGE>
The percentage of the Employer Contributions which may
be applied to purchase life insurance contracts shall
be equal to _____%.
-or -
2. [X] The Plan does not permit Participants to designate a
portion of their Account to purchase life insurance
contracts.
NOTE: Section 14.5 of the Plan provides certain limits on the amount
of Employer Contributions that can be applied to purchase life
insurance contracts.]
- ------------------------------
X. VESTING
Employer Contributions and earnings will become vested if the
Participant terminates employment for any reasons other than
retirement at or after Normal Retirement Age or Early Retirement Date,
death, or disability pursuant to the following schedule (choose A, B,
C or D) (Plan section 8.3):
<TABLE>
<CAPTION>
A. [ ] Years of
Service Vested Percentage
------- -------- ----------
<S> <C>
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
</TABLE>
B. [ ] 100% vesting immediately after satisfaction of the
eligibility requirements.
NOTE: If a service requirement greater than one year is chosen for
eligibility in section III.A.1. of this Adoption Agreement, vesting
schedule B must be chosen.
C. [ ] 100% vesting after years of service (not to exceed
three).
- or -
<TABLE>
<CAPTION>
D. [ ] Years of
Service Vested Percentage
------- -------- ----------
<S> <C> <C>
1 year ___%
2 years ___% (not less than 20)
3 years ___% (not less than 40)
4 years ___% (not less than 60)
5 years ___% (not less than 80)
6 years ___% (not less than 100)
</TABLE>
- ------------------------------
XI. INVESTMENT CHOICES
A. [X] Investment of Trust assets may be selected only from
Shares or other investments offered by the Sponsor.
(AIM Distributors Inc., AIM Family of Funds)
B. [ ] ___% of the Trust assets must be invested in Shares
or other investments offered by the Sponsor with the
remainder in such other investments as may be
acceptable within the discretion of the Trustee.
13
<PAGE>
C. [ ] 50% of the Trust assets must be invested in Shares or
other investments offered by the Sponsor with the
remainder in such other investments as may be
acceptable within the discretion of the Trustee.
D. [ ] 25% of the Trust assets must be invested in Shares or
other investments offered by the Sponsor with the
remainder in such other investments as may be
acceptable within the discretion of the Trustee.
The Sponsor may impose additional limitations
relating to the type of permissible investments in
the Trust (Plan section 7.3).
- ------------------------------
XII. INVESTMENT AUTHORITY
Contributions to the Plan shall be invested by the Trustee in
accordance with instructions of the Employer or Plan Administrator
except that (choose A, B or C) (Plan section 7.2):
A. [ ] No exceptions; the or Plan Administrator shall make
all investment selections.
B. [ ] The Employer delegates all investment responsibility
to the Trustee. (MAY NOT be selected if Sponsor's
designated trustee is appointed as Trustee).]
C. [X] Each Participant [ ] may, [X] shall direct that:
1. [X] Amounts voluntarily contributed by such
Participant pursuant to section 4.3 of the
Plan, rollover contributions pursuant to
section 4.4 of the Plan and direct transfers
pursuant to section 4.5 of the Plan, if any,
- and/or -
2. [X] Employer Contributions on the Participant's
behalf, shall be invested in specified
investments offered by the Sponsor.
Participants may make or change such
directions by giving written notice to the
Plan Administrator. Reasonable restrictions
may be imposed on this privilege by the Plan
Administrator or the Sponsor for purposes of
administrative convenience.
- ------------------------------
XIII. TOP-HEAVY PROVISIONS
Participants who are eligible to receive the minimum allocation
provided by section 5.2 of the Plan shall receive a minimum allocation
of contributions and forfeitures under this Plan equal to 3% of
Compensation, or if lesser, the largest percentage of Compensation
allocated on behalf of any Key Employee for the Plan Year.
NOTE: If the Participant also participates in paired defined
contribution plan #002 (the money purchase pension plan), the
required minimum allocation must be made under paired defined
contribution plan #002 (the money purchase pension plan).
- ------------------------------
14
<PAGE>
XIV. ALLOCATION LIMITATIONS
COMPLETE THIS SECTION ONLY IF YOU MAINTAIN OR EVER MAINTAINED ANOTHER
QUALIFIED PLAN (OTHER THAN PAIRED PLAN #002) IN WHICH ANY PARTICIPANT
IN THIS PLAN IS (OR WAS) A PARTICIPANT OR COULD BECOME A PARTICIPANT.
THIS SECTION MUST ALSO BE COMPLETED IF THE EMPLOYER MAINTAINS A
WELFARE BENEFIT FUND, AS DEFINED IN SECTION 419(e) OF THE CODE, OR AN
INDIVIDUAL MEDICAL ACCOUNT, AS DEFINED IN SECTION 415(l)(2) OF THE
CODE, UNDER WHICH AMOUNTS ARE TREATED AS ANNUAL ADDITIONS WITH RESPECT
TO ANY PARTICIPANT IN THIS PLAN.
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a
master or prototype plan (choose either 1 or 2) (Plan section
6.3):
1. [ ] The provision of section 6.2 will apply as if the
other plan were a master or prototype plan.
- or -
2. [ ] (On an attachment, provide the method under which
the plans will limit total annual additions to the
maximum permissible amount, and will properly reduce
any excess amounts, in a manner that precludes
Employer discretion).
B. If the Participant is or has ever been a participant in a
defined benefit plan maintained by the Employer attach an
explanation of the method under which the plan involved will
satisfy the 1.0 limitation in a manner that precludes
Employer discretion.
- ------------------------------
XV. ADMINISTRATION
A. The Plan Administrator of the Plan will be (choose 1, 2, 3 or
4) (Plan sections 2.30 and 15.4):
1. [ ] The Trustee
- or -
2. [X] The Employer
- or -
3. [ ] An individual Plan Administrator designated
by the Employer
-----------------------------------
Name
-----------------------------------
Address
-----------------------------------
Signature
- or -
15
<PAGE>
4. [ ] A committee of two or more Employees
designated by the Employer:
-----------------------------
Name & Title
-----------------------------
Signature
-----------------------------
Name & Title
-----------------------------
Signature
-----------------------------
Name & Title
-----------------------------
Signature
NOTE: If no Plan Administrator has been designated or serving at any
time, the Employer will be deemed the Plan Administrator
(Plan section 15.4).
B. The Plan Administrator (including all members of a committee,
if a committee is named) is a Named Fiduciary for the Plan. If
other persons are also to be Named Fiduciaries, their names
and addresses are:
Name:
-------------------------------------------
Address:
----------------------------------------
------------------------------------------------
Signature
Name:
-------------------------------------------
Address:
----------------------------------------
------------------------------------------------
Signature
Name:
-------------------------------------------
Address:
----------------------------------------
------------------------------------------------
Signature
C. The Named Fiduciaries have all of the powers set forth in the
Plan. If any powers or duties are to be allocated among them,
or delegated to third parties, indicate below what the powers
or duties are and to whom they are to be delegated (Plan
section 15.3):
-------------------------------
-------------------------------
-------------------------------
-------------------------------
16
<PAGE>
XVI. THE TRUSTEE
A. The Employer hereby appoints the following to serve as
Trustee, and the trustee, by signing this Adoption Agreement
accepts the appointment (complete either A or B) (Plan section
2.39):
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
B. The Employer hereby appoints the Sponsor's designated
trustee(s) to serve as Trustee(s):
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
17
<PAGE>
VII. EMPLOYER SIGNATURE
The Employer acknowledges receipt of the current prospectus of the
investment companies designated by the Employer for its initial
investments under the Plan and represents that it has delivered a copy
thereof to each Participant in the Plan, and that it will deliver to
each Participant making contributions and each new Participant, a copy
of the then current prospectus of such investment companies. The
Employer further represents that the information in this Adoption
Agreement shall become effective only when approved and countersigned
by the Trustee. The right to reject this Adoption Agreement for any
reason is reserved by the sponsor.
This Adoption Agreement must be used only in conjunction with basic
plan document #01.
NOTE: An Employer who has ever maintained or who later adopts any
plan (including, after December 31, 1985, a welfare benefit
fund, as defined in section 419(e) of the Code, which provides
post-retirement medical benefits allocated to separate
accounts for Key Employees, as defined in section 419A(d)(3) of
the Code, or an individual medical account, as defined in
section 415(1)(2) of the Code), in addition to this Plan
(other than paired defined contribution plan #002), may not
rely on the opinion letter issued by the National Office of
the Internal Revenue Service as evidence that this Plan is
qualified under section 401 of the Internal Revenue Code. If
the Employer who adopts or maintains multiple plans wishes to
obtain reliance that the plans are qualified, application for a
determination letter should be made to the appropriate Key
District Director of Internal Revenue.
This Adoption Agreement consists of 11 pages.
IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement
to be executed by its duly authorized officers this ___ day of ____.
-------------------------------
(Name of Employer)
By:
-------------------------------
(Name & Title)
Date:
------------------
18
<PAGE>
ADOPTING THE AIM MONEY PURCHASE PENSION PLAN
ADOPTION AGREEMENT #002
19
<PAGE>
ADOPTING THE AIM MONEY PURCHASE PENSION PLAN ADOPTION
AGREEMENT #002
To adopt the AIM Sponsored Money Purchase Pension Plan you will need to
complete the following forms:
o The Money Purchase Pension Adoption Agreement and Summary Plan
Description (SPD)
o A Money Purchase Pension Account Application
o An Enrollment and Beneficiary Designation Form for each participant.
PLAN STRUCTURE:
If you are establishing "pooled" investment accounts, utilizing a third party
administrator for record keeping:
o Submit only the AIM Money Purchase Profit Sharing and/or Profit Sharing
Plan Account Application indicating all the AIM Funds permitted as
investment options by the Plan. You must identify the Plan's trustees.
If you want AIM to establish separate mutual fund accounts for each plan
participant, registered in the plan's name:
o Submit the AIM Money Purchase Plan Account Application with the
participant enrollment forms (Section VII)
o Identify each participant's name, mailing address, SS # and their AIM
Fund's investment election on the enrollment form.
o The plan administrator must submit all contributions with a breakdown
identifying each participant, and their total contribution allocated
to the funds the participant has chosen.
o The minimum contribution per participant is $25 per fund, per
contribution submission.
o The maximum number of individual participants accounts AIM will
establish is 50 utilizing no more than 6 AIM Funds.
o Duplicate statements will be issued to your recordkeeper or
administrator if requested.
Return to:
AIM Fund Services
P.O. Box 4739
Houston, TX 77210-4739
ADOPTION AGREEMENT
To make it easy for you, the Money Purchase Pension Adoption Agreement has been
partially completed to reflect the retirement plans provisions most frequently
chosen. Please review the completed plan adoption agreement with your legal or
tax advisor to ensure that the plan provisions are correct. NOTE: If desired,
you may change any of the prechecked elections by making the appropriate change
and placing your initials and date next to the section being changed.
[X] PRE-CHECKED SECTIONS:
The key sections in this Adoption Agreement which have been completed are as
follows:
o All employees who are Age 21 and have fulfilled one year of service are
eligible for contributions. (Years of service cannot exceed 2 years:
all contributions are then 100% vested).
20
<PAGE>
o An employee who completes 1,000 hours of service, within 12 consecutive
months of their date of hire, is credited with a year of service for
initial eligibility. Only 500 hours of service are required in any year
thereafter for a participant to be eligible for a plan contribution.
There is no requirement that a participant be employed on the last day
of the plan year to receive a contribution in the year they separate
from service.
o After fulfilling age and service eligibility requirements, employees
will enter the plan on the plan anniversary date or the date which is
six months subsequent to each plan anniversary date. (Calendar Year =
January 1 & July 1)
o All union and non-resident alien employees are excluded from
participation.
o A MONEY PURCHASE PENSION PLAN REQUIRES A FIXED ANNUAL CONTRIBUTION FROM
THE EMPLOYER STATED AS A PERCENTAGE OF EACH ELIGIBLE EMPLOYEE'S
COMPENSATION (SECTION VI).
o The plan is not integrated with Social Security. If you choose to
integrate your contribution, AIM will not compute the allocation.
o Normal retirement age of 65.
o No Loans and No Hardship Distributions are permitted.
o No Life Insurance may be purchased by the plan
MONEY PURCHASE PENSION PLAN ADOPTION AGREEMENT
SECTIONS TO BE COMPLETED BY EMPLOYER
The following sections must be completed by the employer.
Section II: Employer Data (Page 2) - Complete A through G. If applicable,
Complete H and I. (Name, address, TIN, etc.)
Section VI: Contributions - Must complete percentage under A(1).
Section IX: Vesting - Choose the vesting schedule desired.
Section XV: Self Trusteed Plan - You must designate the trustee of this
plan. Neither AIM nor Boston Safe Deposit & Trust Company will
be the plan's trustee.
Section XVI: Employer Signature - Read the employer acknowledgment and
execute this section.
Fidelity Bond - Contact your insurance company regarding the purchase of a
fidelity bond which will cover the plan and plan fiduciaries.
The bond must be for at least $1,000 or an amount equal to 10%
of the plan's assets not to exceed $500,000.
21
<PAGE>
FAILURE TO PROPERLY COMPLETE THESE DOCUMENTS COULD RESULT IN DISQUALIFICATION
OF YOUR PLAN AND LOSS OF TAX BENEFITS. DEADLINE: NEW PLANS MUST BE EXECUTED BY
THE LAST DAY OF THE PLAN'S TAX YEAR (CALENDAR OR FISCAL).
PLAN ADMINISTRATION: NEITHER AIM DISTRIBUTIONS, NOR AIM FUND SERVICES WILL ACT
AS THE PLAN ADMINISTRATOR. AIM WILL NOT REVIEW PLAN DOCUMENTS, COMPUTE
CONTRIBUTION ALLOCATION, PROVIDE RECORD KEEPING SERVICES, PERFORM
DISCRIMINATION TEST, OR FILE FORM 5500. ALL ADMINISTRATIVE, TAX REPORTING AND
ACCOUNTING FUNCTIONS ARE THE RESPONSIBILITY OF THE PLAN SPONSOR OR APPOINTED
THIRD PARTY.
22
<PAGE>
MONEY PURCHASE PENSION ADOPTION AGREEMENT
FOR PROTOTYPE PAIRED DEFINED CONTRIBUTION PLAN
#002 SPONSORED BY
AIM DISTRIBUTORS, INC.
ADOPTION AGREEMENT #002
This is the Adoption Agreement for paired defined contribution plan #002 of
basic plan document #01, which is a combined prototype profit sharing/money
purchase pension defined contribution plan. This adoption agreement may be
adopted either singly or in combination with paired defined contribution plan
#001, a prototype profit sharing plan.
Note: Before executing this Adoption Agreement, the Employer should consult
with a tax advisor or attorney. Failure to properly complete this Adoption
Agreement may result in Plan disqualification.
- --------------------
The Employer hereby establishes a money purchase pension plan and a trust upon
the respective terms and conditions contained in the prototype paired defined
contribution plan (the "Plan") and the Trust Agreement annexed hereto and
appoints as Trustee of such trust the person(s) who have executed this Adoption
Agreement evidencing their acceptance of such appointment. The Plan, the Trust
Agreement, and the Custody Agreement, if applicable, shall be supplemented and
modified by the terms and conditions contained in this Adoption Agreement and
shall be effective on the Effective Date.
The Sponsor will inform the Employer of any amendments made to the Plan or the
discontinuance or abandonment of the Plan.
- --------------------
I. SPONSOR DATA
A. AIM DISTRIBUTORS, INC.
----------------------
Name of Sponsor (or authorized representative)
B. 11 GREENWAY PLAZA SUITE 1919
----------------------------
Address
HOUSTON, TX 77046
------------------
City State
C. (713) 347-1919
--------------
Telephone Number
- --------------------
II. EMPLOYER DATA
A.
----------------------------------------------
(Name of Employer and Employer Identification Number
B.
----------------------------------------------
Address
2. C. ( )
--- ------------------------------------------
Telephone Number
D.
-------------------------------
Employer's Taxable Year End
E.
-------------------------------
Plan Year End
23
<PAGE>
F. The Employer is: [ ] A corporate entity
[ ] A noncorporate entity
[ ] A corporation electing to be taxed under
Subchapter S
G.
-----------------------
Effective Date (should be first day of a Plan Year)
H. If this is an amendment of an existing plan, complete the following:
-----------------------
Effective Date of Amendment (should be first day of a Plan Year)
-----------------------
Name of Prior Plan
-----------------------
Effective Date of Prior Plan
I.
-----------------------
Limitation Year, if different from E., above
- ----------------------
III. ELIGIBILITY
A. Employee shall be eligible to participate in the Plan upon completion
of the eligibility requirements (complete 1 and 2)(Plan section 3.1):
1. Years of Service. The Employee must complete (check one box):
[X] One Year of Service
[ ] ___ Years of Service. (You can require less than or more
than one Year of Service, but not more than two (2). If you
select more than one Year of Service, the Employee must be
100% vested once he becomes eligible, and you must select
vesting schedule B in section IX of this Adoption Agreement.
If the Year of Service is or includes a fractional year, an
Employee will not be required to complete any specified
number of Hours of Service (Section IV, A of this Adoption
Agreement) to receive credit for such fractional year.
2. Age. The Employee must attain age 21 (not greater than age 21).
B. The following Employees will not be eligible to participate in the
Plan (Plan section 3.1):
[X] Union Employees. Employees included in a unit of employees
covered by a collective bargaining agreement between the
Employer and the Employee representatives (as defined in section
3.1(b)(i) of the Plan), if retirement benefits were the subject
of good faith bargaining.
[X] Nonresident Aliens. Employees who are nonresident aliens and
who receive no earned income from the Employer which constitutes
income from sources within the United States.
For purposes of this section III, the term "Employee" includes
all employees of this Employer or any employer aggregated with
this Employer under sections 414(b),(c),(m) or (o) of the Code
and individuals who are Leased Employees required to be
considered Employees of any such employer under section 414 (n)
or (o) of the Code.
- --------------------
24
<PAGE>
IV. CREDITED SERVICE
A. The Plan provides that a Year of Service requires at least 1,000 hours
during any Plan Year. If a lower number of hours is desired, state the
number here: 1,000 (Plan section 2.42).
B. The Plan permits Hours of Service to be determined by the use of
service equivalencies under one of the methods selected below (choose
one method) (Plan section 2.19):
1. [X] On the basis of actual hours of which an Employee is paid or
entitled to payment.
2. [ ] On the basis of days worked. An Employee will be credited
with ten (10) Hours of Service if under section 2.19 of the
Plan such Employee would be credited with at least one (1)
Hour of Service during the day.
3. [ ] On the basis of weeks worked. An Employee will be credited
with forty-five (45) Hours of Service if under section 2.19
of the Plan such Employee would be credited with at least
one (1) Hour of Service during the week.
4. [ ] On the basis of semimonthly payroll periods. An Employee
will be credited with ninety-five (95) Hours of Service if
under section 2.19 of the Plan such Employee would be
credited with at least one (1) Hour of Service during the
semimonthly payroll period.
- or -
5. [ ] On the basis of months worked. An Employee will be credited
with one hundred ninety (190) Hours of Service if under
section 2.19 of the Plan such Employee would be credited
with at least one (1) Hour of Service during the month.
C. Service with a predecessor employer (choose 1 or 2)(Plan sections 3.3
and 8.5):
1. [X] No credit will be given for service with a predecessor
employer.
- or -
2. [ ] Credit will be given for service with the following
predecessor employer(s):
---------------
NOTE: The Plan provides that if this is a continuation of a
predecessor plan, service under the predecessor plan must be
counted.
- --------------------------------
V. COMPENSATION
A. Compensation (choose 1 or 2)(Plan section 2.7):
1. [ ] shall include
- or -
2. [X] shall not include
Employer Contributions made pursuant to a salary reduction agreement
which are not includable in the gross income of the Employee under
sections 125, 402(a)(8), 402(h) or 403(b) of the Code.
B. The effective date of the election in A. above shall be __________
(but not earlier than the first day of the first Plan Year beginning
after 1986).
25
<PAGE>
VI. CONTRIBUTIONS
A. Formulas (choose 1 or 2)(Plan section 4.1.(a)):
1. [X] Plan no integrated with Social Security
The Employer will contribute ___% of compensation for each
Participant (not less than 3% if the profit sharing Adoption
Agreement is also adopted and, in any event, not more than 25%).
2. [ ] Integrated Plan - The Employer will contribute an amount
equal to ___% (base contribution percentage, not less than
3) of each Participant's Compensation (as defined in
section 2.7 of the Plan) for the Plan Year, up to the
Integration Level plus ___% (not less than 3% and not to
exceed the base contribution percentage by more than the
lesser of: (1) the base contribution percentage, or (2) the
Maximum Disparity Rate of such Participant's Compensation
in excess of the Integration Level.
a. [ ] Taxable Wage Base. (The maximum amount considered as
wages for such year under section 3121(a)(1) of the
Internal Revenue Code (the Social Security taxable
wage base) as of the beginning of the Plan Year).
-or-
b. [ ] $_________(a dollar amount not to exceed the Taxable
Wage Base).
-or-
c. [ ] ______% of the Taxable Wage Base (not to exceed 100%).
NOTE: If you maintain any other plan in addition to this Plan,
only one plan may be integrated with Social Security.
B. Forfeitures for a given Plan Year (choose 1 or 2)(Plan section 5.3(a)):
1. [ ] Shall be applied to reduce the Employer Contribution in that
year, or if in excess of the Employer Contribution for such Plan
Year, the excess amounts shall be used to reduce the Employer
Contribution in the next succeeding Plan Year or Years.
-or-
2. [ ] Shall be added to the Employer Contribution and allocated
accordingly.
C. Contribution Eligibility (Plan section 4.1(c)):
The Plan provides that all Participants will share in Employer
Contributions for the Plan Year, except the following (if elected):
[X] Participants who terminate employment during the Plan Year with not
more than 500 Hours of Service and who are not Employees as of the
last day of the Plan Year (other than Participants who die, retire or
become Totally and Permanently Disabled).
If a fewer number of hours than 500 is desired, state the number here:____.
26
<PAGE>
- ------------------------------
VII. DISTRIBUTIONS
A. Normal Retirement Age is (choose 1 or 2 )(Plan section 2.26):
1. [X] The date a Participant reaches age 65
(not more than 65 or less than 55.) If no age is indicated,
normal retirement age shall be 65.
-or-
2. [] The later of age ______ (not more than 65) or the ______
(not more than 5th) anniversary of the day the Participant
commenced participation in the Plan. The participation
commencement date is the first day of the first Plan Year
in which the Participant commenced participation in the
Plan.
B. Early Retirement (choose 1 or 2)(Plan section 2.10):
1. [] Early Retirement Date is the first day of the month
coincident with or next following the date upon which a
Participant reaches age 55 (not less than 55) and completes
5 years of service (not more than 15)
-or-
2. [X] Early Retirement will not be permitted under the Plan.
- ------------------------------
VIII. OPTIONAL FEATURES
A. Loans (choose 1 or 2)(Plan ARTICLE 13):
1. [] The Plan permits loans to Participants.
-or-
2. [X] The Plan does not permit loans to Participants.
NOTE: The Plan may not permit loans to Owner-Employees of noncorporate
entities or to Shareholder-Employees of subchapter S
corporations. If Plan loans are permitted, the Trustee
designated in section XV of this Adoption Agreement may not
be the Sponsor's designated Trustee.]
B. Insurance (choose 1 or 2)(Plan ARTICLE 14):
1. [ The Plan permits Participants to designate a portion of
their Account to purchase life insurance contracts. (MUST
NOT be selected if Sponsor's designated trustee is appointed
as Trustee).
The percentage of the Employer Contributions which may be
applied to purchase life insurance contracts shall be equal
to ___%.
-or-
2. [X] The Plan does not permit Participants to designate a portion
of their Account to purchase life insurance contracts.
NOTE: Section 14.5 of the Plan provides certain limits on the amount
of Employer contributions that can be applied to purchase life
insurance contracts.
27
<PAGE>
- ------------------------
IX. VESTING
Employer Contributions will become vested if the Participant terminates
employment for any reasons other than retirement, death, or disability
pursuant to the following schedule (chosen A, B, C or D) Plan section 8.3):
<TABLE>
<CAPTION>
A. [ ] Years of
Service Vested Percentage
-------------------------
<S> <C>
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
</TABLE>
B. [ ] 100% vesting immediately after satisfaction of the eligibility
requirements.
NOTE: If a service requirement greater than one year is chosen for
eligibility in section III.A.1. of this Adoption Agreement,
vesting schedule B must be chosen).
C. [ ] 100% vesting after ____ years of service (not to exceed three).
- or -
<TABLE>
<CAPTION>
D. [ ] Years of
Service Vested Percentage
-------------------------
<S> <C>
1 year ___%
2 years ___%(not less than 20)
3 years ___%(not less than 40)
4 years ___%(not less than 60)
5 years ___%(not less than 80)
6 years ___%(not less than 100)
</TABLE>
- ------------------------
X. INVESTMENT CHOICES
A. [X] Investment of Trust assets may be selected only from Shares or
other investments offered by the Sponsor.
B. [ ] ___% of the Trust assets must be invested in Shares or other
investments offered by the Sponsor with the remainder in such
other investments as may be acceptable within the discretion of
the Trustee.]
C. [ ] 50% of the Trust assets must be invested in Shares or other
investments offered by the Sponsor with the remainder in such
other investments as may be acceptable within the discretion of
the Trustee.]
D. [ ] 25% of the Trust assets must be invested in Shares or other
investments offered by the Sponsor with the remainder in such
other investments as may be acceptable within the discretion of
the Trustee.]
The Sponsor may impose additional limitations relating to the
type of permissible investments in the Trust (Plan section 7.3).
28
<PAGE>
- ------------------------------
XI. INVESTMENT AUTHORITY
Contributions to the Plan shall be invested by the Trustee in accordance
with instructions of the Employer or Plan Administrator except that
(choose [A], [B] or [C])] (Plan section 7.2):
A. [ ] No exceptions; the Employer or Plan Administrator shall make
all investment selections.
B. [ ] The Employer delegates all investment responsibility to the
Trustee. (MUST NOT be selected if Sponsor's designated trustee
is appointed as Trustee.)]
-or-
C. [X] Each Participant [ ] may, [X] shall direct that:
1. [ ] Amounts voluntarily contributed by such Participant
pursuant to section 4.3 of the Plan rollover contributions
pursuant to section 4.4 of the Plan, and direct transfers
pursuant to section 4.5 of the Plan, if any,
-and/or-
2. [X] Employer Contributions on the Participant's behalf shall
be invested in specified investments offered by the
Sponsor. Participants may make or change such directions
by giving written notice to the Plan Administrator.
Reasonable restrictions may be imposed on this privilege
by the Plan Administrator or the Sponsor for purposes of
administrative convenience.
- ------------------------------
XII. TOP-HEAVY PROVISIONS
Participants who are eligible to receive the minimum allocation provided
by section 5.2 of the Plan shall receive a minimum contribution under
this Plan equal to 3% of Compensation, or if lesser, the largest
percentage of Compensation allocated on behalf of any Key Employee for
the Plan Year under this Plan and paired defined contribution plan #001.
NOTE: If the Participant also participates in paired defined
contribution plan #001 (the profit sharing plan), the required minimum
contribution must be made under this Plan, even if the integrated plan
combination formula is selected.
- ------------------------------
XIII. ALLOCATION LIMITATIONS
COMPLETED THIS SECTION ONLY IF YOU MAINTAIN OR EVER MAINTAINED ANOTHER
QUALIFIED PLAN (OTHER THAN PAIRED PLAN #001) IN WHICH ANY PARTICIPANT IN
THIS PLAN IS (OR WAS) A PARTICIPANT OR COULD BECOME A PARTICIPANT. THIS
SECTION MUST ALSO BE COMPLETED IF THE EMPLOYER MAINTAINS A WELFARE
BENEFIT FUND, AS DEFINED IN SECTION 419(e) OF THE CODE, OR AN INDIVIDUAL
MEDICAL ACCOUNT, AS DEFINED IN SECTION 415(1)(2) OF THE CODE, UNDER
WHICH AMOUNTS ARE TREATED AS ANNUAL ADDITIONS WITH RESPECT TO ANY
PARTICIPANT IN THIS PLAN.
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master
or prototype plan (choose either 1 or 2)(Plan section 6.3):
1. [ ] The provisions of section 6.2 will apply as if the
other plan were a master or prototype plan.
29
<PAGE>
-or-
2. [ ] (On an attachment, provide the method under which the
plans will limit total annual additions to the
permissible amount, and will properly reduce any
excess amounts, in a manner that precludes
Employer discretion).
B. If the Participant is or has ever been a participant in a
defined benefit plan maintained by the Employer attach an
explanation of the method under which the plan involved will
satisfy the 1.0 limitation in a manner that precludes Employer
discretion.
- ------------------------------
XIV. ADMINISTRATION
A. The Plan Administrator of the Plan will be (choose [1], [2], [3]
or [4]) (Plan sections 2.30 and 15.4):
1. [ ] The Trustee
NOTE: If the Trustee designated in section XV of this Adoption
Agreement is the Sponsor's designated Trustee, it may be
appointed as Plan Administrator.
-or-
2. [X] The Employer
-or-
3. [ ] An individual Plan Administrator designated by the
Employer
--------------------------------------------------
Name
--------------------------------------------------
Address
--------------------------------------------------
-or-
4. [ ] A committee of two or more Employees designated by the
Employer:
--------------------------------------------------
Name & Title
--------------------------------------------------
Signature
--------------------------------------------------
Name & Title
--------------------------------------------------
Signature
--------------------------------------------------
Name & Title
--------------------------------------------------
30
<PAGE>
[Signature]
NOTE: If no Plan Administrator has been designated or serving at any time,
the Employer will be deemed the Plan Administrator (Plan section 15.4).
B. The Plan Administrator (including all members of a committee, if a
committee is named) is a Named Fiduciary for the Plan. If other persons are
also to be Named Fiduciaries, their names and addresses are:
Name:
-----------------------------------
Address:
--------------------------------
----------------------------------------
Name:
-----------------------------------
Address:
--------------------------------
----------------------------------------
Name:
-----------------------------------
Address:
--------------------------------
----------------------------------------
C. The Named Fiduciaries have all of the powers set forth in the Plan. If any
powers or duties are to be allocated among them, or delegated to third
parties, indicate below what the powers or duties are and to whom they are
to be delegated (Plan section 15.3):
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
***************************
XV. THE TRUSTEE
A. The Employer hereby appoints the following to serve as Trustee (Plan
section 2.39):
Name:
------------------------------------
Address:
----------------------------------
----------------------------------------
Dated:
---------------- ----------------------
(Signature of) Trustee
Name:
------------------------------
31
<PAGE>
Address:
------------------------------------
-------------------------------------------
Dated:
-------------- ----------------------
(Signature of) Trustee
Name:
--------------------------------------
Address:
-----------------------------------
-------------------------------------------
Dated:
-------------- ----------------------
(Signature of Trustee)
B. The Employer hereby appoints the Sponsor's designated trustee(s) to serve
as Trustee(s):
Name:
-------------------------------------
Address:
------------------------------------
-----------------------------------------
Dated:
--------------- -----------------------
(Signature of Trustee)
Name:
----------------------------------------
Address:
--------------------------------------
--------------------------------------------
Dated:
--------------- ------------------------
(Signature of Trustee)
Name:
----------------------------------------
Address:
--------------------------------------
--------------------------------------------
Dated:
--------------- ------------------------
(Signature of Trustee)
********************************
32
<PAGE>
XVI. EMPLOYER SIGNATURE
The Employer acknowledges receipt of the current prospectus of the
investment companies designated by the Employer for its initial investments
under the Plan and represents that it has delivered a copy thereof to each
Participant in the Plan, and that it will deliver to each Participant
making contributions and each new Participant, a copy of the then current
prospectus of such investment companies. The Employer further represents
that the information in this Adoption Agreement shall become effective
only when approved and countersigned by the Trustee. The right to reject
this Adoption Agreement for any reason is reserved.
This Adoption Agreement must be used only in conjunction with basic plan
document #01.
NOTE: An Employer who has ever maintained or who later adopts any plan
(including a welfare benefit fund, as defined in section 419(e) of the
Code, which provides post-retirement medical benefits allocated to
separate accounts for Key Employees, as defined in section 419A(d)(3)
of the Code, or an individual medical account as defined in section
415(l)(2) of the Code), in addition to this Plan (other than paired
plan #001), may not rely on the opinion letter issued by the National
Office of the Internal Revenue Service as evidence that this Plan is
qualified under section 401 of the Internal Revenue Code. If the
Employer who adopts or maintains multiple plans wishes to obtain
reliance that the plans are qualified, application for a
determination letter should be made to the appropriate Key District
Director of Internal Revenue.
This Adoption Agreement consists of 17 pages.
IN WITNESS WHEREOF, the Employer has caused this Adoption
Agreement to be executed by its duly authorized officers this _
day of ________________.
--------------------------------
(Name of Employer)
By:
--------------------------------
(Name & Title)
Date:
------------------
33
<PAGE>
MONEY PURCHASE PENSION AND PROFIT SHARING
PLAN BASIC DOCUMENT
34
<PAGE>
AMENDMENT TO THE
INVESTMENT COMPANY INSTITUTE
PROTOTYPE MONEY PURCHASE PENSION AND PROFIT SHARING PLAN
BASIC DOCUMENT #01
FIRST
The Plan is hereby amended by the word-for-word adoption of the model
language contained in Revenue Procedure 93-12, for distributions made on or
after January 1, 1993, as follows:
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this provision, a
Distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an Eligible Rollover Distribution
paid directly to an Eligible Retirement Plan specified by the Distributee
in a Direct Rollover.
Definitions
(a) Eligible Rollover Distribution. 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 or the joint lives
(or joint life expectancies) of the Distributee and the Distributee's
designated Beneficiary, or for a specified period of ten (10) 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 includable in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities).
(b) 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, an annuity plan described in section 403(a) of the Code, or a
qualified trust described in section 401(a) 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.
(c) 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.
(d) Direct Rollover. A Direct Rollover is a payment by the Plan to
the Eligible Retirement Plan specified by the Distributee.
35
<PAGE>
SECOND
The Plan is hereby amended by the word-for-word adoption of the model language
contained in Revenue Procedure 94-13 as follows:
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual Compensation of each
Employee taken into account under the Plan shall not exceed the OBRA '93 Annual
Compensation Limit. The OBRA '93 Annual Compensation Limit is $150,000, as
adjusted by the Commissioner for increases in the cost-of-living in accordance
with section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding
12 months, over which Compensation is determine ("Determination Period")
beginning in such calendar year. If a Determination Period consists of fewer
than 12 months, the OBRA '93 Annual Compensation Limit will be multiplied by a
fraction, the numerator of which is the number of months in the Determination
period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under section 401(a)(17) of the Code shall mean the OBRA
'93 Annual Compensation Limit set forth in this provision.
If Compensation for any prior Determination Period is taken into account in
determining an Employee's benefits accruing in the current Plan Year, the
Compensation for that prior Determination Period is subject to the OBRA '93
Annual Compensation Limit in effect for that prior Determination Period. For
this purpose, for Determination Periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA '93 Annual
Compensation Limit is $150,000.
36
<PAGE>
MONEY PURCHASE PENSION AND
PROFIT SHARING PLAN
PLAN DOCUMENT
37
<PAGE>
PROTOTYPE MONEY PURCHASE PENSION
AND PROFIT SHARING PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
------- ----
ARTICLE 1
GENERAL
<S> <C> <C>
1.1 Purpose ...................................................................... 5
1.2 Trust ........................................................................ 5
ARTICLE 2
DEFINITIONS
2.1 Account ...................................................................... 5
2.2 Adoption Agreement ........................................................... 5
2.3 Affiliated Employers ......................................................... 5
2.4 Beneficiary ................................................................... 5
2.5 Break in Service ............................................................. 5
2.6 Code ......................................................................... 5
2.7 Compensation ................................................................. 5
2.8 Custodian .................................................................... 5
2.9 Determination Date ........................................................... 5
2.10 Early Retirement Date ......................................................... 5
2.11 Earned Income ................................................................ 6
2.12 Effective Date ............................................................... 6
2.13 Eligibility Computation Period ............................................... 6
2.14 Employee ..................................................................... 6
2.15 Employer ..................................................................... 6
2.16 Employer Contributions ....................................................... 6
2.17 Entry Dates .................................................................. 6
2.18 ERISA ........................................................................ 6
2.19 Hour of Service .............................................................. 6
2.20 Integration Level ............................................................ 7
2.21 Key Employee ................................................................. 7
2.22 Leased Employee .............................................................. 7
2.23 Maximum Disparity Rate ....................................................... 8
2.24 Maximum Profit Sharing Disparity Rate ........................................ 8
2.25 Non-Key Employee ............................................................. 8
2.26 Normal Retirement Age ........................................................ 8
2.27 Owner-Employee ............................................................... 8
2.28 Participant .................................................................. 8
2.29 Plan ......................................................................... 8
2.30 Plan Administrator ........................................................... 8
2.31 Plan Year .................................................................... 8
2.32 Self-Employed Individuals .................................................... 8
2.33 Shares ....................................................................... 8
2.34 Sponsor ...................................................................... 9
2.35 Taxable Wage Base ............................................................ 9
2.36 Total and Permanent Disability................................................ 9
2.37 Trust ........................................................................ 9
2.38 Trust Agreement .............................................................. 9
2.39 Trustee ...................................................................... 9
2.40 Valuation Date ............................................................... 9
2.41 Vesting Computation Period ................................................... 9
2.42 Year of Service ............................................................... 9
ARTICLE 3
ELIGIBILITY AND YEARS OF SERVICE
3.1 Eligibility Requirement ...................................................... 9
3.2 Participation and Service Upon Reemployment .................................. 9
3.3 Predecessor Employers ........................................................ 9
ARTICLE 4
CONTRIBUTIONS
4.1 Employer Contributions ....................................................... 9
4.2 Payment ...................................................................... 10
4.3 Nondeductible Voluntary Contributions by Participants......................... 10
4.4 Rollovers..................................................................... 10
</TABLE>
38
<PAGE>
<TABLE>
<S> <C> <C>
4.5 Direct Transfers ............................................................ 10
ARTICLE 5
ALLOCATIONS
5.1 Individual Accounts ......................................................... 10
5.2 Minimum Allocation .......................................................... 11
5.3 Allocation of Employer Contributions and Forfeitures ........................ 11
5.4 Coordination of Social Security Integration ................................. 12
5.5 Withdrawals and Distributions ............................................... 12
5.6 Determination of Value of Trust Fund and of Net Earnings or Losses .......... 12
5.7 Allocation of Net Earnings or Losses ........................................ 12
5.8 Responsibilities of the Plan Administrator .................................. 13
ARTICLE 6
LIMITATIONS ON ALLOCATIONS
6.1 Employers Who Do Not Maintain Other Qualified Plans ......................... 13
6.2 Employers Who Maintain Other Qualified Master
or Prototype Defined Contribution Plans ..................................... 13
6.3 Employers Who, In Addition to This Plan, Maintain Other Qualified Plans
Which are Defined Contribution Plans Other Than Master or Prototype Plans ... 14
6.4 Employers, Who In Addition To This Plan,
Maintain A Qualified Defined Benefit Plan ................................... 14
6.5 Definitions ................................................................. 14
ARTICLE 7
TRUST FUND
7.1 Receipt of Contributions by Trustee ......................................... 16
7.2 Investment Responsibility ................................................... 16
7.3 Investment Limitations ...................................................... 16
ARTICLE 8
VESTING
8.1 Nondeductible Voluntary Contributions and Earnings .......................... 16
8.2 Rollovers, Transfers and Earnings ........................................... 16
8.3 Employer Contributions and Earnings ......................................... 16
8.4 Amendments to Vesting Schedule .............................................. 17
8.5 Determination of Years of Service ........................................... 17
8.6 Forfeiture of Nonvested Amounts ............................................. 17
8.7 Reinstatement of Benefit..................................................... 18
ARTICLE 9
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 General...................................................................... 18
9.2 Qualified Joint and Survivor Annuity ........................................ 18
9.3 Qualified Preretirement Survivor Annuity .................................... 18
9.4 Definitions.................................................................. 18
9.5 Notice Requirements ......................................................... 19
9.6 Safe Harbor Rules ........................................................... 19
9.7 Transitional Rules .......................................................... 20
ARTICLE 10
DISTRIBUTION PROVISIONS
10.1 Vesting on Distribution Before Break In Service ............................. 21
10.2 Restrictions on Immediate Distributions ..................................... 21
10.3 Commencement of Benefits .................................................... 21
10.4 Early Retirement With Age and Service Requirement ........................... 22
10.5 Nontransferability of Annuities ............................................. 22
10.6 Conflicts With Annuity Contracts ............................................ 22
ARTICLE 11
TIMING AND MODES OF DISTRIBUTION
11.1 General Rules ............................................................... 22
11.2 Required Beginning Date ..................................................... 22
11.3 Limits on Distribution Periods .............................................. 22
11.4 Determination of Amount to be Distributed Each Year ......................... 22
</TABLE>
39
<PAGE>
<TABLE>
<S> <C> <C>
11.5 Death Distribution Provisions ............................................... 22
11.6 Designation of Beneficiary ................................................... 23
11.7 Definitions ................................................................. 23
11.8 Transitional Rules .......................................................... 24
11.9 Optional Forms of Benefit ................................................... 25
ARTICLE 12
WITHDRAWALS
12.1 Withdrawal of Nondeductible Voluntary Contributions ......................... 25
12.2 Hardship Withdrawals ........................................................ 25
12.3 Manner of Making Withdrawals ................................................ 25
I2.4 Limitations on Withdrawals .................................................. 26
ARTICLE 13
LOANS
13.1 General Provisions........................................................... 26
13.2 Administration of Loan Program............................................... 26
13.3 Amount of Loan............................................................... 26
13.4 Manner of Making Loans....................................................... 26
13.5 Terms of Loan................................................................ 27
13.6 Security for Loan............................................................ 27
13.7 Segregated Investment........................................................ 27
13.8 Repayment of Loan............................................................ 27
13.9 Default on Loan.............................................................. 27
13.10 Unpaid Amounts............................................................... 27
ARTICLE 14
INSURANCE
14.1 Insurance ................................................................... 27
14.2 Policies .................................................................... 27
14.3 Beneficiary ................................................................. 27
14.4 Payment of Premiums ......................................................... 28
14.5 Limitation on Insurance Premiums ............................................ 28
14.6 Insurance Company ........................................................... 28
14.7 Distribution of Policies .................................................... 28
14.8 Policy Features ............................................................. 29
14.9 Changed Conditions .......................................................... 29
14.10 Conflicts ................................................................... 29
ARTICLE 15
ADMINISTRATION
15.1 Duties and Responsibilities of Fiduciaries;
Allocation of Fiduciary Responsibility ...................................... 29
15.2 Powers and Responsibilities of the Plan Administrator ....................... 29
15.3 Allocation of Duties and Responsibilities ................................... 30
15.4 Appointment of the Plan Administrator ....................................... 30
15.5 Expenses .................................................................... 30
15.6 Liabilities ................................................................. 30
15.7 Claims Procedure ............................................................ 30
ARTICLE 16
AMENDMENT, TERMINATION AND MERGER
16.1 Sponsor's Power to Amend..................................................... 31
16.2 Amendment by Adopting Employer...............................................
16.3 Vesting Upon Plan Termination................................................ 31
16.4 Vesting Upon Complete Discontinuance of Contributions........................ 31
16.5 Maintenance of Benefits Upon Merger.......................................... 31
16.6 Special Amendments........................................................... 31
ARTICLE 17
MISCELLANEOUS
17.1 Exclusive Benefit of Participants and Beneficiaries ......................... 31
17.2 Nonguarantee of Employment................................................... 32
17.3 Rights to Trust Assets....................................................... 32
17.4 Nonalienation of Benefits.................................................... 32
17.5 Aggregation Rules............................................................ 32
17.6 Failure of Qualification..................................................... 32
17.7 Applicable Law............................................................... 32
</TABLE>
40
<PAGE>
ARTICLE 1
GENERAL
1.1 PURPOSE. The Employer hereby establishes this Plan to provide
retirement, death and disability benefits for eligible employees and their
Beneficiaries. This Plan is a standardized prototype paired defined contribution
plan and is designed to permit adoption of profit sharing provisions, money
purchase pension provisions, or both. The provisions herein and the selections
made by the Employer by execution of the money purchase pension or profit
sharing Adoption Agreement or Agreements, shall constitute the Plan. It is
intended that the Plan and Trust qualify under sections 401 and 501 of the
Internal Revenue Code of 1986, as amended and with the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
1.2 TRUST. The Employer has simultaneously adopted a Trust authorizing a
Trustee to receive, invest, and distribute funds in accordance with the Plan.
ARTICLE 2
DEFINITIONS
2.1 ACCOUNT. The aggregate of the individual bookkeeping subaccounts
established for each Participant, as provided in section 5.1.
2.2 ADOPTION AGREEMENT. The written agreement or agreements of the
Employer and the Trustee by which the Employer establishes this Plan and adopts
the Trust Agreement forming a part hereof, as the same may be amended from
time to time. The Adoption Agreement contains all the options that may be
selected by the Employer. The information set forth in the Adoption Agreement
executed by the Employer shall be deemed to be a part of this Plan as if set
forth in full herein.
2.3 AFFILIATED EMPLOYERS. The Employer and any corporation which is a
member of a controlled group of corporations (as defined in section 414(b) of
the Code) which includes the Employer, any trade or business (whether or not
incorporated) which is under common control (as defined in section 414(c) of the
Code) with the Employer, or any service organization (whether or not
incorporated) which is a member of an affiliated service group (as defined in
sections 414(m) and (o) of the Code) which includes the Employer.
2.4 BENEFICIARY. The person or persons (natural or otherwise) designated
by a Participant in accordance with section 11.6 to receive any undistributed
amounts credited to the Participant's Account under the Plan at the time of the
Participant's death.
2.5 BREAK IN SERVICE. An Eligibility Computation Period or Vesting
Computation Period in which an Employee fails to complete more than five hundred
(500) Hours of Service.
2.6 CODE. The Internal Revenue Code of 1986, as amended from time to time,
or any successor statute.
2.7 COMPENSATION.
(a) Compensation will mean all of each Participant's W-2 earnings.
For purposes of determining allocations under Section 5.3, only
Compensation while the Employee is a Participant shall be
converted.
(b) For any self-employed individual covered under the Plan,
Compensation will mean Earned Income.
(c) Compensation shall include only that Compensation that is
actually paid to the Participant during the Plan Year.
(d) Notwithstanding the above, if elected by the Employer in the
Adoption Agreement, Compensation shall include any amount which is contributed
by the Employer pursuant to a salary reduction agreement and which is not
includable in the gross income of the Employee under sections 125, 402(e)(3),
402(h) or 403(b) of the Code. The effective date of this subsection shall be
elected by the Employer in the Adoption Agreement.
(e) The annual Compensation of each Participant taken into account
under the Plan for any year shall not exceed one hundred fifty thousand dollars
($150,000), as adjusted by the Secretary at the same time and in the same manner
as under section 415(d) of the Code. In determining the Compensation of a
Participant for purposes of this limitation, the rules of section 414(q)(6) of
the Code shall apply, except in applying such rules, the term "family" shall
include only the Spouse of the Participant and any lineal descendants of the
Participant who have not attained age nineteen (19) before the close of the
year. If, as a result of the application of such rules, the limitation is
exceeded, then (except for purposes of determining the portion of Compensation
up to the Integration Level to the extent this Plan provides for permitted
disparity), the limitation shall be prorated among the affected individuals in
proportion to each such individual's Compensation as determined under this
section prior to the application of this limitation. The effective date of this
subsection shall be the first Plan Year beginning on or after January 1, 1989.
2.8 CUSTODIAN. The custodian, if any, designated in the Adoption
Agreement.
2.9 DETERMINATION DATE. With respect to any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year. For the first Plan
Year of the Plan, the last day of that Plan Year.
2.10 EARLY RETIREMENT DATE. The first day of the month coincident with or
next following the date upon which the Participant satisfies the early
retirement age and service requirements in the Adoption Agreement; provided,
however, such requirements may not be less than age fifty-five (55), nor more
than fifteen (15) Years of Service.
41
<PAGE>
2.11 EARNED INCOME. The net earnings from self-employment in the trade or
business with respect to which the Plan is established, for which personal
services of the individual are a material income-producing factor. Net earnings
will be determined without regard to items not included in gross income and the
deductions allocable to such items. Net earnings are reduced by contributions to
a qualified plan to the extent deductible under section 404 of the Code. Net
earnings shall be determined with regard to the deduction allowed to the
Employer by section 164(f) of the Code for taxable years beginning after
December 31, 1989.
2.12 EFFECTIVE DATE. The first day of the first Plan Year for which the
Plan is effective as specified in the Adoption Agreement.
2.13 ELIGIBILITY COMPUTATION PERIOD. For purposes of determining Years of
Service and Breaks in Service for eligibility to participate, the initial
Eligibility Computation Period shall be the twelve (12) consecutive month period
beginning with the day the Employee first performs an Hour of Service for the
Employer (employment commencement date). The succeeding twelve (12) consecutive
month periods commence with the first and each following anniversary of the
Employee's employment commencement date.
2.14 EMPLOYEE. Any person, including a Self-Employed Individual, who is
employed by the Employer maintaining the Plan or any other employer required to
be aggregated with such Employer under sections 414(b),(c),(m) or (o) of the
Code. The term "Employee" shall also include any Leased Employee deemed to be an
Employee of any Employer described above as provided in sections 414(n) or (o)
of the Code.
2.15 EMPLOYER. The corporation, proprietorship, partnership or other
organization that adopts the Plan by execution of an Adoption Agreement.
2.16 EMPLOYER CONTRIBUTIONS. The contribution of the Employer to the Plan
and Trust as set forth in section 4.1 and the Adoption Agreement.
2.17 ENTRY DATES. The Effective Date shall be the first Entry Date.
Thereafter, the Entry Dates shall be the first day of each Plan Year and the
first day of the seventh month of each Plan Year.
2.18 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
2.19 HOUR OF SERVICE.
(a) Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours shall be credited to
the Employee only for the computation period or periods in which the duties are
performed; and
(b) Each hour for which an Employee is paid, or entitled to payment,
by the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacity (including disability), layoff,
jury duty, military duty, or leave of absence. No more than five hundred one
(501) Hours of Service shall be credited under this paragraph to an Employee on
account of any single, continuous period during which the Employee performs no
duties (whether or not such period occurs in a single computation period). Hours
under this paragraph will be calculated and credited pursuant to section
2530.200b-2 of the Department of Labor regulations which are incorporated herein
by this reference.
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited both under paragraph (a) or paragraph (b), as the
case may be, and under this paragraph (c). These hours shall be credited to
the Employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
agreement, or payment is made.
(d) Solely for purposes of determining whether an Employee has a Break
in Service, Hours of Service shall also include an uncompensated authorized
leave of absence not in excess of two (2) years, or military leave while the
Employee's reemployment rights are protected by law or such additional or other
periods as granted by the Employer as military leave (credited on the basis of
forty (40) Hours of Service per each week or eight (8) Hours of Service per
working day), provided the Employee returns to employment at the end of his
leave of absence or within ninety (90) days of the end of his military leave,
whichever is applicable.
(e) Hours of Service will be credited for employment with other
members of an affiliated service group (under section 414(m)), a controlled
group of corporations (under section 414(b)), or a group of trades or businesses
under common control (under section 414(c)) of which the adopting Employer is a
member, and any other entity required to be aggregated with the Employer
pursuant to section 414(o) and the regulations thereunder. Hours of Service will
also be credited for any individual considered an Employee for purposes of this
Plan under section 414(n) or section 414(o) and the regulations thereunder.
(f) Solely for purposes of determining whether an Employee has a Break
in Service, Hours of Service shall also include absence from work for maternity
or paternity reasons, if the absence begins on or after the first day of the
first Plan Year beginning after 1984. During this absence, the Employee shall be
credited with the Hours of Service which would have been credited but for the
absence, or, if such hours cannot be determined with eight (8) hours per day.
An absence from work for maternity or paternity reasons means an absence:
(i) by reason of the pregnancy of an Employee;
(ii) by reason of the birth of a child of the Employee;
42
<PAGE>
(iii) by reason of the placement of a child with
the Employee in connection with adoption; or
(iv) for purposes of caring for such a child for a
period immediately following such birth or placement.
These Hours of Service shall be credited in the computation period following
the computation period in which the absence begins, except as necessary to
prevent a Break in Service in the computation period in which the absence
begins. However, no more than five hundred one (501) Hours of Service will be
credited for purposes of any such maternity or paternity absence from work.
(g) The Employer may elect to compute Hours of Service by
the use of one of the service equivalencies in the Adoption Agreement. Only one
method may be selected. If selected, the service equivalency must be applied to
all Employees covered under the Plan.
(h) If the Employer amends the method of crediting
service from the elapsed time method described in section 1.410 (a)-7 of the
Treasury regulations to the Hours of Service computation method by the adoption
of this Plan, or an Employee transfers from a plan under which service is
determined on the basis of elapsed time, the following rules shall apply for
purposes of determining the Employee's service under this Plan up to the time
of amendment or transfer:
(i) the Employee shall receive credit, as of the
date of amendment or transfer, for a number of Years of Service equal to the
number of one (1) year periods of service credited to the Employee as of the
date of the amendment or transfer; and
(ii) the Employee shall receive credit in the
applicable computation period which includes the date of amendment or transfer,
for a number of Hours of Service determined by applying the weekly service
equivalency specified in paragraph (g) to any fractional part of a year
credited to the Employee under this paragraph (h) as of the date of amendment
or transfer. The use of the weekly service equivalency shall apply to all
Employees who formerly were credited with service under the elapsed time
method.
2.20 INTEGRATION LEVEL. The Taxable Wage Base or such lesser amount
elected by the Employer in the Adoption Agreement.
2.21 KEY EMPLOYEE.
(a) Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination period
was an officer of the Employer if such individual's annual Compensation exceeds
fifty percent (50%) of the dollar limitation under section 415(b)(1)(A) of the
Code; an owner (or considered an owner under section 318 of the Code) of one of
the ten (10) largest interests in the Employer if such individual's
Compensation exceeds one hundred percent (100%) of the dollar limitation under
section 415(c)(1)(A) of the Code; a Five Percent (5%) Owner of the Employer; or
a one percent (1%) owner of the Employer who has annual Compensation of more
than one hundred fifty thousand dollars ($150,000).
(b) For purposes of this section, annual Compensation
means compensation as defined in section 415(c)(3) of the Code, but including
amounts contributed by the Employer pursuant to a salary reduction agreement
which are excludable from the Employee's gross income under sections 125,
402(a)(8), 402(h) or 403(b) of the Code.
(c) For purposes of this section, determination period is
the Plan Year containing the Determination Date and the four (4) preceding Plan
Years.
2.22 LEASED EMPLOYEE.
(a) Any person (other than an Employee of any of the
Affiliated Employers) who, pursuant to an agreement between any of the
Affiliated Employers and any other person ("leasing organization"), has
performed service for any of the Affiliated Employers (or for any of the
Affiliated Employers and related persons determined in accordance with section
414(n)(6) of the Code) on a substantially full-time basis for a period of at
least one (1) year and such services are of a type historically performed by
employees in the Affiliated Employer's business field. Contributions or benefits
provided a Leased Employee by the leasing organization which are attributable
to services performed for the Affiliated Employer shall be treated as provided
by the Affiliated Employer.
(b) A Leased Employee shall not be considered an Employee
of an Affiliated Employer if:
(i) such employee is covered by a money purchase
pension plan providing:
(1) a nonintegrated employer
contribution rate of at least ten percent (10%) of compensation (as defined in
section 415(c)(3) of the Code), but including amounts contributed pursuant to a
salary reduction agreement which are excludable from the employee's gross
income under sections 125, 402(a)(8), 402(h) or 403(b) of the Code;
(2) immediate participation; and
(3) full and immediate vesting.
and
(ii) Leased Employee's do not constitute more than
twenty percent (20%) of the Affiliated
Employees non-Highly-Compensated workforce.
(c) The determination of whether a person is a
Leased Employee will be made pursuant to
section 414(n) of the Code.
43
<PAGE>
2.23 MAXIMUM DISPARITY RATE. The lesser of.
(a) five and seven-tenths percent (5.7%);
(b) the applicable percentage determined in accordance
with the table below:
if the Integration Level is
<TABLE>
<CAPTION>
The Applicable
More Than But Not More Than Percentage Is:
- --------- ----------------- --------------
<S> <C> <C>
$0 X * 5.7%
X of TWB 80% Of TWB 4.3%
80% of TWB Y ** 5.4%
</TABLE>
* X = the greater of $10,000 or 20% of the Taxable Wage Base.
** Y = any amount more then 80% of the Taxable Wage Base but less than
100% of the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the applicable
percentage is five and seven-tenths percent (5.7%).
2.24 MAXIMUM PROFIT SHARING DISPARITY RATE. The lesser of:
(a) two and seven-tenths percent (2.7%);
(b) the applicable percentage determined in accordance
with the table below:
If the Integration Level is
<TABLE>
<CAPTION>
The Applicable
More Than But Not More than Percentage Is:
- --------- ----------------- --------------
<S> <C> <C>
$0 X * 2.7%
X of TWB 80% of TWB 1.3%
80% of TWB Y ** 2.4%
</TABLE>
* X = the greater of $10,000 or 20% of the Taxable Wage Base.
** Y = any amount more than 80% of the Taxable Wage Base but less than
100 of the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the applicable
percentage is two and seven-tenths percent (2.7%).
2.25 NON-KEY EMPLOYEE. Any Employee or former Employee who is not a
Key Employee. In addition, any Beneficiary of a Non-Key Employee shall be
treated as a Non-Key Employee.
2.26 NORMAL RETIREMENT AGE. The age selected in the Adoption
Agreement, but not less than age fifty-five (55). If the Employer enforces a
mandatory retirement age, the Normal Retirement Age is the lesser of that
mandatory age or the age specified in the Adoption Agreement.
2.27 OWNER-EMPLOYEE. An individual who is a sole proprietor, or who
is a partner owning more than ten percent (10%) of either the capital or
profits interest of a partnership.
2.28 PARTICIPANT. A person who has met the eligibility requirements
of section 3.1 and whose Account hereunder has been neither completely
forfeited nor completely distributed.
2.29 PLAN. The prototype paired defined contribution profit sharing
and money purchase pension plan provided under this basic plan document.
References to the Plan shall refer to the profit sharing provisions, the money
purchase pension provisions, or both, as the context may require.
2.30 PLAN ADMINISTRATOR. The person, persons or entity appointed by
the Employer pursuant to ARTICLE 15 to manage and administer the Plan.
2.31 PLAN YEAR. The twelve (12) consecutive month period designated
by the Employer in the Adoption Agreement.
2.32 SELF-EMPLOYED INDIVIDUAL. An individual who has Earned Income
for the taxable year from the trade or business for which the Plan is
established, or an individual who would have had Earned Income for the taxable
year but for the fact that the trade or business had no net profits for the
taxable year.
44
<PAGE>
2.33 SHARES. Shares of stock in any regulated investment company
registered under the Investment Company Act of 1940 that are made available for
investment purposes as an investment option under this Plan.
2.34 SPONSOR. The sponsor designated in the Adoption Agreement
which has made this Plan available to the Employer.
2.35 TAXABLE WAGE BASE. The maximum amount of earnings which may be
considered wages for a year under section 3121(a)(1) of the Code in effect as
of the beginning of the Plan Year.
2.36 TOTAL AND PERMANENT DISABILITY. The inability of the
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment, which condition, in the
opinion of a physician chosen by the Plan Administrator, can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months.
2.37 TRUST. The fund maintained by the Trustee for the investment
of Plan assets in accordance with the terms and conditions of the Trust
Agreement.
2.38 TRUST AGREEMENT. The agreement between the Employer and the
Trustee under which the assets of the Plan are held, administered, and managed.
The provisions of the Trust Agreement shall be considered an integral part of
this Plan as if set forth fully herein.
2.39 TRUSTEE. The individual or corporate Trustee or Trustees
under the Trust Agreement as they may be constituted from time to time.
2.40 VALUATION DATE. The last day of each Plan Year and such other
dates as may be determined by the Plan Administrator, as provided in section
5.6 for valuing the Trust assets.
2.41 VESTING COMPUTATION PERIOD. The Plan Year.
2.42 YEAR OF SERVICE. An Eligible Computation Period, Vesting
Computation Period, or Plan Year, whichever is applicable, during which an
Employee has completed at least one thousand (1,000) Hours of Service (whether
or not continuous). The Employer may, in the Adoption Agreement, specify a
fewer number of hours.
ARTICLE 3
ELIGIBILITY AND YEARS OF SERVICE
3.1 ELIGIBILITY REQUIREMENTS.
(a) Each Employee of the Affiliated Employers shall
become a Participant in the Plan as of the first Entry Date after the date on
which the Employee has satisfied the minimum age and service requirements
specified in the Adoption Agreement.
(b) The Employer may elect in the Adoption Agreement to
exclude from participation:
(i) Employees included in a unit of employees
covered by a collective bargaining agreement between the Employer and Employee
representatives, if retirement benefits were the subject of good faith
bargaining. For this purpose, the term "Employee representatives" does not
include any organization more than half of whose members are Employees who are
owners, officers, or executives of the Employer; and
(ii) nonresident aliens who receive no earned
income from the Employer which constitutes income from sources within the
United States.
3.2 PARTICIPATION AND SERVICE UPON REEMPLOYMENT. Upon the
reemployment of any Employee, the following rules shall determine his
eligibility to participate in the Plan and his credit for prior service.
(a) Participation. If the reemployed Employee was a
Participant in the Plan during his prior period of employment, he shall be
eligible upon reemployment to resume participation in the Plan. If the
reemployed Employee was not a Participant in the Plan, he shall be considered a
new Employee and required to meet the requirements of section 3.1 in order to
be eligible to participate in the Plan, subject to the reinstatement of credit
for prior service under paragraph (b) below.
(b) Credit for Prior Service. In the case of any Employee
who is reemployed before or after incurring a Break in Service, any Hour of
Service and Year of Service credited to the Employee at the and of his prior
period of employment shall be reinstated as of the date of his reemployment.
3.3 PREDECESSOR EMPLOYERS. If specified in the Adoption Agreement,
Years of Service with a predecessor employer will be treated as service for the
Employer for eligibility purposes; provided, however, If the Employer maintains
the plan of a predecessor employer, Years of Service with such employer will be
treated as service with the Employer without regard to any election.
ARTICLE 4
CONTRIBUTIONS
4.1 EMPLOYER CONTRIBUTIONS.
(a) Money Purchase Pension Contributions. For each Plan
Year, the Employer shall contribute to the Trust an amount equal to such
uniform percentage of Compensation of each eligible Participant as may be
determined by the Employer in accordance with the money purchase pension
contribution formula specified in the Adoption Agreement. Subject to the
limitations of section 5.4, the money purchase pension contribution formula may
be integrated with Social Security, as set forth in the Adoption Agreement.
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(b) Profit Sharing Contribution. For each Plan Year, the
Employer shall contribute to the Trust an amount as may be determined by the
Employer in accordance with the profit sharing formula set forth in the
Adoption Agreement.
(c) Eligible Participants. Subject to the Minimum
Allocation rules of section 5.2 and the exclusions specified in this section,
each Participant shall be eligible to share in the Employer Contribution. An
Employer may elect in the Adoption Agreement that Participants who terminate
employment during the Plan Year with not more than five hundred (500) Hours of
Service and who are not Employees as of the last day of the Plan Year (other
than Participants who die, retire or become totally and Permanently Disabled
during the Plan Year) shall not be eligible to share in the Employer
Contribution. An Employer may further elect in the Adoption Agreement to
allocate a contribution on behalf of a Participant who completes fewer than
five hundred (500) Hours of Service and is otherwise ineligible to share in the
Employer Contribution. If the Employer fails to specify in the Adoption
Agreement the number of Hours of Service required to share in the Employer
Contribution, the number shall be five hundred (500) Hours of Service.
(d) Contribution Limitation. In no event shall any
Employer Contribution exceed the maximum amount deductible from the Employer's
income under section 404 of the Code, or the maximum limitations under section
415 of the Code provided in ARTICLE 6.
4.2 PAYMENT. All Employer Contributions to the Trust for any Plan
Year shall be made either in one lump-sum or in installments in U.S. currency,
by check, or in Shares within the time prescribed by law, including extensions
granted by the Internal Revenue Service, for filing the Employer's federal
income tax return for the taxable year with or within which such Plan Year
ends. All Employer Contributions to the Trust for a money purchase pension plan
for any Plan Year shall be made within the time prescribed by regulations under
section 412(c)(10) of the Code.
4.3 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS BY PARTICIPANTS.
(a) This Plan will not accept nondeductible Employee
contributions for Plan Years beginning after the Plan Year in which this Plan
is adopted by the Employer. Employee contributions made with respect to Plan
years beginning after December 31, 1986 will be limited so as to meet the
nondiscrimination test of section 401(m).
(b) A separate account shall be maintained by the Trustee
for the nondeductible Employee contributions of each Participant.
(c) Employee contributions and earnings thereon shall be
fully vested and nonforfeitable at all times.
(d) The provisions of this section shall apply to
Employee contributions made prior to the first Plan Year after the Plan Year in
which the Employer adopts this Plan.
4.4 ROLLOVERS.
(a) Subject to the approval of the Plan Administrator, a
participant who has participated in any other qualified plan described in
section 401(a) of the Code or in a qualified annuity plan described in section
403(a) of the Code shall be permitted to make a rollover contribution in the
form of cash to the Trustee of an amount received by the Participant that is
attributable to participation in such other plan (reduced by any nondeductible
voluntary contributions he made to the plan). provided that the rollover
contribution complies with all requirements of sections 402(c) or 403(a)(4) of
the Code, whichever is applicable.
(b) Before approving such a Participant rollover, the
Plan Administrator may request from the Participant or the Employer any
documents which the Plan Administrator, in its discretion, deems necessary for
such rollover.
(c) Any rollover contribution to the Trust shall be
credited to the Participants rollover subaccount established under section 5.1
and separately accounted for.
4.5 DIRECT TRANSFER.
(a) The Plan shall accept a transfer of assets directly
from another plan qualified under sections 401(a) or 403(a) of the Code only if
the Plan Administrator, in its sole discretion, agrees to accept such a
transfer. In determining whether to accept such a transfer the Plan
Administrator shall consider the administrative inconvenience engendered by
such a transfer and any risks to the continued qualification of the Plan under
section 401(a) of the Code. Acceptance of any such transfer shall not preclude
the Plan Administrator from refusing any subsequent such transfers.
(b) Any transfer of assets accepted under this section
shall be credited to the Participant's direct transfer subaccount and shall be
separately accounted for at all times and shall remain subject to the
provisions of the transferor plan (as it existed at the time of such transfer)
to the extent required by section 411(d)(6) of the Code (including, but not
limited to, any rights to Qualified Joint and Survivor Annuities and qualified
preretirement survivor annuities) as if such provisions were pan of the Plan.
In all other respects, however, such transferred assets will be subject to the
provisions of the Plan.
(c) Assets accepted under this section shall be fully
vested and nonforfeitable.
(d) Before approving such a direct transfer, the Plan
Administrator may request from the Participant or the Employer (or the prior
employer) any documents the Plan Administrator, in its discretion, deems
necessary for such direct transfer.
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ARTICLE 5
ALLOCATIONS
5.1 INDIVIDUAL ACCOUNTS. The Plan Administrator shall establish
and maintain an Account in the name of each Participant. The Account shall
contain the following subaccounts:
(a) A money purchase pension contribution subaccount to
which shall be credited each such Participant's share of (i) Employer
Contributions under section 4.1 (a); (ii) the net comings or net losses on the
investment of the assets of the Trust; (iii) distributions; and (iv) dividends,
capital gain distributions and other earnings received on any Shares credited
to the Participant's subaccount;
(b) A profit sharing contribution subaccount to which
shall be credited each such Participant's share of (i) Employer Contributions
under section 4.1 (b); (ii) forfeitures; (iii) the net earnings or net losses
on the investment of the assets of the mat; (iv) distributions; and (v)
dividends, capital gain distributions and other earnings received on any
Shares credited to the Participant's subaccount;
(c) A nondeductible voluntary contribution subaccount to
which shall be credited (i) nondeductible voluntary contributions by the
Participant under section 4.3; (ii) the net earnings or net losses on the
investment of the assets of the Trust; (iii) distributions; and (iv) dividends,
capital gain distributions and other earnings received on any Shares credited
to the Participant's subaccount;
(d) A direct transfer subaccount to which shall be
credited (i) contributions to the Trust accepted under section 4.5(a); (ii) the
not earnings or net losses on the investment of the assets of the Trust; (iii)
distributions; and (iv) dividends, capital gain distributions and other
earnings received on any Shares credited to the Participant's subaccount;
(e) A rollover subaccount to which shall be credited (i)
contributions to the Trust accepted under section 4.4(a); (ii) the net earnings
or net losses on the investment of the assets of the Trust; (iii)
distributions; and (iv) dividends, capital gain distributions and other
earnings received on any Shares credited to the Participant's subaccount.
5.2 MINIMUM ALLOCATION.
(a) Except as otherwise provided in this section, the
Employer Contributions and forfeitures allocated on behalf of any Participant
who is not a Key Employee shall not be less than the lesser of three percent
(3%) of such Participant's Compensation or in the case where the Employer has
no defined benefit plan which designates this Plan to satisfy section 401 of
the Code, the largest percentage of Employer Contributions and forfeitures, as
a percentage of the first one hundred and fifty thousand dollars ($150,000) of
the Key Employee's Compensation, allocated on behalf of any Key Employee for
that year. The minimum allocation is determined without regard to any Social
Security contribution. This minimum allocation shall be made even though, under
other Plan provisions, the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation for the year
because of (i) the Participant's failure to complete one thousand (1,000) Hours
of Service (or any equivalent provided in the Plan); or (ii) the Participant's
failure to make mandatory Employee contributions to the Plan; or (iii)
Compensation less than a stated amount. For purposes of this subsection, all
defined contribution plans required to be included in an aggregation group
under section 416(g)(2)(A)(i) shall be treated as a single plan.
(b) For purposes of computing the minimum allocation,
Compensation shall mean Compensation as defined in section 6.5(b) of the Plan.
(c) The provision in subsection (a) above shall not apply
to any Participant who was not employed by the Employer on the last day of the
Plan Year.
(d) The provision in subsection (a) above shall not apply
to any Participant to the extent the Participant is covered under any other
plan or plans of the Employer and the Employer has provided in the Adoption
Agreement that the minimum allocation or benefit requirement applicable to
top-heavy plans will be met in the other plan or plans.
(e) The minimum allocation required (to the extent
required to be nonforfeitable under section 416(b)) may not be forfeited under
section 411 (a)(3)(B) or 411(a)(3)(D).
5.3 ALLOCATION OF EMPLOYER CONTRIBUTIONS AND FORFEITURES.
(a) All money purchase pension contributions for a given
Plan Year shall be allocated to the Account of the Participant for whom such
contribution was made. Any forfeiture from a Participant's money purchase
pension contribution subaccount arising under the Plan for a given Plan Year
shall be applied as specified In the Adoption Agreement, either (i) to reduce
the Employer Contribution in that year, or if in excess of the Employer
Contribution for such Plan Year, the excess amounts shall be used to reduce the
Employer Contribution in the next succeeding Plan Year or Years or (ii) to be
added to the Employer Contributions and allocated accordingly.
(b) All profit sharing contributions and forfeitures from
a Participant's profit sharing contribution subaccount will be allocated to the
Account of each Participant in the ratio that such Participant's Compensation
bears to the Compensation of all Participants. However, if the profit sharing
contribution formula selected in the Adoption Agreement is integrated with
Social Security, profit sharing contributions for the Plan Year plus any
forfeitures will be allocated to Participants' Accounts as follows:
(i) Step One. Contributions and forfeitures will
be allocated to each Participant's Account in the ratio that each Participant's
total Compensation bears to all Participants' total Compensation, but not in
excess of three percent (3%) of each Participant's Compensation. (Step One is
not applicable if the Employer enters into the money purchase pension Adoption
Agreement).
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(ii) Step Two. Any contributions and forfeitures
remaining after the allocation in Step One (if any) will be allocated to each
Participant's Account in the ratio that each Participant's Compensation for the
Plan Year in excess of the Integration Level bears to the excess Compensation
of all Participants, but not in excess of three percent (3%). (Step Two is not
applicable if the Employer enters into the money purchase pension Adoption
Agreement).
(iii) Step Three. Any contributions and
forfeitures remaining after the allocation in Step Two (if any) will be
allocated to each Participant's Account in the ratio that the sum of each
Participant's total Compensation and Compensation in excess of the Integration
Level bears to the sum of all Participants' total Compensation and Compensation
in excess of the Integration Level, but not in excess of whichever of the
following is applicable:
(1) if the Employer has not adopted the money
purchase pension Adoption Agreement, then the Maximum Profit Sharing Disparity
Rate; or
(2) If the Employer has adopted the money
purchase pension Adoption Agreement, then the lesser of:
(A) the percentage of each Participant's
Compensation for the Plan Year up to the Integration Level determined by
dividing the allocation by such Compensation (the base contribution
percentage); or
(B) the Maximum Disparity Rate.
(iv) Step Four. Any remaining contributions or
forfeitures will be allocated to each Participant's Account in the ratio that
each Participant's total Compensation for the Plan Year bears to all
Participants' total Compensation for that year.
(c) Notwithstanding anything in (a) or (b) above to the
contrary, forfeitures arising under a Participant's money purchase pension
contribution subaccount will only be used to reduce the contributions of the
Participant's Employer who adopted this Plan, and forfeitures arising under a
Participant's profit sharing contribution subaccount will be reallocated only
for the benefit of Employees of the Participant's Employer who adopted this
Plan.
5.4 COORDINATION OF SOCIAL SECURITY INTEGRATION. If the Employer
maintains plans involving integration with Social Security other than this
Plan, and if any Participant is eligible to participate in more than one of
such plans, all such plans will be considered to be integrated if the extent of
the integration of all such plans does not exceed one hundred percent (100%).
For purposes of the preceding sentence, the extent of integration of a plan is
the ratio (expressed as a percentage) which the actual benefits, benefit rate,
offset rate, or Employer Contribution rate under the plan bears to the
integration limitation applicable to such plan. If the Employer enters into
both the money purchase pension Adoption Agreement and the profit sharing
Adoption Agreement under this Plan, integration with Social Security may only
be selected in one Adoption. Agreement.
5.5 WITHDRAWALS AND DISTRIBUTIONS. Any distribution to a
Participant or his Beneficiary, any amount transferred from a Participant's
Account directly to the Trustee of any other qualified plan described in
section 401(a) of the Code or to a qualified annuity plan described in section
403(a) of the Code, or any withdrawal by a Participant shall be charged to the
appropriate subaccount(s) of the Participant as of the date of the distribution
or the withdrawal.
5.6 DETERMINATION OF VALUE OF TRUST FUND AND OF NET EARNINGS OR
LOSSES. As of each Valuation Date the Trustee shall determine for the period
then ended the sum of the net earnings or losses of the Trust (excluding with
respect to Shares and other assets specifically allocated to a specific
Participant's subaccount, (i) dividends and capital gain distributions from
Shares, (ii) receipts or income attributable to insurance policies, (iii)
income gains and/or losses attributable to a Participant's loans made pursuant
to ARTICLE 13 or to any other Assets) which shall reflect accrued but unpaid
interest, dividends, gains, or losses realized from the sale, exchange or
collection of assets, other income received, appreciation in the fair market
value of assets, depreciation in the fair market value of assets,
administration expenses, and taxes and other expenses paid. Gains or losses
realized and adjustments for appreciation or depreciation in fair market value
shall be computed with respect to the difference between such value as of the
preceding Valuation Date or date of purchase, whichever is applicable, and the
value as of the date of disposition or the current Valuation Date, whichever is
applicable.
5.7 ALLOCATION OF NET EARNINGS OR LOSSES.
(a) As of each Valuation Date the net earnings or losses
of the Trust (excluding with respect to Shares and other assets specifically
allocated to a specific Participant's subaccount, (i) dividends and capital
gain distributions from Shares, (ii) dividends or credits attributable to
insurance policies, (iii) income gains and/or losses attributable to a
Participant's loans made pursuant to ARTICLE 13 or to any other assets, all of
which shall be allocated to such Participant's subaccount) for the valuation
period then ending shall be allocated to the Accounts of all Participants (or
Beneficiaries) having credits in the fund both on such date and at the
beginning of such valuation period. Such allocation shall be made by the
application of a fraction, the numerator of which is the value of the Account
of a specific Participant (or Beneficiary) as of the immediately preceding
Valuation Date, reduced by any distributions therefrom since such preceding
Valuation Date, and the denominator of which is the total value of all such
Accounts as of the preceding Valuation Date, reduced by any distributions
therefrom since such preceding Valuation Date.
(b) To the extent that Shares and other assets are
specifically allocated to a specific Participant's subaccount: (i) dividends
and capital gain distributions from Shares; (ii) dividends or credits
attributable to insurance policies; and (iii) income gains and/or losses
attributable to a Participant's loans made pursuant to ARTICLE 13 or to any
other assets, all shall be allocated to such Participant's subaccount.
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5.8 RESPONSIBILITIES OF THE PLAN ADMINISTRATOR. The Plan
Administrator shall maintain accurate records with respect to the contributions
made by or on behalf of Participants under the Plan, and shall furnish the
Trustee with written instructions directing the Trustee to allocate all Plan
contributions to the Trust among the separate Accounts of Participants in
accordance with section 5.1 above, In making any such allocation, the Trustee
shall be fully entitled to rely on the instructions furnished by the Plan
Administrator, and shall be under no duty to make any inquiry or investigation
with respect there to.
ARTICLE 6
LIMITATIONS ON ALLOCATIONS
6.1 EMPLOYERS WHO DO NOT MAINTAIN OTHER QUALIFIED PLANS.
(a) If the Participant does not participate in, and has
never participated in another qualified plan or a welfare benefit fund, as
defined in section 419(e) of the Code, maintained by the Employer, or an
individual medical account, as defined in section. 415(1)(2) of the Code,
maintained by the Employer, which provides in Annual Addition as defined in
section 6.5(a), the amount of Annual Additions that may be credited to the
Participant's Account for any Limitation Year will not exceed the lesser of the
Maximum Permissible Amount or any other limitation contained in this Plan. If
the Employer Contribution that would otherwise be contributed or allocated to
the Participant's Account would cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, the amount contributed or
allocated will be reduced so that the Annual Additions for the Limitation Year
will equal the Maximum Permissible Amount.
(b) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant on the basis of a reasonable estimation of
the Participant's Compensation for the Limitation Year, uniformly determined
for all Participants similarly situated.
(c) As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of the Participant's actual Compensation for
the Limitation Year.
(d) If, pursuant to subsection (c) or as a result of the
allocation of forfeitures, there is an Excess Amount the excess will be
disposed of as follows:
(i) Any nondeductible voluntary Employee
contributions, to the extent they would reduce the Excess Amount, will be
returned to the Participant;
(ii) If after the application of paragraph (i) an
Excess Amount still exists, and the Participant is covered by the Plan at the
and of the Limitation Year, the Excess Amount in the Participant's Account will
be used to reduce Employer Contributions (including any allocation of
forfeitures) for such Participant in the next Limitation Year, and each
succeeding Limitation Year if necessary;
(iii) if after the application of paragraph (i) an
Excess Amount still exists, and the Participant is not covered by the Plan at
the end of the Limitation Year, the Excess Amount will be held unallocated in a
suspense account. The suspense account will be applied to reduce future
Employer Contributions (including allocation of any forfeitures) for all
remaining Participants in the next Limitation Year, and each succeeding
Limitation Year if necessary;
(iv) if a suspense account is in existence at any
time during the Limitation Year pursuant to this section, it will not
participate in the allocation of the Trust's investment gains and losses. If a
suspense account is in existence at any time during a particular Limitation
Year, all amounts in the suspense account must be allocated and reallocated to
Participants' Accounts before any Employer or any Employee contributions may be
made to the Plan for that Limitation Year. Excess accounts may not be
distributed to Participants or former Participants.
6.2 EMPLOYERS WHO MAINTAIN OTHER QUALIFIED MASTER OR PROTOTYPE
DEFINED CONTRIBUTION PLANS.
(a) This section applies if, in addition to this Plan,
the Participant is covered under another qualified master or prototype defined
contribution plan maintained by the Employer, a welfare benefit fund, as
defined in section 419(e) of the Code maintained by the Employer or an
individual medical account, a defined in section 415(1)(2) of the Code,
maintained by the Employer which provides an Annual Addition as defined in
section 6.5(a), during any Limitation Year. The Annual Additions that may be
credited to a Participant's Account under this Plan for any such Limitation
Year will not exceed the Maximum Permissible Amount reduced by the Annual
Additions credited to a Participant's Account under the other plans and welfare
benefit funds for the same Limitation Year. If the Annual Additions with
respect to the Participant under other defined contribution plans and welfare
benefit funds maintained by the Employer are less than the Maximum Permissible
Amount and the Employer Contribution that would otherwise be contributed or
allocated to the Participant's Account under this Plan would cause the Annual
Additions for the Limitation Year to exceed this limitation, the amount
contributed or allocated will be reduced so that the Annual Additions under all
such plans and funds for the Limitation Year will equal the Maximum Permissible
Amount. If the Annual Additions with respect to the Participant under such
other defined contribution plans and welfare benefit funds in the aggregate are
equal to or greater than the Maximum Permissible Amount, no amount will be
contributed or allocated to the Participant's Account under this Plan for the
Limitation Year.
(b) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant in the manner described in section 6.1
(b).
(c) As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of the Participant's actual Compensation for
the Limitation Year.
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(d) If, pursuant to section 6.2(c), or as a result of the
allocation of forfeitures, a Participants Annual Additions under this Plan and
such other plans would result in an Excess Amount for a Limitation Year, the
Excess Amount will be deemed to consist of the Annual Additions last allocated,
except that Annual Additions attributable to a welfare benefit fund or
individual medical account will be deemed to have been allocated first
regardless of the actual allocation date.
(e) If an Excess Amount was allocated to a Participant on
an allocation date of this Plan which coincides with an allocation date of
another plan, the Excess Amount attributed to this Plan will be the product of
(i) the total Excess Amount allocated as of such
date, times
(ii) the ratio of (1) the Annual Additions
allocated to the Participant for the Limitation Year as of such date under this
Plan to (2) the total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all the other qualified master
or prototype defined contribution plans.
(f) Any Excess Amount attributed to this Plan will be
disposed of in the manner described in section 6.1 (d).
6.3 EMPLOYERS WHO, IN ADDITION TO THIS PLAN, MAINTAIN OTHER
QUALIFIED PLANS WHICH ARE DEFINED CONTRIBUTION PLANS OTHER THAN MASTER OR
PROTOTYPE PLANS. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a Master or Prototype
Plan, Annual Additions which may be credited to the Participant's Account under
this Plan for any Limitation Year will be limited in accordance with section
6.2 as though the other plan were a Master or Prototype Plan unless the
Employer provides other limitations in the Adoption Agreement.
6.4 EMPLOYERS WHO, IN ADDITION TO THIS PLAN, MAINTAIN A QUALIFIED
DEFINED BENEFIT PLAN. If the Employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in this Plan, the sum
of the Participant's Defined Benefit Fraction and Defined Contribution Fraction
will not exceed 1.0 in any Limitation Year. The Annual Additions which may be
credited to the Participant's Account under this Plan for any Limitation Year
will be limited in accordance with the Adoption Agreement.
6.5 DEFINITIONS. Unless otherwise expressly provided herein, for
purposes of this ARTICLE only, the following definitions and rules of
interpretation shall apply:
(a) Annual Additions. The sum of the following amounts
credited to a Participant's Account for the Limitation Year:
(i) Employer Contributions;
(ii) Employee contributions;
(iii) forfeitures; and
(iv) amounts allocated after March 31, 1984 to an
individual medical account; as defined in section 415(l)(2) of the Code, which
is part of a pension or annuity plan maintained by the Employer, are treated as
Annual Additions to a defined contribution plan. Also, amounts derived from
contributions paid or accrued after December 31, 1985, in taxable years ending
after such date, which are attributable to post-retirement medical benefits
allocated to the separate account of a key employee, as defined in section
419A(d)(3) of the Code, under a welfare benefit fund, as defined in section
419(e) of the Code, maintained by the Employer, are treated as Annual Additions
to a defined contribution plan.
For this purpose, any Excess Amount applied under sections 6.1 (d) or 6.2(f) in
the Limitation Year to reduce Employer Contributions will be considered Annual
Additions for such Limitation Year.
(b) Compensation. A Participant's earned income, wages,
salaries, and fees for professional services and other amounts received for
personal services actually rendered in the course of employment with the
Employer maintaining the Plan (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses), and excluding the
following:
(i) Employer contributions to a plan of deferred
compensation which are not includable in the Employee's gross income for the
taxable year in which contributed, or Employer Contributions under a simplified
employee pension plan to the extent such contributions are excluded from the
Employee's gross income, or any distributions from a plan of deferred
compensation;
(ii) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock option; and
(iv) Other amounts which received special tax
benefits, or contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity described in section
403(b) of the Code (whether or not the amounts are actually excludable from the
gross income of the Employee).
For purposes of applying the limitations of this
ARTICLE, Compensation for a Limitation Year is the Compensation actually paid
or includable in gross income during such year.
Notwithstanding the preceding sentence, Compensation
for a Participant in a defined contribution plan who is Totally and Permanently
Disabled (as defined in section 22(e)(3) of the Code) is the Compensation such
Participant would have received for the Limitation Year if the Participant had
been paid at the rate of Compensation paid Immediately before becoming
permanently and totally disabled; such imputed Compensation for the disabled
Participant may
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be taken into account only if the Participant is not a Highly-Compensated
Employee (as defined in section 414(q) of the Code), and contributions made on
behalf of such Participant are nonforfeitable when made.
(c) DEFINED BENEFIT FRACTION. A fraction, the numerator
of which is the sum of the Participant's Projected Annual Benefits under all the
defined benefit plans (whether or not terminated) maintained by the Employer,
and the denominator of which is the lesser of one hundred percent (100%) of the
dollar limitation determined for the Limitation Year under sections 415(b) and
(d) of the Code or one hundred forty percent (140%) of highest average
compensation, including any adjustments under section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the denominator of this
fraction will not be less than one hundred twenty-five percent (125%) of the
sum of the annual benefits under such plans which the Participant had accrued
as of the close of the last Limitation Year beginning before January 1, 1987
disregarding any changes in the terms and conditions of the plan after May 5,
1986. The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of section 415 of
the Code for all Limitation Years beginning before January 1, 1987.
(d) DEFINED CONTRIBUTION DOLLAR LIMITATION. Thirty
thousand dollars ($30,000) or, if greater, one-fourth (1/4) of the defined
benefit dollar limitation set forth in section 415(b)(1) of the Code as in
effect for the Limitation Year.
(e) DEFINED CONTRIBUTION FRACTION. A fraction, the
numerator of which is the sum of the Annual Additions to the Participant's
Account under all the defined contribution plans (whether or not terminated)
maintained by the Employer for the current and all prior Limitation Years
(including the Annual Additions attributable to the Participant's nondeductible
voluntary contributions to all defined benefit plans, whether or not
terminated, maintained by the Employer, and the Annual Additions attributable
to all welfare benefit funds, as defined in section 419(e) of the Code and
individual medical accounts, as defined in section 415(1)(2) of the Code,
maintained by the Employer), and the denominator of which is the sum of the
maximum aggregate amounts for the current and all prior Limitation Years of
service with the Employer (regardless of whether a defined contribution plan
was maintained by the Employer). The maximum aggregate amount in any Limitation
Year is the lesser of one hundred percent (100%) of the dollar limitation in
effect under section 415(c)(1)(A) of the Code or thirty-five percent (35%) of
the Participant's Compensation for such year.
If the Participant was a Participant as of the end of the
first day of the first Limitation Yew beginning after December 31, 1986, in one
or mom defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted if the
sum of this fraction and the Defined Benefit Fraction would otherwise exceed
1.0 under the terms of this Plan. Under the adjustment, an amount equal to the
product of (1) the excess of the sum of the fractions over 1.0 times (2) the
denominator of this fraction, will be permanently subtracted from the numerator
of this fraction. The adjustment is calculated using the fractions as they
would be computed as of the end of the last Limitation Year beginning before
January 1, 1987, and disregarding any changes in the terms and conditions of
the Plan made after May 5, 1986, but using the section 415 limitation
applicable to the first Limitation Year beginning on or after January 1, 1987.
the Annual Addition for any Limitation Year beginning before January 1, 1987,
shall not be recomputed to treat all Employee contributions as Annual
Additions.
(f) EMPLOYER. For purposes of this ARTICLE, Employer
shall mean the employer that adopts this Plan, and all members of a controlled
group of corporations (as defined in section 414(b) of the Code as modified by
section 415(h) of the Code), all commonly controlled trades or businesses (as
defined in section 414(c) of the Code as modified by section 415(h) of the
Code), or affiliated service groups (as defined in section 414(m) of the Code)
of which the adopting Employer is a part and any other entity required to be
aggregated with the Employer pursuant to regulations under section 414(o) of
the Code.
(g) EXCESS AMOUNT. The excess of the Participant's Annual
Addition for the Limitation Year over the Maximum Permissible Amount.
(h) HIGHEST AVERAGE COMPENSATION. The average
compensation for the three consecutive Plan Years that produce the highest
average.
(i) LIMITATION YEAR. A Plan Year, or the twelve (12)
consecutive month period elected by the Employer in the Adoption Agreement. All
qualified plans maintained by the Employer must use the same Limitation Year.
If the Limitation Year is amended to a different twelve (12) consecutive month
period, the new Limitation Year must begin on a date within the Limitation Year
in which the amendment is made.
(j) MASTER OR PROTOTYPE PLAN. A plan the form of which
is the subject of a favorable opinion letter from the Internal Revenue Service.
(k) MAXIMUM PERMISSIBLE AMOUNT. The maximum Annual
Addition that may be contributed or allocated to a Participant's Account under
the Plan for any Limitation Year shall not exceed the lesser of:
(i) the Defined Contribution Dollar Limitation;
or
(ii) twenty-five percent (25%) of the Participant's
Compensation for the Limitation Year.
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The Compensation limitation referred to in subsection (b)
shall not apply to any contribution for medical benefits (within the meaning of
section 401(h) or section 419A(f)(2) of the Code) which is otherwise treated as
an Annual Addition under section 415(l)(1) or section 419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different twelve (12) consecutive month
period, the Maximum Permissible Amount will not exceed the Defined Contribution
Dollar Limitation multiplied by the following fraction:
Number of Months in the Short Limitation Year
12
(l) PROJECTED ANNUAL BENEFIT. The annual retirement
benefit (adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or Qualified
Joint and Survivor Annuity) to which the Participant would be entitled under
the terms of the Plan assuming:
(i) the Participant will continue employment
until Normal Retirement Age under the Plan (or current age, if later), and
(ii) the Participant's Compensation for the current
Limitation Year and all other relevant factors used to determine benefits under
the Plan will remain constant for all future Limitation Years.
ARTICLE 7
TRUST FUND
7.1 RECEIPT OF CONTRIBUTIONS BY TRUSTEE. All contributions to the
Trust that we received by the Trustee, together with any earnings thereon,
shall be held, managed and administered by the Trustee named in the Adoption
Agreement in accordance with the terms and conditions of the Trust Agreement
and the Plan. The Trustee may use a Custodian designated by the Sponsor to
perform recordkeeping and custodial functions. The Trustee shall be subject to
the proper directions of the Employer or the Plan Administrator made in
accordance with the terms of the Plan and ERISA.
7.2 INVESTMENT RESPONSIBILITY.
(a) If the Employer elects in the Adoption Agreement to
exercise investment authority and responsibility, the selection of the
investments in which assets of the Trust are invested shall be the
responsibility of the Plan Administrator and each Participant will have a
ratable interest in all assets of the Trust.
(b) If the Adoption Agreement so provides and the
Employer elects to permit each Participant or Beneficiary to select the
investments in his Account, no person, including the Trustee and the Plan
Administrator, shall be liable for any loss or for any breach of fiduciary duty
which results from such Participant's or Beneficiary's exercise of control.
(c) If the Adoption Agreement so provides and the
Employer elects to permit each Participant or Beneficiary to select the
investments in his Account, the Employer or the Plan Administrator must
complete a schedule of Participant designations.
(d) If Participants and Beneficiaries are permitted to
select the investment in their Accounts, all investment related expenses,
including administrative fees charged by brokerage houses, will be charged
against the Accounts of the Participants.
(e) The Plan Administrator may at any time change the
selection of investments in which the assets of the Trust are invested, or
subject to such reasonable restrictions as may be imposed by the Sponsor for
administrative convenience, may submit an amended schedule of Participant
designations. Such amended documents may provide for a variance in the
percentages of contributions to any particular investment or a request that
Shares in the Trust be reinvested in whole or in part in other Shares.
7.3 INVESTMENT LIMITATIONS. The Sponsor may impose reasonable
investment limitations an the Employer and the Plan Administrator relating to
the type of permissible investments in the Trust or the minimum percentage of
Trust assets to be invested in Shares.
ARTICLE 8
VESTING
8.1 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS AND EARNINGS. The
Participant's nondeductible voluntary contribution subaccount shall be fully
vested and nonforfeitable at all times and no forfeitures will occur as a
result of an Employee's withdrawal of nondeductible voluntary contributions.
8.2 ROLLOVERS, TRANSFERS AND EARNINGS. The Participant's rollover
subaccount and direct transfer subaccount shall be fully vested and
nonforfeitable at all times.
8.3 EMPLOYER CONTRIBUTIONS AND EARNINGS. Notwithstanding the
vesting schedule elected by the Employer in the Adoption Agreement, the
Participant's money purchase pension contribution subaccount and profit sharing
contribution subaccount shall be fully vested and nonforfeitable upon the
Participant's death, disability, attainment of Normal Retirement Age, or, if the
Adoption Agreement provides for an Early Retirement Date, attainment of the
required age and completion of the required service, In the absence of any of
the preceding events, the Participant's money purchase contribution subaccount
and his profit sharing contribution subaccount shall vest in accordance with a
minimum vesting
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schedule specified in the Adoption Agreement. The schedule must be at least as
favorable to Participants as either schedule (a) or (b) below.
(a) Graduated vesting according to the following schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
(b) Full one hundred percent (100%) vesting after three (3) Years of
Service.
8.4 AMENDMENTS TO VESTING SCHEDULE.
(a) If the Plan's vesting schedule is amended, or the Plan is
amended in any way that directly or indirectly affects the computation of the
Participant's nonforfeitable percentage or if the Plan is deemed amended by an
automatic change to or from a top-heavy vesting schedule, each Participant with
at least three (3) Years of Service with the Employer may elect, within a
reasonable period after the adoption of the amendment or change, to have the
nonforfeitable percentage computed under the Plan without regard to such
amendment or change. For any Participants who do not have at least one (1) Hour
of Service in any Plan Year beginning after December 31, 1988, the preceding
sentence shall be applied by substituting "five (5) Years of Service" for
"three (3) Years of Service" where such language appears.
(b) The period during which the election may be made shall commence
with the date the amendment is adopted or deemed to be made and shall end on
the latest of:
(i) sixty (60) days after the amendment is adopted;
(ii) sixty (60) days after the amendment becomes effective;
or
(iii) sixty (60) days after the Participant is issued written
notice of the amendment by the Employer or Plan Administrator.
(c) No amendment to the Plan shall be effective to the extent that
it has the effect of decreasing a Participant's accrued benefit.
Notwithstanding the preceding sentence, a Participant's Account balance may be
reduced to the extent permitted under section 412(c)(8) of the Code. For
purposes of this paragraph, a Plan amendment which has the effect of decreasing
a Participant's Account balance or eliminating an optional form of benefit,
with respect to benefits attributable to service before the amendment shall be
treated as reducing an accrued benefit. Furthermore, if the vesting schedule of
a Plan is amended, in the case of an Employee who is a Participant as of the
later of the date such amendment is adopted or the date it becomes effective,
the nonforfeitable percentage (determined as of such date) of such Employee's
right to his Employer-derived accrued benefit will not be less than his
percentage computed under the Plan without regard to such amendment.
8.5 DETERMINATION OF YEARS OF SERVICE. For purposes of determining the
vested and nonforfeitable percentage of the Participant's Employer Contribution
subaccounts, all of the Participant's Years of Service with the Employer or an
Affiliated Employer shall be taken into account. If specified in the Adoption
Agreement, Years of Service with a predecessor employer will be treated as
service for the Employer; provided, however, if the Employer maintains the plan
of a predecessor employer, Years of Service with such predecessor employer will
be treated as service with the Employer without regard to any election.
8.6 FORFEITURE OF NONVESTED AMOUNTS.
(a) For Plan Years beginning before 1985, any portion of a
Participant's Account that is not vested shall be forfeited by him as of the
last day of the Plan Year in which a Break in Service occurs. For Plan Years
beginning after 1984, any portion of a Participant's Account that is not vested
shall be forfeited by him as of the last day of the Plan Year in which his
fifth consecutive Break in Service occurs. Any amounts thus forfeited shall be
reallocated as provided in ARTICLE 5 and shall not be considered part of a
Participant's Account in computing his vested interest. The remaining portion of
the Participant's Account will be nonforfeitable.
(b) If a distribution is made at a time when a Participant has a
vested right to less than one hundred percent (100%) of the value of the
Participant's Account attributable to Employer Contributions and forfeitures,
as determined in accordance with the provisions of section 8.3, and the
nonvested portion of the Participant's Account has not yet been forfeited in
accordance with paragraph (a) above:
(i) a separate remainder subaccount shall be established
for the Participant's interest in the Plan as of the time of the distribution,
and
(ii) at any relevant time the Participant's vested portion
of the separate remainder subaccount shall be equal to an amount ("X")
determined by the following formula:
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X = P(AB + (R x D)) - (R x D)
For purposes of applying the formula: P is the vested percentage at
the relevant time; AB is the Account balance at the relevant time; D is the
amount of the distribution; and R is the ratio of the Account balance at the
relevant time to the Account balance after distribution.
8.7 REINSTATEMENT OF BENEFIT. If a benefit is forfeited because a
Participant or Beneficiary cannot be found, such benefit will be reinstated if
a claim is made by the Participant or Beneficiary.
ARTICLE 9
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 GENERAL. The provisions of this ARTICLE shall apply to any
Participant who is credited with at least one (1) Hour of Service with the
Employer on or after August 23, 1984, and such other Participants as provided
in section 9.7.
9.2 QUALIFIED JOINT AND SURVIVOR ANNUITY. Unless an optional form of
benefit is selected pursuant to a Qualified Election within the ninety (90) day
period ending on the Annuity Starting Date, a married Participant's Vested
Account Balance will be paid in the form of a Qualified Joint and Survivor
Annuity and an unmarried Participant's Vested Account Balance will be paid in
the form of a life annuity. The Participant may elect to have such annuity
distributed upon attainment of the Earliest Retirement Age under the Plan.
9.3 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. Unless an optional form of
benefit has been selected within the Election Period pursuant to a Qualified
Election, if a Participant dies before the Annuity Starting Date, then the
Participant's Vested Account Balance shall be applied toward the purchase of an
annuity for the life of the Surviving Spouse. The Surviving Spouse may elect to
have such annuity distributed within a reasonable period after the
Participant's death.
9.4 DEFINITIONS.
(a) Election Period.
(i) The period which begins on the first day of the Plan Year
in which the Participant attains age thirty-five (35) and ends on the date of
the Participant's death. If a Participant separates from service prior to the
first day of the Plan Year in which age thirty-five (35) is attained, with
respect to the Account balance as of the date of separation, the Election
Period shall begin on the date of separation.
(ii) A Participant who has not yet attained age thirty-five (35)
as of the end of any current Plan Year may make a special Qualified Election to
waive the qualified preretirement survivor annuity for the period beginning on
the date of such election and ending on the first day of the Plan Year in
which the Participant will attain age thirty-five (35). Such election shall not
be valid unless the Participant receives a written explanation of the qualified
preretirement survivor annuity in such terms as are comparable to the
explanation required under section 9.5. Qualified preretirement survivor
annuity coverage will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age thirty-five (35). Any new waiver
on or after such date shall be subject to the full requirements of this ARTICLE.
(b) Earliest Retirement Age. The earliest date on which, under the
Plan, the Participant could elect to receive retirement benefits.
(c) Qualified Election.
(i) A waiver of a Qualified Joint and Survivor Annuity or a
qualified preretirement survivor annuity. Any waiver of a Qualified Joint and
Survivor Annuity or a qualified preretirement survivor annuity shall not be
effective unless:
(1) the Participant's Spouse consents in writing to the
election;
(2) the election designates a specific Beneficiary,
including any class of Beneficiaries or any contingent Beneficiaries, which may
not be changed without spousal consent (or the Spouse expressly permits
designations by the Participant without any further spousal consent);
(3) the Spouse's consent acknowledges the effect of the
election; and
(4) the Spouse's consent is witnessed by a Plan
representative or notary public. Additionally, a Participant's waiver of the
Qualified Joint and Survivor Annuity shall not be effective unless the election
designates a form of benefit payment which may not be changed without spousal
consent (or the Spouse expressly permits designations by the participant
without any further spousal consent). If it is established to the satisfaction
of a Plan representative that there is no Spouse or that the Spouse cannot be
located, a waiver will be deemed a Qualified Election.
(ii) Any consent by a Spouse obtained under this provision (or
establishment that the consent of Spouse may not be obtained) shall be
effective only with respect to such Spouse. A consent that permits designations
by the Participant without any requirement of further consent by such Spouse
must acknowledge that the Spouse has the right to limit consent to a specific
Beneficiary, and a specific form of benefit where applicable, and that the
Spouse voluntarily elects to relinquish either or both of such rights.
A revocation of a prior waiver may be made by a Participant without the consent
of the Spouse at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this provision
shall be valid unless the Participant has received notice as provided in
section 9.5.
(d) Qualified Joint And Survivor Annuity. An immediate annuity for
the life of the Participant with a survivor annuity for the life of the Spouse
which equals fifty percent (50%) of the amount of the annuity which is payable
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during the joint lives of the Participant and the Spouse and which is the
amount of benefit which can be purchased with the Participant's Vested Account
Balance.
(e) Spouse(Surviving Spouse). The Spouse or Surviving Spouse of the
Participant, provided that a former spouse will be treated as the Spouse or
Surviving Spouse and a current Spouse will not be treated as the Spouse or
Surviving Spouse to the extent provided under a qualified domestic relations
order as described in section 414(p) of the Code.
(f) Annuity Starting Date. The first day of the first period for
which an amount is paid as an annuity or any other form.
(g) Vested Account Balance. The aggregate value of the Participant's
Vested Account Balances derived from Employer and Employee contributions
(including rollovers and direct transfers), whether vested before upon death,
including the proceeds of insurance contracts if any, on the Participant's life,
The provisions of this ARTICLE shall apply to a Participant who is vested in
amounts attributable to Employer Contributions, Employee contributions (or both)
at the time of death or distribution.
9.5 Notice Requirements
(a) In the case of a Qualified Joint and Survivor Annuity, the Plan
Administrator shall no less than thirty (30) days and no more than ninety (90)
days prior to the Annuity Starting Date, provide each Participant a written
explanation of:
(i) the terms and conditions of a Qualified Joint and Survivor
Annuity;
(ii) the Participant's right to make and the effect of an
election to waive the Qualified Joint and Survivor Annuity form of
benefit;
(iii) the rights of a Participant's Spouse; and
(iv) the right to make, and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity.
(b) In the case of a qualified preretirement survivor annuity as
described in section 9.3, the Plan Administrator shall provide each Participant
within the applicable period for such Participant a written explanation of the
qualified preretirement survivor annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the requirements of
subsection (a) applicable to a Qualified Joint and Survivor Annuity.
(c) The applicable period for a Participant is whichever of the following
periods ends last:
(i) the period beginning with the first day of the Plan Year in
which the Participant attains age thirty-two (32) and ending with the
close of the Plan Year preceding the Plan Year in which the
Participant attains age thirty-five (35);
(ii) a reasonable period ending after the individual becomes a
Participant;
(iii) a reasonable period ending after subsection (e) ceases to
apply to the Participant;
(iv) a reasonable period ending after this ARTICLE first applies
to the Participant.
Notwithstanding the foregoing, notice must be provided within a reasonable
period ending after separation form service in the case of a participant who
separates from service before attaining age thirty-five (35).
(d) For purposes of applying subsection (c), a reasonable period ending
after the enumerated events described above in subsections (ii), (iii) and (iv)
is the end of the two-year period beginning one (1) year prior to the date the
applicable event occurs, and ending on (1) year after that date. In the case of
a Participant who separates from service before the Plan year in which age
thirty-five (35) is attained, notice shall be provided within the two (2) year
period beginning one (1) year prior to separation and ending one (1) year after
separation. If such a participant thereafter returns to employment with the
Employer, the applicable period for such Participant shall be redetermined.
(e) Notwithstanding the other requirements of this section, the
respective notices prescribed by this section need not be given to a
Participant if:
(i) the Plan "fully subsidizes" the cost of a Qualified Joint and
Survivor Annuity or qualified preretirement survivor annuity; and
(ii) the Plan does not allow the Participant to waive the Qualified
Joint and Survivor Annuity or qualified preretirement survivor annuity and does
not allow a married Participant to designate a nonspouse Beneficiary.
For purposes of this subsection, plan fully subsidizes the costs of a
benefit if no increase in cost, or decrease in benefits to the Participant may
result from the Participant's failure to elect another benefit.
9.6 Safe Harbor Rules
(a) This section shall apply to a Participant in a profit sharing plan,
and to any distribution, made on or after the first day of the first Plan year
beginning after December 31, 1988, from or under a separate account
attributable solely to accumulated deductible Employee contributions, as
defined in section 72(o)(5)(B) of the Code, and maintained on behalf of a
Participant in a money purchase pension plan (including a target benefit plan)
if the following conditions are satisfied:
(i) the Participant does not or cannot elect payments in the form of
a life annuity; and
(ii) on the death of a Participant, the Participant's Vested Account
Balance will be paid to the Participant's Surviving Spouse, but if there is no
Surviving Spouse, or if the Surviving Spouse has consented in a manner
conforming to a Qualified Election, then to the Participant's Designated
Beneficiary.
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(b) The Surviving Spouse may elect to have distribution of the
Vested Account Balance commence within the ninety (90) day period following the
date of the Participant's death. The Account balance shall be adjusted for
gains or losses occurring after the Participant's death in accordance with the
provisions of the Plan governing the adjustment of Account balances for other
types of distributions.
(c) This section shall not be operative with respect to a
Participant in a profit sharing plan if the plan is a direct or indirect
transferee of a defined benefit plan, money purchase plan, a target benefit
plan, stock bonus, or profit sharing plan which is subject to the survivor
annuity requirements of sections 401(a)(11) and 417 of the Code. If this
section is operative, then the provisions of the ARTICLE, other than section
9.7, shall be inoperative.
(d) The Participant may waive the spousal death benefit described in
this section at any time provided that no such waiver shall be effective unless
it satisfies the conditions of section 9.4(c) (other than the notification
requirement referred to therein) that would apply to the Participant's waiver
of the qualified preretirement survivor annuity.
(e) For purposes of this section, Vested Account Balance shall mean,
in the case of a money purchase pension plan or a target benefit plan, the
Participant's separate Account balance attributable solely to accumulated
deductible Employee contributions within the meaning of section 72(o)(5)(B) of
the Code. In the case of a profit sharing plan, Vested Account Balance shall
have the same meaning as provided in section 9.4(g).
9.7 TRANSITIONAL RULES.
(a) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed by the previous
sections of this ARTICLE must be given the opportunity to elect to have the
prior sections of this ARTICLE apply if such Participant is credited with at
least one (1) Hour of Service under this Plan or a predecessor plan in a Plan
Year beginning on or after January 1, 1976, and such Participant had at least
ten (10) years of vesting service when he or she separated from service.
(b) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one (1) Hour of Service under this Plan or
a predecessor plan on or after September 2, 194, and who is not otherwise
credited with any service in a Plan Year beginning on or after January 1, 1976,
must be given the opportunity to have his or her benefits paid in accordance
with subsection (d).
(c) The respective opportunities to elect (as described in
subsections (a) and (b) above) must be afforded to the appropriate
Participants during the period commencing on August 23, 1984, and ending on the
date benefits would otherwise commence to said Participants.
(d) Any Participant who has elected pursuant to subsection (b) and
any Participant who does not elect under subsection (a) or who meets the
requirements of subsection (a) except that such Participant does not have at
least ten (10) years of vesting service when he or she separates from service,
shall have his or her benefits distributed in accordance with all of the
following requirements if benefits would have been payable in the form of a
life annuity:
(i) Automatic Joint and Survivor Annuity. If benefits in the
form of a life annuity become payable to a married Participant who:
(1) begins to receive payments under the Plan on or after
Normal Retirement Age; or
(2) dies on or after Normal Retirement Age while still
working for the Employer; or
(3) begins to receive payments on or after the qualified
early retirement age; or
(4) separates from service on or after attaining Normal
Retirement age; (or qualified early retirement age) and under satisfying the
eligibility requirements for the payments of benefits under the Plan and
thereafter dies before beginning to receive such benefits; then such benefits
will be received under this Plan in the form of a Qualified Joint and Survivor
Annuity, unless the Participant has elected otherwise during the Election
Period. The Election Period must begin at least six (6) months before the
Participant attains qualified early retirement age and end not more than ninety
(90) days before the commencement of benefits. Any election hereunder will be
in writing and may be changed by the Participant at any time.
(ii) Election of Early Survivor Annuity. A Participant who is
employed after attaining the qualified early retirement age will be given the
opportunity to elect, during the Election Period, to have a survivor annuity
payable on death. If the Participant elects the survivor annuity, payments
under such annuity must not be less than the payments which would have been
made to the Spouse under the Qualified Joint and Survivor Annuity if the
Participant had retired on the day before his or her death. Any election under
this provision will be in writing and may be changed by the Participant at any
time. The Election Period begins on the later of (1) the 90th day before the
Participant attains the qualified early retirement age; or (2) the date on
which participation begins, and ends on the date the Participant terminates
employment.
(e) The following terms shall have the meanings specified herein:
(i) Qualified Early Retirement Age. The latest of:
(1) the earliest date, under the Plan, on which the
Participant may elect to receive retirement benefits;
(2) the first day of the 120th month beginning before the
Participant reaches Normal Retirement Age; or
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(3) the date the Participant begins participation.
(ii) Qualified Joint and Survivor Annuity. An annuity for
the life of the Participant with a survivor annuity for the life of the Spouse
as described in section 9.4(d).
ARTICLE 10
DISTRIBUTION PROVISIONS
10.1 VESTING ON DISTRIBUTION BEFORE BREAK IN SERVICE.
(a) If an Employee terminates service, and the value of the
Employee's vested Account balance derived from Employer and Employee
Contributions is not greater than three thousand five hundred dollars ($3,500),
the Employee will receive a distribution of the value of the entire vested
portion of such Account balance and the nonvested portion will be treated as a
forfeiture. For purposes of this section, if the value of an Employee's
vested Account balance is zero, the Employee shall be deemed to have received a
distribution of such vested Account balance. A Participant's vested Account
balance shall not include accumulated deductible Employee contributions within
the meaning of section 72(o)(5)(B) of the Code for Plan Years beginning prior
to January 1, 1989.
(b) If an Employee terminates service and elects, in accordance with
the ARTICLE, to receive the value of his Vested Account Balance, the nonvested
portion will be treated as a forfeiture. If the Employee elects to have
distributed less than the entire vested portion of the Account balance derived
from Employer Contributions, the part of the nonvested portion that will be
treated as a forfeiture is the total nonvested portion multiplied by a
fraction, the numerator of which is the amount of the distribution attributable
to Employer Contributions and the denominator of which is the total value of
the vested Employer derived Account balance.
(c) If an Employee receives a distribution pursuant to this section
and the Employee resumes employment covered under this Plan, the Employee's
Employer-derived Account balance will be restored to the amount on the date of
distribution if the Employee repays to the Plan the full amount of the
distribution attributable to Employer Contributions before the earlier of five
(5) years after the first date on which the Participant is subsequently
reemployed by the Employer, or the date the Participant incurs five (5)
consecutive one (1) year Breaks in Service following the date of the
distribution. If an Employee is deemed to receive a distribution to this
section, and the Employee resumes employment covered under this Plan before the
date the Participant incurs five (5) consecutive one (1) year Breaks in
Service, upon the reemployment of such Employee, the Employer-derived Account
balance of the Employee will be restored to the amount on the date of such
deemed distribution.
10.2 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS.
(a) If the value of a Participant's vested Account balance derived
from Employer and Employee contributions exceeds(or at the time of any prior
distribution exceeds) three thousand five hundred dollars (3,500) and the
Account balance is immediately distributable, the Participant and the
Participant's Spouse (or where either the Participant or the Spouse has died,
the survivor) must consent to any distribution of such Account balance. The
consent of the Participant and the Participant's Spouse shall be obtained in
writing within the ninety (90) day period ending on the Annuity Starting Date.
The Annuity Starting Date is the first day of the first period for which an
amount is paid as an annuity or any other form. The Plan Administrator shall
notify the Participant and the Participant's Spouse of the right to defer any
distribution until the Participant's Account balance is no longer immediately
distributable. Such notification shall include a general description of the
material features, and an explanation of the relative values of, the optional
forms of benefit available under the Plan in a manner that would satisfy the
notice requirements of section 417(a)(3), and shall be provided no less than
thirty (30) days and no more than ninety (90) days prior to the Annuity
Starting Date.
(b) Notwithstanding the provisions of subsection (a), only the
Participant need consent to the commencement of a distribution in the form of a
Qualified Joint and Survivor Annuity while the Account balance is immediately
distributable. (Furthermore, if payment in the form of a Qualified Joint and
Survivor Annuity is not required with respect to the Participant pursuant to
section 9.6 of the Plan, only the Participant need consent to the distribution
of an Account balance that is immediately distributable).
Neither the consent of the Participant nor the Participant's Spouse shall be
required to the extent that a distribution is required to satisfy section
401(a)(9) or section 415 of the Code. In addition, upon termination of this
Plan if the Plan does not offer an annuity option (purchased from a commercial
provider), the Participant's Account balance may, without the Participant's
consent, be distributed to the Participant or transferred to another defined
contribution plan (other than an employee stock ownership plan as defined in
section 4975(e)(7) of the Code) within the same controlled group.
(c) An Account balance is immediately distributable if any part of
the Account balance could be distributed to the Participant (or Surviving
Spouse) before the Participant attains *or would have attained if not deceased)
the later of Normal Retirement Age or age sixty-two (62).
(d) For purposes of determining the applicability of the foregoing
consent requirements to distributions made before the first day of the first
Plan Year beginning after December 31, 1988, the Participant's vested Account
balance shall not include amounts attributable to accumulated deductible
Employee contributions within the meaning of section 72*o)(5)(B) of the Code.
10.3 COMMENCEMENT OF BENEFITS.
(a) Unless the Participant elects otherwise, distribution of
benefits will begin no later than the 60th day after the latest of the close of
the Plan Year in which:
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(i) the Participant attains age sixty-five (65) (or
Normal Retirement Age, if earlier);
(ii) the 10th anniversary of the year in which the
Participant commenced participant in the Plan occurs; or
(iii) the Participant terminates service with the
Employer.
(b) Notwithstanding the foregoing, the failure of a
Participant and Spouse to consent to a distribution while a benefit is
immediately distributable, within the meaning of section 10.2 of the Plan, shall
be deemed to be an election to defer commencement of payment of any benefit
sufficient to satisfy this section.
10.4 EARLY RETIREMENT WITH AGE AND SERVICE REQUIREMENT. If a
Participant separates from service before satisfying the age requirement for
early retirement, but has satisfied the service requirement, the Participant
will be entitled to elect an early retirement benefit upon satisfaction of such
age requirement.
10.5 NONTRANSFERABILITY OF ANNUITIES. Any annuity contract
distributed herefrom must be nontransferable.
10.6 CONFLICTS WITH ANNUITY CONTRACTS. The terms of any annuity
contract purchased and distributed by the Plan to a Participant or Spouse shall
comply with the requirements of this Plan.
ARTICLE 11
TIMING AND MODES OF DISTRIBUTION
11.1 GENERAL RULES.
(a) Subject to ARTICLE 9, the requirements of this ARTICLE
shall apply to any distribution of a Participant's interest and will take
precedence over any inconsistent provisions of this Plan. Unless otherwise
specified, the provisions of this ARTICLE apply to calendar years beginning
after December 31, 1984.
(b) All distributions required under this ARTICLE shall be
determined and made in accordance with the income tax regulations under section
401(a)(9) of the Code, including the minimum distribution incidental benefit
requirement of section 1.40(a)(9)-2 of the proposed regulations.
11.2 REQUIRED BEGINNING DATE. The entire interest of a Participant
must be distributed or begin to be distributed no later than the Participant's
Required Beginning Date.
11.3 LIMITS ON DISTRIBUTION PERIODS. As of the first Distribution
Calendar Year, distributions, if not made in single-sum, may only be made over
one of the following periods (or a combination thereof):
(a) the life of the Participant;
(b) the life of the Participant and a Designated Beneficiary;
(c) a period certain not extending beyond the Life Expectancy
of the Participant; or
(d) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a Designated Beneficiary.
11.4 DETERMINATION OF AMOUNT TO BE DISTRIBUTED EACH YEAR.
(a) Individual Account.
(i) If a Participant's Benefit is to be distributed
over (1) a period not extending beyond the Life Expectancy of the Participant or
the joint life and last survivor expectancy of the Participant and the
Participant's Designated Beneficiary or (2) a period not extending beyond the
Life Expectancy of the Designated Beneficiary, the amount required to be
distributed for each calendar year, beginning with distribution for the first
Distribution Calendar Year, must at least equal the quotient obtained by
dividing the Participant's Benefit by the Applicable Life Expectancy.
(ii) For calendar years beginning before January 1,
1989, if the Participant's Spouse is not the Designated Beneficiary, the method
of distribution selected must assure that at least fifty percent (50%) of the
present value of the amount available for distribution is paid within the Life
Expectancy of the Participant.
(iii) For calendar years beginning after December 31,
1988, the amount to be distributed each year, beginning with distributions for
the first Distribution Calendar Year shall not be less than the quotient
obtained by dividing the Participant's Benefit by the lesser of (1) the
Applicable Life Expectancy or (2) if the Participant's Spouse is not the
Designated Beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of section 1.40(a)(9)-2 of the proposed regulations.
Distributions after the death of the Participant shall be distributed using the
Applicable Life Expectancy in subsection (a)(i) above as the relevant divisor
without regard to proposed regulations section 1.40(a)(9)-2.
(iv) The minimum distribution required for the
Participant's first Distribution Calendar Year must be made on or before the
Participant's Required Beginning Date. The minimum distribution for other
calendar years, including the minimum distribution for the Distribution
Calendar Year in which the Employee's Required Beginning Date occurs, must be
made on or before December 31, of that Distribution Calendar Year.
(b) Other Forms. If the Participant's benefit is distributed
in the form of an annuity purchased from an insurance company, distributions
thereunder shall be made in accordance with the requirements of section
401(a)(9) of the Code and the proposed regulations thereunder.
11.5 DEATH DISTRIBUTION PROVISIONS.
(a) Distribution Beginning Before Death. If the Participant
dies after distribution of his or her interest has begun, the remaining portion
of such interest will continue to be distributed at least as rapidly as under
the method of distribution being used prior to the Participant's death.
(b) Distribution Beginning After Death. If the Participant
dies before distribution of his or her interest begins, distribution of the
Participant's entire interest shall be completed by December 31 of the calendar
year
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containing the fifth anniversary of the Participant's death except to the extent
that an election is made to receive distributions in accordance with (i) or (ii)
below:
(i) if any portion of the Participant's interest is payable
to a Designated Beneficiary, distributions may be made over the life or over a
period certain not greater than the Life Expectancy of the Designated
Beneficiary commencing on or before December 31 of the calendar year immediately
following the calendar year in which the Participant died;
(ii) if the Designated Beneficiary is the Participant's
Surviving Spouse, the date distributions are required to begin in accordance
with (i) above shall not be earlier than the later of (1) December 31 of the
calendar year immediately following the calendar year in which the Participant
died and (2) December 31 of the calendar year in which the Participant would
have attained age seventy and one-half (70 1/2).
(c) If the Participant has not made an election pursuant to this
section by the time of his or her death, the Participant's Designated
Beneficiary must elect the method of distribution no later than the earlier of
(1) December 31 of the calendar year in which distributions would be required to
begin under this section; or (2) December 31 of the calendar year which contains
the fifth anniversary of the date of death of the Participant. If the
Participant has no Designated Beneficiary, or if the Designated Beneficiary does
not elect a method of distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar year containing the
fifth anniversary of the Participant's death.
(d) For purposes of subsection (b) above, if the Surviving Spouse
dies after the Participant, but before payments to such Spouse begin, the
provisions of subsection (b), with the exception of paragraph (ii) therein,
shall be applied as if the Surviving Spouse were the Participant.
(e) For purposes of this section, any amount paid to a child of
the Participant will be treated as if it had been paid to the Surviving Spouse
if the amount becomes payable to the Surviving Spouse when the child reaches the
age of majority.
(f) For the purposes of this section, distribution of a
Participant's interest is considered to begin on the Participant's Required
Beginning Date (or, if subsection (d) above is applicable, the date distribution
is required to begin to the Surviving Spouse pursuant to subsection (b) above).
If distribution is in the form of an annuity described in section 11.4(b) above
irrevocably commences to the Participant before the Required Beginning Date, the
date distribution is considered to begin is the date distribution actually
commences.
11.6 DESIGNATION OF BENEFICIARY. Subject to the rules of ARTICLE 9, a
Participant (or former Participant) may designate from time to time any person
or persons (who may be designated contingently or successively and may be an
entity other than a natural person) as his Beneficiary who will be entitled to
receive any undistributed amounts credited to the Participant's separate
Account under the Plan at any time of the Participant's death. Any such
beneficiary designation by a Participant shall be made in writing in the manner
prescribed by the Plan Administrator, and shall be effective only when filed
with the Plan Administrator during the Participant's lifetime. A Participant
my change or revoke his Beneficiary designation at any time in the manner
prescribed by the Plan Administrator. If any portion of the Participant's
Account is invested in insurance pursuant to ARTICLE 14, the Beneficiary of the
benefits under the insurance policy shall be the person or persons designated
under the policy. If the Designated Beneficiary (or each of the Designated
Beneficiaries) predeceases the Participant, the Participant's Beneficiary
designation shall be ineffective. If no Beneficiary designation is in effect
at the time of the Participant's death, his Beneficiary shall be his estate.
11.7 DEFINITIONS.
(a) APPLICABLE LIFE EXPECTANCY. The Life Expectancy (or
joint and last survivor expectancy) calculated using the attained age of the
Participant (or Designated Beneficiary) as of the Participant's (or Designated
Beneficiary's) birthday in the applicable calendar year reduced by one (1) for
each calendar year which as elapsed since the date Life Expectancy was first
calculated. If Life Expectancy is being recalculated, the Applicable Life
Expectancy shall be the Life Expectancy as so recalculated. The applicable
calendar year shall be the first Distribution Calendar Year, and if Life
Expectancy is being recalculated such succeeding calendar year.
If annuity payments commence in accordance with section 11.4(b) before the
Required Beginning Date, the applicable calendar year is the year such payments
commence. If distribution is in the form of an immediate annuity purchased
after the Participant's death with the Participant's remaining interest, the
applicable calendar year is the year of purchase.
(b) DESIGNATED BENEFICIARY. The individual who is designated
as the Beneficiary under the Plan in accordance with section 401(a)(9) and the
proposed regulations thereunder.
(c) DISTRIBUTION CALENDAR YEAR. A calendar year for which a
minimum distribution is required. For distributions beginning before the
Participant's death, the first Distribution Calendar Year is the calendar year
immediately preceding the calendar year which contains the Participant's
Required Beginning Date. For distributions beginning after the Participant's
death, the first Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to section 11.5 above.
(d) LIFE EXPECTANCY.
(i) Life Expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples in Table V and
VI of section 1.72-9 of the income tax regulations.
(ii) Unless otherwise elected by the Participant (or
Spouse, in the case of distributions described in section 11.5(b)(ii)above) by
the time distributions are required to begin, life expectancies shall be
recalculated
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annually. Such election shall be irrevocable as to the Participant (or Spouse)
and shall apply to all subsequent years. The Life Expectancy of a non-
Spouse Beneficiary may not be recalculated.
(e) Participant's Benefit.
(i) The Account balance as of the last valuation date in the
calendar year immediately preceding the Distribution Calendar Year
(valuation calendar year) increased by the amount of any contributions or
forfeitures allocated to the Account balance as of dates in the valuation
calendar year after the valuation date and decreased by distributions made in
the valuation calendar year after the valuation date.
(ii) For purposes of subsection (i) above, if any portion of
the minimum distribution for the first Distribution Calendar Year is made in
the second Distribution Calendar Year on or before the Required Beginning Date,
the amount of the minimum distribution made in the second Distribution Calendar
Year shall be treated as if it had been made in the immediately preceding
Distribution Calendar Year.
(f) Required Beginning Date.
(i) General Rule. The Required Beginning Date of a Participant
is the first day of April of the calendar year following the calendar year in
which the Participant attains age seventy and one-half (70 1/2).
(ii) Transitional Rules. The Required Beginning Date of a
Participant who attains age seventy and one-half (70 1/2) before January 1,
1988, shall be determined in accordance with (1) or (2) below:
(1) Non-Five-Percent Owners. The Required Beginning Date
of a Participant who is not a Five Percent (5%) Owner is the first day of April
of the calendar year following the calendar year in which the later of
retirement or attainment of age seventy and one-half (70 1/2) occurs.
(2) Five Percent Owners. The Required Beginning Date of a
Participant who is a Five Percent (5%) Owner during any year beginning after
December 31, 1979, is the first day of April following the later of:
(A) the calendar year in which the Participant
attains age seventy and one-half (70 1/2); or
(B) the earlier of the calendar year with or within
which ends the Plan Year in which the Participant becomes a Five Percent (5%)
Owner, or the calendar year in which the Participant retires. The Required
Beginning Date of a Participant who is not a Five Percent (5%) Owner who
attains age seventy and one-half (70 1/2) during 1988 and who has not retired
as of January 1, 1989, is April 1, 1990.
(iii) Five Percent Owner. A Participant is treated as a Five
Percent (5%) Owner for purposes of this section if such Participant is a Five
Percent (5%) Owner as defined in section 416(i) of the Code (determined in
accordance with section 416 but without regard to whether the Plan is to-heavy)
at any time during the Plan Year ending with or within the calendar year in
which such owner attains age sixty-six and one-half (66 1/2) or any subsequent
year.
(iv) Once distributions have begun to a Five Percent (5%) Owner
under this section, they must continue to be distributed, even if the
Participant ceases to be a Five Percent (5%) Owner in a subsequent year.
11.8 Transitional Rule.
(a) Notwithstanding the other requirements of this ARTICLE and
subject to the requirements of ARTICLE 9, distribution on behalf of any
Employee, including a Five Percent (5%) Owner, may be made in accordance with
all of the following requirements (regardless of when such distribution
commences):
(i) The distribution by the Trust is one which would not have
disqualified such trust under section 401(a)(9) of the Internal Revenue Code as
in effect prior to amendment by the Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method of
distribution designated by the Employee whose interest in the Trust is being
distributed or, if the Employee is deceased, by a Beneficiary of such Employee.
(iii) Such designation was in writing, was signed by the
Employee or the Beneficiary, and was made before January 1, 1984.
(iv) The Employee had accrued a benefit under the Plan as of
December 31, 1983.
(v) The method of distribution designated by the Employee or
the Beneficiary specifies the time at which distributions will be made, and in
the case of any distribution upon the Employee's death, the Beneficiaries of
the Employee listed in order of priority.
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation contains the
required information described above with respect to the distributions to be
made upon the death of the Employee.
(c) For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Employee, or the Beneficiary, to whom
such distribution is being made, will be presumed to have designated the method
of distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirements in subsections (a)(i) and (a)(v).
(d) If a designation is revoked, any subsequent distribution must
satisfy the requirements of section 401(a)(9) of the Code and the proposed
regulations thereunder. If a designation is revoked subsequent to the date
distributions are required to begin, the Trust must distribute by the end of
the calendar year following the calendar year in which the revocation occurs
the total amount not yet distributed which would have been required to have
been distributed to satisfy section 401(a)(9) of the Code and the regulations
thereunder but for the section 242(b)(2) election.
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For calendar years beginning after December 31, 1988, such distributions must
meet the minimum distribution incidental benefit requirements in section
1.401(a)(9)-2 of the proposed regulations. Any changes in the designation will
be considered to be a revocation of the designation. However, the mere
substitution or addition of another beneficiary (one not named in the
designation)under the designation will not be considered to be a revocation of
the designation, so long as such substitution or addition does not alter the
period over which distributions are to be made under the designation, directly
or indirectly (for example, by altering the relevant measuring life). In the
case in which an amount is transferred or rolled over from one plan to another
plan, the rules in Q&A J-2 and Q&A J-3 shall apply.
11.9 OPTIONAL FORMS OF BENEFIT
(a) Except to the extent benefits are required to be paid in the form
of an automatic joint and survivor annuity under ARTICLE 9, any amount which a
Participant shall be entitled to receive under the Plan shall be distributed in
one or a combination of the following ways:
(i) in a lump-sum payment of cash, the amount of which
shall be determined by redeeming all Shares credited to the Participant's
Account under the Plan as of the date of distribution;
(ii) in a lump-sum payment including a distribution in kind
of all Shares credited to the Participant's Account under the Plan as of the
date of distribution;
(iii) in substantially equal monthly, quarterly, or annual
installment payments of cash, or the distribution of Shares in kind, over a
period certain not to exceed the Life Expectancy of the Participant or the joint
and last survivor Life Expectancy of the Participant and his Beneficiary,
determined in each case as of the earlier of: (1) the end of the Plan Year in
which occurs the event entitling the Participant to a distribution of benefits,
or (2) the date such installments commence;
(iv) if permitted by the Sponsor, in monthly, quarterly, or
annual installment payments of cash, or the distribution of Shares in kind, so
that the amount distributed in each Plan Year equals the quotient obtained by
dividing the Participant's Account at the beginning of that Plan Year by the
joint and last survivor Life Expectancy of the participant and the Beneficiary
for that Plan Year. The Life Expectancy will be computed using the recomputation
method described in section 11.7(d). Unless the Spouse of the retired
Participant is the Beneficiary, the actuarial present value of all expected
payments to the retired Participant must be more than fifty percent (50%) of the
actuarial present value of payments to the retired Participant and the
Beneficiary; or
(v) by application of the Participant's vested Account to
the purchase of a nontransferable immediate or deferred annuity contract, on an
individual or group basis. Unless the Spouse of the retired Participant is the
Beneficiary, the actuarial present value of all expected payments to the
retired Participant must be more than fifty percent (50%) of the actuarial
present value of payments to the retired Participant and the Beneficiary.
(b) If the Participant fails to select a method of distribution,
except as may be required by ARTICLE 9, all amounts which he is entitled to
receive under the Plan shall be distributed to him in a lump-sum payment.
ARTICLE 12
WITHDRAWALS
12.1 WITHDRAWAL OF NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS. Subject to the
Qualified Election requirements of ARTICLE 9 and section 12.3, any Participant
who has made nondeductible voluntary contributions may, upon thirty (30) days
notice in writing filed with the Plan Administrator, have paid to him all or
any portion of the fair market value of his nondeductible voluntary contribution
subaccount.
12.2 HARDSHIP WITHDRAWALS. If the Adoption Agreement so provides and
the Employer elects, this section applies only to the profit sharing
contribution subaccount and only if the profit sharing allocation formula
selected in the Adoption Agreement is not integrated with Social Security.
(a) Demonstration of Need. Subject to the Qualified Election
requirements of ARTICLE 9 and section 12.3, if a Participant establishes an
immediate and heavy financial need for funds because of a hardship resulting
form the purchase or renovation of a primary residence, the education of the
participant or a member of his immediate family, or (including special
education), the medial or personal expenses of the Participant or a member of
his immediate family, or other demonstrable emergency as determined by the Plan
Administrator on a uniform and nondiscriminatory basis, the Participant shall
be permitted, subject to the limitations of subsection (b) below, to make a
hardship withdrawal of an amount credited to his profit sharing contribution
subaccount under the Plan.
(b) Amount of Hardship Withdrawal. The amount of any hardship
withdrawal by a Participant under subsection (a) above shall not exceed the
amount required to meet the immediate financial need created by the hardship
and not reasonably available from other resources of the Participant.
(c) Prior Withdrawal of Nondeductible Voluntary Participant
Contributions. A Participant shall not be permitted to make a hardship
withdrawal under subsection (a) above unless he has already withdrawn, in
accordance with section 12.1, any amount credited to his nondeductible
voluntary contributions subaccount.
12.3 MANNER OF MAKING WITHDRAWALS. Any withdrawal by a Participant under
the Plan shall be made only after the Participant files a written request with
the plan Administrator specifying the nature of the withdrawal (and the reasons
therefor, if a hardship withdrawal), and the amount of funds requested to be
withdrawn. Upon approving any withdrawal, the Plan Administrator shall furnish
the Trustee with written instructions directing the Trustee to make the
withdrawal in a lump-sum payment of cash to the Participant. In making any
withdrawal payment, the Trustee shall be fully
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entitled to rely on the instructions furnished by the Plan Administrator, and
shall be under no duty to make any inquiry or investigation with respect
thereto. Unless section 9.6 is applicable, if the Participant is married, his
Spouse must consent to the withdrawal pursuant to a Qualified Election (as
defined in section 9.4(c)) within the ninety (90) day period ending on the date
of the withdrawal.
12.4 LIMITATIONS ON WITHDRAWALS. The Plan Administrator may prescribe
uniform and nondiscriminatory rules and procedures limiting the number of times
a Participant may make a withdrawal under the Plan during any Plan Year, and
the minimum amount a Participant may withdraw on any single occasion.
13.1 GENERAL PROVISIONS.
(a) If the Adoption Agreement so provides and the Employer so elects,
loans shall be made available to any Participant or Beneficiary who is
party-in-interest (as defined in section 3(14) of ERISA) on a reasonably
equivalent basis. A Participant or Beneficiary who is not a party-in-interest
(as defined in section 3(14) of ERISA) shall not be eligible to receive a loan
under this ARTICLE.
(b) Loans shall not be made available to Highly-Compensated
Employees (as defined in section 414(q) of the Code) in an amount greater than
the amount made available to other Employees.
(c) Loans must be adequately secured and bear a reasonable interest
rate.
(d) No participant loan shall exceed the present value of the
Participant's Vested Account Balance.
(e) Unless section 9.6 is applicable, a Participant must obtain the
consent of his or her Spouse, if any, to use of the Account balance as security
for the loan. Spousal consent shall be obtained no earlier than the beginning
of the ninety(90) day period that ends on the date on which the loan is to be
so secured. The consent must be in writing, must acknowledge the effect of the
loan, and must be witnessed by a Plan representative or notary public. Such
consent shall thereafter be binding with respect to the consenting Spouse or any
subsequent Spouse with respect to that loan. A new consent shall be required if
the Account balance is used for renegotiation, extension, renewal or other
revision of the loan.
(f) In the event of default, foreclosure on the note and attachment
of security will not occur until a distributable event occurs under the Plan.
(g) Loans will not be made to any shareholder-employee or
Owner-Employee. For purposes of this requirement, a shareholder-employee means
an Employee or officer of an electing small business (subchapter S) corporation
who owns (or is considered as owning within the meaning of section 318(a)(1)
of the Code), on any day during the taxable year of such corporation, more than
five percent(5%) of the outstanding stock of the corporation.
(h) If a valid spousal consent has been obtained in accordance with
subsection (e), then, notwithstanding any other provision of this Plan, the
portion of the Participant's Vested Account Balance used as a security interest
held by the Plan by reason of a loan outstanding to the Participant shall be
taken into account for purposes of determining the amount of the Account
balance payable at the time of death or distribution, but only if the reduction
is used as repayment of the loan. If less than one hundred percent (100%) of
the Participant's Vested Account Balance (determined without regard to the
preceding sentence) is payable to the Surviving Spouse, then the Account
balance shall be adjusted by first reducing the Vested Account Balance by the
amount of the security used as repayment of the loan, and then determining the
benefit payable to the Surviving Spouse.
13.2 ADMINISTRATION OF LOAN PROGRAM.
(a) The Plan's loan program will be administered by the Plan
Administrator.
(b) Loan requests shall be made on a form prescribed by the Plan
Administrator and shall comply with section 13.4.
(c) Loan request that comply with all the requirements of this
ARTICLE shall be approved by the Plan Administrator.
(d) The rate of interest to be charged on loans shall be determined
under section 13.5.
(e) The only collateral that may be used as security for a loan, and
the limitations and requirements applicable, are determined under
section 13.6.
(f) The rules regarding defaults are set forth in section 13.9.
13.3 AMOUNT OF LOAN. Loans to any Participant or Beneficiary will not be
made to the extent that such loan, when added to the outstanding balance of all
other loans to the Participant or Beneficiary, would exceed the lesser of:
(a) fifty thousand dollars ($50,000) reduced by the excess (if any) of
the highest outstanding balance of loans during the one (1) 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) one-half(1/2) the present value of the nonforfeitable accrued
benefit of the Participant.
(c) For the purpose of the above limitation, all loans from all
plans of the Employer and other members of a group of employers described in
sections 414(b), 414(c) and 414(m) of the Code are aggregated.
13.4 MANNER OF MAKING LOANS. A request by a Participant for a loan shall
be made in writing to the Plan Administrator and shall specify the amount of
the loan, and the subaccount(s) or Shares of the Participant from which the loan
should be made. The terms and conditions on which the Plan Administrator shall
approve loans under the Plan shall be applied on a uniform and
nondiscriminatory basis with respect to all Participants. If a Participant's
request for a loan is
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approved by the Plan Administrator, the Plan Administrator shall furnish the
Trustee with written instructions directing the Trustee to make the loan in a
lump-sum payment of cash to the Participant. In making any loan payment under
this ARTICLE, the Trustee shall be fully entitled to rely on the instructions
furnished by the Plan Administrator and shall be under no duty to make any
inquiry or investigation with respect thereto.
13.5 TERMS OF LOAN. Loans shall be made on such terms and subject to
such limitations as the Plan Administrator shall prescribe. 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 (5) years from the date of the loan, unless such loan
is used to acquire a dwelling unit which, within a reasonable time (determined
at the time the loan is made) will be used as the principal residence of the
Participant. The rate of interest to be charged shall be determined by the Plan
Administrator in accordance with the rates quoted by representative financial
institutions in the local area for similar loans.
13.6 SECURITY FOR LOAN. Any loan to a Participant under the Plan
shall be secured by the pledge of all the Participant's right, title, and
interest in the Trust. Such pledge shall be evidenced by the execution of a
promissory note by the Participant which shall provide that, in the event of
any default by the participant on a loan repayment, the Plan Administrator
shall be authorized (to the extent permitted by law) to deduct the amount of
the loan outstanding and any unpaid interest due thereon from the Participant's
wages or salary to be thereafter paid by the Employer, and to take any and all
other actions necessary and appropriate to enforce collection of the unpaid
loan. An assignment or pledge of any portion of the Participant's interest in
the Plan and a loan, pledge, or assignment with respect to any insurance
contract purchased under the Plan, will be treated as a loan under this
section. In the event the value of the Participant's vested Account at any time
is less than one hundred twenty-five percent (125%) of the outstanding loan
balance, the Plan Administrator shall request additional collateral of
sufficient value to adequately secure the repayment of the loan. Failure to
provide such additional collateral upon a request of the Plan Administrator
shall constitute an event of default.
13.7 SEGREGATED INVESTMENT. Loans shall be considered a Participant
directed investment and, for the limited purposes of allocated earnings and
losses pursuant to ARTICLE 5, shall not be considered a part of the common fund
under the Trust.
13.8 REPAYMENT OF LOAN. The Plan Administrator shall have the sole
responsibility for ensuring that a Participant timely makes all loan
repayments, and for notifying the Trustee in the event of any default by the
Participant on the loan. Each loan repayment shall be paid to the Trustee and
shall be accompanied by written instructions from the Plan Administrator that
identify the Participant on whose behalf the loan repayment was being made.
13.9 DEFAULT ON LOAN.
(a) In the event of a termination of the Participant's
employment with the Affiliated Employers or a default by a Participant on a
loan repayment, all remaining payments on the loan shall be immediately due and
payable. The Employer shall, upon the direction of the Plan Administrator, to
the extent permitted by law, deduct the total amount of the loan outstanding
and any unpaid interest due thereon from the wages or salaries payable to the
Participant by the Employer in accordance with the Participant's promissory
note. In addition, the Plan Administrator shall take any and all other actions
necessary and appropriate to enforce collection of the unpaid loan. However,
attachment of the Participant's Account pledged as security will not occur
until a distributable event occurs under the Plan.
(b) For purposes of this section, the term "default" shall
mean failure, by a period of at least ten (10) days, to make any loan payment
(whether principal or interest or both) that is due and payable. Neither the
Plan Administrator nor any other fiduciary is required to give any written or
oral notice of default.
13.10 UNPAID AMOUNTS. Upon the occurrence of a Participant's
retirement or death, or upon a Participant's fifth consecutive Break in Service
or earlier distribution, the unpaid balance of any loan, including any unpaid
interest, shall be deducted from any payment or distribution from the Trust to
which such Participant or his Beneficiary may be entitled. If after charging
the Participant's Account with the unpaid balance of the loan, including any
unpaid interest, there still remains an unpaid balance of any such loan and
interest, then the remaining unpaid balance of such loan and interest shall be
charged against any property pledged as security with respect to such loan.
ARTICLE 14
INSURANCE
14.1 INSURANCE. If the Adoption Agreement so provides and the
Employer elects to allocate or permit Participants to allocate a portion of
their Accounts to purchase life insurance, the ensuing subsections of this
ARTICLE shall apply:
14.2 POLICIES. The Plan Administrator shall instruct the Trustee
to procure one or more life insurance policies on the Participant's life, the
terms of which shall conform to the requirements of the Plan and the Code. The
policies and the companies which write them shall be subject to the approval of
the Plan Administrator and the Trustee. The Trustee shall procure and hold such
policies in the name of the nominee. The Trustee shall be the sole owner of all
contracts purchased hereunder, and it shall be so designated in each policy and
application therefor.
14.3 BENEFICIARY. The Participant shall have the right to name the
Beneficiary and to choose the benefit option under the policy for the
Beneficiary. The Trustee shall designate the Beneficiary of all such policies
in accordance with the written directions of the Plan Administrator and the
policy terms. Such designations may be outlined in the original application as
forwarded to the issuing company. However, the Plan Administrator shall have
available and shall furnish the
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Participant with the necessary forms for any Beneficiary designation or change
of Beneficiary and it will keep a copy of all executed designations as part of
its records. Upon a Participant's death, the Plan Administrator will promptly
furnish the Trustee a copy of the last designation and shall authorize the
Trustee to complete such forms as the insurance company may require in order to
effect the benefit option.
14.4 PAYMENT OF PREMIUMS. Subject to the provisions of sections 7.3 and
14.5, premium payments to the insurer may be made only by the Trustee with
respect to any insurance policy purchased on behalf of a Participant and shall
constitute first an investment of a portion of the funds of the Participant's
Employer Contribution subaccounts up to the maximum amount of such subaccounts
permitted to be applied toward such premium payments, as provided in section
14.5. If a Participant's subaccounts lack sufficient assets to pay premiums on
a life insurance policy due on his behalf, the Trustee, at the direction of the
Plan Administrator, acting upon the request of the Participant, shall borrow
under the policy loan provisions, if any, the amount necessary to pay such
premiums, using the cash value of the insurance as security, or the Trustee may
liquidate assets held in the Participant's Account, in the same order, of
sufficient value to pay such premiums. Any loans shall be repaid by the
application of earnings, contributions, or forfeitures to the Account of the
Participant insured by such policy. In the absence of the Plan administrator's
direction to borrow or to liquidate assets to pay premiums, the life insurance
policy shall be put on a paid-up-basis or, if it has no cash value, canceled.
14.5 LIMITATION ON INSURANCE PREMIUMS. The Trustee shall not pay, nor
shall anyone on behalf of the Trustee pay, any life insurance premium for any
Participant out of the Participant's Employer Contribution subaccounts unless
the amount of such payment, plus all premiums previously so paid on behalf of
the Participant, is less than fifty percent (50%) of the Employer Contributions
and forfeitures allocated to the Participant's Employer Contribution
subaccounts as determined on the date such premium is paid with respect to
reserve life insurance policies and shall be less than twenty-five percent
(25%) thereof with respect to nonreserve (term) policies, or, if both reserve
life and term insurance are purchased on the life of any Participant, the sum
of the term insurance premium plus one-half (1/2) of the reserve life premiums
may not exceed twenty-five percent (25%) of the Employer Contributions made on
behalf of such Participant. For purposes of these incidental insurance
provisions, reserve life insurance contracts are contracts with both
nondecreasing death benefits and nonincreasing premiums. Dividends received on
life insurance policies shall be considered a reduction of premiums paid in
such computations.
If payment of premiums on a Participant's life insurance policy is
prohibited because of the limitation, the Trustee, as directed by the Plan
Administrator, shall permit the Participant to maintain that part of the
coverage made available by the prohibited premiums, either by payment of the
amount of the prohibited premium by the Participant from sources other than the
Trust or by distributing the policy to the extent of the Participant's vested
interest to the Participant and eliminating it from the Trust.
Nothing contained in the foregoing provisions of section 14.4 and
this section shall be deemed to authorize the payment of any premium or
premiums for any Participant which would result in a failure to maintain any
mandatory investment in Shares required by the Sponsor in the account or
subaccounts of any such Participant.
14.6 INSURANCE COMPANY. No insurance company which may issue any policies
for the purposes of this Plan shall be required to take or permit any action
contrary to the provisions of said policies, nor shall such insurance company
be deemed to be a party to, or responsible for the validity of, this Plan for
any purpose. No such insurance company shall be required to look into the terms
of this Plan or question any action of the Trustee hereunder, nor be
responsible to see that any action of the Trustee is authorized by the terms of
this Plan. Any such issuing insurance company shall be fully discharged from
any and all liability for any amount paid to the Trustee or paid in accordance
with the direction of the Trustee, as the case may be, or for any change made
or action taken by such insurance company upon such direction and no such
insurance company shall be obliged to see the distribution or further
application of any monies paid by it. The certificate of the Trustee signed by
one of its trust officers, assistant secretary, or other authorized
representative thereof, may be received by any insurance company as conclusive
evidence of any of the matters mentioned in the Plan and any insurance company
shall be fully protected in taking or permitting any action on the faith
thereof and shall incur no liability or responsibility for so doing.
14.7 DISTRIBUTION OF POLICIES. Upon a Participant's death, the Trustee,
upon direction of the Plan Administrator, shall procure the payment of the
proceeds of any policy held by the Participant in accordance with its terms and
this Plan. The Trustee shall be required to pay over all the proceeds of any
policy to the Participant's Designated Beneficiary in accordance with the
distribution provisions of the Plan. A Participant's Spouse will be the
Designated Beneficiary unless a Qualified Election has been made in accordance
with section 9.4(c) of the Plan. Under no circumstances shall the Trust retain
any part of the proceeds. Subject to the joint and survivor annuity
requirements of ARTICLE 9, the policies shall be converted or distributed upon
commencement of benefits in accordance with the provisions of this section.
Upon a Participant's retirement at or after his Normal Retirement Age, unless
there is a single sum distribution in which case any policy shall be
distributed, any such policy shall be converted paid-up contract and delivered
to the Participant but the Plan Administrator may, with the Participant's
consent, direct that a portion or all of such cash value of the policy be
converted to provide retirement income as permitted within the terms of the
policy and this Plan. Upon a Participant's retirement due to Total and
Permanent Disability, any such policy shall be held for his account and
assigned or delivered to the Participant in addition to any other benefits
provided by this Plan. Upon a Participant's termination of employment for
reasons other than death, Total and Permanent Disability, or retirement as
stated above, to the extent of life insurance
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purchased by Employer Contributions, he shall be entitled to a vested interest
in any policy held for his account as his interest is vested in the remainder
of his Employer Contribution subaccounts (exclusive of any such policy).
Whenever the Participant is entitled to one hundred percent (100%), then such
policy shall be assigned and delivered to the Participant in accordance with its
terms and the terms of the Plan. Whenever the Participant is entitled to
vesting of less than one hundred percent(100%), then the Participant shall be
entitled to a vested interest of the cash surrender value of any such policy
equal to his percent of vested interest in his Employer Contribution
subaccounts, exclusive of the policy, and one of the following distribution
procedures shall apply:
(a) If the nonvested portion of the cash surrender value of all
policies held for the Participant's Account is less than the amount of his
vested termination benefit exclusive of the policies, then, such policy shall
be assigned to the Participant and the remainder of the Participant's vested
interest in the Participant's Employer Contribution subaccounts shall be
reduced by the cash surrender value of the nonvested portion of all policies,
after which it shall be paid or distributed to the Participant in accordance
with the terms of the Plan; or
(b) If the nonvested portion of the cash surrender value of all
policies held for the Participant's Account exceeds the Participant's vested
interest in the Employer Contribution subaccount exclusive of such policies,
the Participant shall be given the opportunity to purchase such policies by
paying to the Trustee the amount of such excess within thirty (30) days after
notice to him of the amount to be paid. Upon receipt of such payment said policy
shall be assigned and delivered to the Participant to the full satisfaction of
all termination benefits under this Plan. Any such policy not so purchased
shall be surrendered by the Trustee for its cash value and the proceeds thereof
deposited in the Trust for reallocation pursuant to ARTICLE 5.
It is the intention hereof that the total termination benefit of a
Participant whose interest is not fully vested shall be equal to the sum of the
vested percentage of his Employer Contribution subaccounts exclusive of all
such policies and the same percentage of the cash value of all such policies
held for his Account. To the extent possible under the foregoing provisions,
such total termination benefits shall be satisfied by the transfer and delivery
to the Participant of one or more such policies with the balance, if any, to be
paid in cash or in kind.
14.8 POLICY FEATURES. The Trustee shall arrange, where possible, that all
policies purchased for the benefit of a Participant shall have the same dividend
option which shall be on the premium reduction plan, and as nearly as may be
possible all policies issued under the Plan shall have the same anniversary
date. To the extent any dividends or credits earned on insurance policies are
not applied toward the next premiums due, they shall be allocated to the
Participant's Employer Contribution subaccount in the same manner as a
Participant's directed investment.
14.9 CHANGED CONDITIONS. From time to time because of changed conditions,
the Trustee, acting at the direction of the Plan Administrator upon the
election of the Participant concerned, shall obtain an additional contract or
policy or make such change in the contracts or policies maintained by the
Trustee on the life of the Participant as may be required by such changed
conditions, within the limits permitted by the insurance company which issued
or is requested to issue a contract and the limits established by this Plan.
14.10 CONFLICTS. In the event of any conflict between the terms of the
Plan and the provisions of any contract issued hereunder, the terms of the Plan
shall control.
ARTICLE 15
ADMINISTRATION
15.1 DUTIES AND RESPONSIBILITIES OF FIDUCIARIES; ALLOCATION OF FIDUCIARY
RESPONSIBILITY. A fiduciary of the Plan shall have only those specific powers,
duties, responsibilities, and obligations as are explicitly given him under the
Plan and Trust Agreement. In general, the Employer shall have the sole
responsibility for making contributions to the Plan required under ARTICLE 4;
appointing the Trustee and the Plan Administrator; and determining the funds
available for investment under the Plan. The Plan Administrator shall have the
sole responsibility for the administration of the Plan, as more fully described
in section 15.2. It is intended that each fiduciary shall be responsible only
for the proper exercise of his own powers duties, responsibilities, and
obligations under the Plan and Trust Agreement, and shall not be responsible
for any act or failure to act of another fiduciary. A fiduciary may serve in
more than one fiduciary capacity with respect to the Plan.
15.2 POWERS AND RESPONSIBILITIES OF THE PLAN ADMINISTRATOR.
(a) ADMINISTRATION OF THE PLAN. The Plan Administrator shall have all
powers necessary to administer the Plan, including the power to construe and
interpret the Plan documents; to decide all questions relating to an
individual's eligibility to participate in the Plan; to determine the amount,
manner and timing of any distribution of benefits or withdrawal under the Plan;
to approve and ensure the repayment of any loan to a Participant under the
Plan; to resolve any claim for benefits in accordance with section 15.7; and to
appoint or employ advisors, including legal counsel to render advice with
respect to any of the Plan Administrator's responsibilities under the Plan.
Any construction, interpretation, or application of the Plan by the Plan
Administrator shall be final, conclusive, and binding. All actions by the Plan
Administrator shall be taken pursuant to uniform standards applied to all
persons similarly situated. The Plan Administrator shall have no power to add
to, subtract from, or modify any of the terms of the Plan, or to change or add
to any benefits provided by the Plan, or to waive or fail to apply any
requirements of eligibility for a benefit under the Plan.
(b) RECORDS AND REPORTS. The Plan Administrator shall be responsible
for maintaining sufficient records to reflect the Eligibility Computation
Periods in which an Employee is credited with one or more Years of Service
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for purposes of determining his eligibility to participate in the Plan, and the
Compensation of each Participant for purposes of determining the amount of
contributions that may be made by or on behalf of the Participant under the
Plan. The Plan Administrator shall be responsible for submitting all required
reports and notifications relating to the Plan to Participants or their
Beneficiaries, the Internal Revenue Service and the Department of Labor.
(c) Furnishing Trustee with Instructions. The Plan Administrator
shall be responsible for furnishing the Trustee with written instructions
regarding all contributions to the Trust, all distributions to Participants in
accordance with ARTICLE 10 all withdrawals by Participants in accordance with
ARTICLE 12, all loans to Participants in accordance with ARTICLE 13 and all
purchases of life insurance in accordance with ARTICLE 14. In addition, the
Plan Administrator shall be responsible for furnishing the Trustee with any
further information respecting the Plan which the Trustee may request for the
performance of its duties or for the purpose of making any returns to the
Internal Revenue Service or Department of Labor as may be required of the
Trustee.
(d) Rules and Decisions. The Plan Administrator may adopt such
rules as it deems necessary, desirable, or appropriate in the administration of
the Plan. All rules and decisions of the Plan Administrator shall be applied
uniformly and consistently to all Participants in similar circumstances. When
making a determination or calculation, the Plan Administrator shall be entitled
to rely upon information furnished by a Participant or Beneficiary, the
Employer, the legal counsel of the Employer, or the Trustee.
(e) Application and Forms for Benefits. The Plan Administrator may
require a Participant or Beneficiary to complete and file with it an
application for a benefit, and to furnish all pertinent information requested
by it. The Plan Administrator may rely upon all such information so furnished
to it, including the Participant's or Beneficiary's current mailing address.
(f) Facility of Payment. Whenever, in the Plan Administrator's
opinion, a person entitled to receive a payment of a benefit or installment
thereof is under a legal disability or is incapacitated in any way so as to be
unable to manage his financial affairs, it may direct the Trustee to make
payments to such person or to the legal representative or to a relative or
friend of such person for that person's benefit, or it may direct the Trustee
to apply the payment for the benefit of such person in such manner as it
considers advisable.
15.3 ALLOCATION OF DUTIES AND RESPONSIBILITIES. The Plan Administrator
may, by written instrument, allocate among its members or employees any of its
duties and responsibilities not already allocated under the Plan or may
designate persons other than members or employees to carry out any of the Plan
Administrator's duties and responsibilities under the Plan. Any such duties or
responsibilities thus allocated must be described in the written instrument. If
a person other than an Employee of the Employer is so designated, such person
must acknowledge in writing his acceptance of the duties and responsibilities
allocated to him.
15.4 APPOINTMENT OF THE PLAN ADMINISTRATOR. The Employer shall designate
in the Adoption Agreement the Plan Administrator who shall administer the
Employer's Plan. Such Plan Administrator may consist of an individual, a
committee of two or more individuals, whether or not, in either such case, the
individual or any of such individuals are Employees of the Employer, a
consulting firm or other independent agent, the Trustee (with its consent), or
the Employer itself. The Plan Administrator shall be charged with the full
power and the responsibility for administering the Plan in all its details. If
no Plan Administrator has been appointed by the Employer, or if the person
designated as Plan Administrator by the Employer is not serving as such for any
reason, the Employer shall be deemed to be the Plan Administrator of the Plan.
The Plan Administrator may be removed by the Employer, or may resign by giving
notice in writing to the Employer, and in the event of the removal,
resignation, or death, or other termination of service by the Plan
Administrator, the Employer shall, as soon as practicable, appoint a successor
Plan Administrator, such successor thereafter to have all of the rights,
privileges, duties, and obligations of the predecessor Plan Administrator.
15.5 EXPENSES. The Employer shall pay all expenses authorized and
incurred by the Plan Administrator in the administration of the Plan except to
the extent such expenses are paid from the Trust.
15.6 LIABILITIES. The Plan Administrator and each person to whom duties
and responsibilities have been allocated pursuant to section 15.3 may be
indemnified and held harmless by the Employer with respect to any alleged
breach of responsibilities performed or to be performed hereunder. The Employer
and each Affiliated Employer shall indemnify and hold harmless the Sponsor
against all claims, liabilities, fines, and penalties, and all expenses
reasonably incurred by or imposed upon him (including, but not limited to,
reasonable attorney's fees) which arise as a result of actions or failure to
act in connection with the operation and administration of the Plan.
15.7 CLAIMS PROCEDURE.
(a) Filing a Claim. Any Participant or Beneficiary under the Plan
may file a written claim for a Plan benefit with the Plan Administrator or with
a person named by the Plan Administrator to receive claims under the Plan.
(b) Notice of Denial of Claim. In the event of a denial or
limitation of any benefit or payment due to or requested by any Participant or
Beneficiary under the Plan ("claimant"), claimant shall be given a written
notification containing specific reasons for the denial or limitation of his
benefit. The written notification shall contain specific reference to the
pertinent Plan provisions on which the denial or limitation of his benefit is
based. In addition, it shall contain a description of any other material or
information necessary for the claimant to perfect a claim, and an explanation
of why such material or information is necessary. The notification shall
further provide appropriate information as to the steps to be taken if the
claimant wishes to submit his claim for review. This written notification shall
be given to a claimant within ninety (90)
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days after receipt of his claim by the Plan Administrator unless special
circumstances require an extension of time for processing the claim. If such an
extension of time for processing is required, written notice of the extension
shall be furnished to the claimant prior to the termination of said ninety (90)
day period, and such notice shall indicate the special circumstances which make
the postponement appropriate.
(c) Right of Review. In the event of a denial or limitation of his
benefit, the claimant or his duly authorized representative shall be permitted
to review pertinent documents and to submit to the Plan Administrator issues and
comments in writing. In addition, the claimant or his duly authorized
representative may make a written request for a full and fair review of his
claim and its denial by the Plan Administrator; provided, however, that such
written request must be received by the Plan Administrator (or its delegate to
receive such requests) within sixty (60) days after receipt by the claimant of
written notification of the denial or limitation of the claim. The sixty (60)
day requirement may be waived by the Plan Administrator in appropriate cases.
(d) Decision on Review. A decision shall be rendered by the Plan
Administrator within sixty (60) days after the receipt of the request for
review, provided that where special circumstances require an extension of time
for processing the decision, it may be postponed on written notice to the
claimant (prior to the expiration of the initial sixty (60) day period) for an
additional sixty (60) days, but in no event shall the decision by rendered more
than one hundred twenty (120) days after the receipt of such request for
review. Any decision by the Plan Administrator shall be furnished to the
claimant in writing and shall set forth the specific reasons for the decision
and the specific Plan provisions on which the decision is based.
(e) Court Action. No Participant or Beneficiary shall have the
right to seek judicial review of a denial of benefits, or to bring any action
in any court to enforce a claim for benefits prior to filing a claim for
benefits or exhausting his rights to review under this section.
ARTICLE 16
AMENDMENT, TERMINATION AND MERGER
16.1 SPONSOR'S POWER TO AMEND. The Sponsor may amend any part of the
Plan. For purposes of Sponsor's amendments, the mass submitted shall be
recognized as the agent of the Sponsor. If the Sponsor does not adopt the
amendments made by the mass submitted, it will no longer be identical to or a
minor modifier of the mass submitted plan.
16.2 AMENDMENT BY ADOPTING EMPLOYER.
(a) The Employer may:
(i) change the choice of options in the Adoption Agreement;
(ii) add overriding language in the Adoption Agreement when
such language is necessary to satisfy section 415 or section 416 of the Code
because of the required aggregation of multiple plans; and
(iii) add certain model amendments published by the Internal
Revenue Service which specifically provide that their adoption will not cause
the Plan to be treated as individually designed.
(b) An Employer that amends the Plan for any other reason, including
a waiver of the minimum funding requirement under section 412(d) of the Code,
will no longer participate in this prototype plan and will be considered to
have an individually designed plan.
16.3 VESTING UPON PLAN TERMINATION. In the event of the termination or
partial termination of the Plan, the Account balance of each affected
Participant will be nonforfeitable.
16.4 VESTING UPON COMPLETE DISCONTINUANCE OF CONTRIBUTIONS. In the event
of a complete discontinuance of contributions under the Plan, the Account
balance of each affected Participant will be nonforfeitable.
16.5 MAINTENANCE OF BENEFITS UPON MERGER. In the event of a merger or
consolidation with, or transfer of assets to any other plan, each Participant
will receive a benefit immediately after such merger, consolidation or transfer
(if the Plan then terminated) which is at least equal to the benefit the
Participant was entitled to immediately before such merger, consolidation or
transfer (if the Plan had been terminated).
16.6 SPECIAL AMENDMENTS. The Employer may from time to time make any
amendment to the Plan that may be necessary to satisfy section 415 or 416 of
the Code. Any such amendment will be adopted by the Employer by completing
overriding Plan language in the Adoption Agreement. In the event of such an
agreement, the Employer must obtain a separate determination letter from the
Internal Revenue Service to continue reliance on the Plan's qualified status.
ARTICLE 17
MISCELLANEOUS
17.1 EXCLUSIVE BENEFIT OF PARTICIPANTS AND BENEFICIARIES.
(a) All assets of the Trust shall be retained for the exclusive
benefit of Participants and their Beneficiaries, and shall be used only to pay
benefits to such persons or to pay the fees and expenses of the Trust. The
assets of the Trust shall not revert to the benefit of the Employer, except as
otherwise specifically provided in section 17.1(b).
(b) To the extent permitted or required by ERISA and the Code,
contributions to the Trust under this Plan are subject to the following
conditions:
(i) If a contribution or any part thereof is made to the
Trust by the Employer under a mistake of fact, such contribution or part
thereof shall be returned to the Employer within one (1) year after the date
the contribution is made.
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(ii) In the event the Plan is determined not to meet the initial
qualification requirements of section 401 of the Code, contributions made in
respect of any period for which such requirements are not met shall be returned
to the Employer within one (1) year after the Plan is determined not to meet
such requirements, but only if the application for the qualification is made by
the time prescribed by law for filing the Employer's return for the taxable
year in which the Plan is adopted, or such later date as the Secretary of the
Treasury may prescribe.
(iii) Contributions to the Trust are specifically conditioned on
their deductibility under the Code and, to the extent a deduction is disallowed
for any such contribution, such amount shall be returned to the Employer within
one (1) year after the date of the disallowance of the deduction.
17.2 NONGUARANTEE OF EMPLOYMENT. Nothing contained in this Plan shall be
construed as a contract of employment between the Employer and any Employee, or
as a right of any Employee to be continued in the employment of the Employer,
or as a limitation of the right of the Employer to discharge any of its
Employees, with or without cause.
17.3 RIGHTS TO TRUST ASSETS. No Employee, Participant, or Beneficiary
shall have any right to, or interest in, any assets of the Trust upon
termination of employment or otherwise, except as provided under the Plan. All
payments of benefits under the Plan shall be made solely out of the assets of
the Trust.
17.4 NONALIENATION OF BENEFITS. No benefit or interest available
hereunder will be subject to assignment or alienation, either voluntarily or
involuntarily. The preceding sentence shall also apply to the creation,
assignment, or recognition of a right to any benefit payable with respect to a
Participant pursuant to a domestic relations order, unless such order is
determined to be a qualified domestic relations order, as defined in section
414(p) of the Code, or any domestic relations order entered before January 1,
1985.
17.5 AGGREGATION RULES.
(a) Except as provided in ARTICLE 6, all Employees of the Employer
or any Affiliated Employer will be treated as employed by a single employer.
(b) If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and the plan
established for other trades or businesses must, when looked at as a single
plan, satisfy sections 401(a) and (d) of the Code for the Employees of this
and all other trades or businesses.
(c) If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan which
satisfies sections 401(a) and (d) of the Code and which provides contributions
and benefits not less favorable than provided for Owner-Employees under this
Plan.
(d) If an individual is covered as an Owner-Employee under the plans
of two or more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
employees under the plan of the trades or businesses which are controlled must
be as favorable as those provided for him under the most favorable plan of the
trade or business which is not controlled.
(e) For purposes of paragraphs (b), (c) and (d), an Owner-Employee,
or two or more Owner-Employees, will be considered to control a trade or
business if the Owner-Employee, or two or more Owner-Employees together:
(i) own the entire interest in an unincorporated trade or
business; or
(ii) in the case of a partnership, own more than fifty percent
(50%) of either the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or
more Owner-Employees shall be treated as owning an interest in a partnership
which is owned, directly or indirectly, by a partnership which such
Owner-Employee, or such two or more Owner-Employees, are considered to control
within the meaning of the preceding sentence.
17.6 FAILURE OF QUALIFICATION. If the Employer's plan fails to attain or
retain qualification, such plan will no longer participate in this
master/prototype plan and will be considered an individually designed plan.
17.7 APPLICABLE LAW. Except to the extent otherwise required by ERISA, as
amended, this Plan shall be construed and enforced in accordance with the laws
of the state in which the Employer's principal place of business is located, as
specified in the Adoption Agreement.
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DETERMINATION LETTERS
69
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<TABLE>
<S> <C>
INTERNAL REVENUE SERVICE Department of the Treasury
Description: Prototype Standardized Profit Sharing Plan
50241605001 Case: 9012605 EIN: 74-1894784
01 Plan: 001 Letter Serial No: D248294a
Washington D.C. 20224
Person to Contact: Ms. Arrington
AIM DISTRIBUTORS, INC. Telephone Number: (202) 566-4576
ELEVEN GREENWAY PLAZA Refer Reply to: E:EP:Q:ICU
SUITE 1919
HOUSTON, TX 77046 Date: 07/10/90
</TABLE>
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit
of their employees. This opinion relates only to the acceptability of the form
of the plan under the Internal Revenue Code. It is not an opinion of the effect
of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for officers, owners, or highly compensated
employees than for other employees. Except as stated below, the Key District
Director will not issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16) if: (1) an employer ever maintained another qualified plan for one
or more employees who are covered by this plan, other than a specified paired
plan within the meaning of section 7 of Rev. Proc. 89-9, 1989-6 I.R.S. 14; or
(2) after December 31, 1985, the employer maintains a welfare benefit fund
defined in Code section 419(e), which provides postretirement medical benefits
allocated to separate accounts for key employees as defined in Code section
419A(d)(3). In such situations, the employer should request a determination as
to whether the plan, considered with all related qualified plans and, if
appropriate, welfare benefit funds, satisfies the requirements of Code section
401(a)(16) as to limitations on benefits and contributions in Code section 415.
The plan identified above is not a replacement plan as defined in section 3.10
of Rev. Proc. 89-9, 1989-6 I.R.S. 14. Therefore, an adopting employer may not
rely on this opinion letter to extend the remedial amendment period under
section 401(b) of the Code and regulations thereunder.
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor's address and telephone number for
inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of the plan.
Sincerely yours,
/s/ [ILLEGIBLE]
Chief, Employee Plans Qualifications Branch
<PAGE>
<TABLE>
<S> <C>
Internal Revenue Service Department of the Treasury
Plan Description: Prototype Standardized Money Purchase Pension Plan
M: 50241605001-002 Case: 9812606 EIN: 74-1894784
BPD: 01 Plan: 802 Letter Serial No: D248295a
Washington DC 20224
Person to Contact: Ms. Arrington
AIM DISTRIBUTORS INC
Telephone Number: (202) 566-4576
ELEVEN GREENWAY PLAZA
SUITE 1919 Refer Reply to: E:EP:Q:ICU
HOUSTON, TX 77046
Date: 07/10/90
</TABLE>
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit
of their employees. This opinion relates only to the acceptability of the form
of the plan under the Internal Revenue Code. It is not an opinion of the effect
of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for officers, owners, or highly compensated
employees than for other employees. Except as stated below, the Key District
Director will not issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16). If: (1) an employer ever maintained another qualified plan for one
or more employees who are covered by this plan, other than a specified paired
plan within the meaning of section 7 of Rev. Proc. 89-9, 1989-6 I.R.S. 14; or
(2) after December 31, 1985, the employer maintains a welfare benefit fund
defined in Code section 419(e), which provides postretirement medical benefits
allocated to separate accounts for key employees as defined in Code section
419A(d)(3). In such situations, the employer should request a determination as
to whether the plan, considered with all related qualified plans and, if
appropriate, welfare benefit funds, satisfies the requirements of Code section
401(a)(16) as to limitations on benefits and contributions in Code section 415.
The plan identified above is not a replacement plan as defined in section 3.10
of Rev. Proc. 89-9, 1989-6 I.R.S. 14. Therefore, an adopting employer may not
rely on this opinion letter to extend the remedial amendment period under
section 401(b) of the Code and regulations thereunder.
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor's address and telephone number for
inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/ [ILLEGIBLE]
Chief, Employee Plans Qualifications Branch
<PAGE>
TRUST AGREEMENT
70
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PROTOTYPE DEFINED CONTRIBUTION TRUST
71
<PAGE>
INVESTMENT COMPANY INSTITUTE
PROTOTYPE DEFINED CONTRIBUTION TRUST
TABLE OF CONTENTS
ARTICLE PAGE
- ------- ----
ARTICLE I ACCOUNTS
1.1 Establishing Accounts 4
1.2 Charges Against Accounts 4
1.3 Prospectus to be Provided 4
ARTICLE II RECEIPT OF CONTRIBUTIONS 4
ARTICLE III INVESTMENT POWERS OF THE TRUSTEE
3.1 Investment of Account Assets 4
3.2 Directed Investments 5
3.3 General Investment Powers 5
3.4 Investment in Combined Funds 5
3.5 Other Powers of the Trustee 6
3.6 General Powers 6
3.7 Valuation of Trust 6
3.8 Bonding 6
3.9 Duties not Assigned 6
ARTICLE IV DISTRIBUTIONS FROM A PARTICIPANT'S ACCOUNT 6
ARTICLE V REPORTS OF THE TRUSTEE AND THE PLAN ADMINISTRATOR 7
ARTICLE VI TRUSTEE'S FEES AND EXPENSES OF THE TRUST 7
ARTICLE VII DUTIES OF THE EMPLOYER AND THE PLAN ADMINISTRATOR
7.1 Information and Data to be Furnished 7
the Trustee
7.2 Limitation of Duties 7
ARTICLE VIII LIABILITY OF THE TRUST
8.1 Trustee's Liability 7
ARTICLE IX DELEGATION OF POWERS
9.1 Delegation by the Trustee 8
9.2 Delegation with Employer Approval 8
ARTICLE X AMENDMENT 8
ARTICLE XI RESIGNATION OR REMOVAL OF TRUSTEE 8
ARTICLE XII TERMINATION OF THE TRUST
12.1 Term of the Trust 9
12.2 Termination by the Trustee 9
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ARTICLE XIII MISCELLANEOUS
13.1 No Diversion of Assets 9
13.2 Notices 9
13.3 Multiple Trustees 9
13.4 Conflict with Plan 9
13.5 Applicable Law 9
13.6 Returned Contributions 9
13.7 General Undertaking 9
13.8 Invalidity of Certain Provisions 9
13.9 Counterpart Originals 9
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<PAGE>
TRUST AGREEMENT
The employer identified at the end of this Trust Agreement (the
"Employer") has established a prototype Money Purchase Pension and/ or Profit
Sharing Plan sponsored by the AIM Family of Funds (the "Plan") for the benefit
of Participants therein pursuant to section 401 of the Internal Revenue Code of
1986. As part of the Plan, the Employer has requested such person or persons
(individual, corporate, or other entity), as may be designated in the Adoption
Agreement, to serve as Trustee pursuant to the Trust established for the
investment of contributions under the Plan upon the terms and conditions set
forth in this Trust Agreement.
Unless the context of this Trust Agreement clearly indicates otherwise,
the terms defined in ARTICLE 2 of the Plan entered into by the Employer, of
which this Trust Agreement forms a part, shall, when used herein, have the same
meaning as in the Plan.
ARTICLE I
ACCOUNTS
1.1 ESTABLISHING ACCOUNTS. The Trustee shall open and maintain a Trust
account for the Plan and, as part thereof, Participants' Accounts for such
individuals as the Plan Administrator shall, from time to time, give written
notice to the Trustee as being Participants in the Plan. The Trustee shall also
open and maintain such other subaccounts as may be appropriate or desirable to
aid in the administration of the Plan. Separate subaccounts shall be maintained
for each Participant and shall be credited with the contributions made by the
Employer and with forfeitures allocated to each such Participant pursuant to
the Plan (and all earnings thereon). If nondeductible voluntary contributions
by Participants are permitted by the Plan, the Trustee shall open and maintain
as a part of the Trust a separate subaccount for each Participant who makes
such nondeductible voluntary contributions, each such subaccount to be credited
with the Participant's voluntary contributions (and all earnings attributable
to such contributions). If trustee transfers or rollover contributions from
another qualified plan are received, the Trustee shall open and maintain a
separate rollover subaccount for each Participant, each such subaccount to be
credited with the Participant's trustee transfers or rollover contributions
(and all earnings attributable to such contributions).
1.2 CHARGES AGAINST ACCOUNTS. Upon receipt of written instructions from
the Plan Administrator, the Trustee shall charge the appropriate subaccount of
the Participant for any withdrawals or distributions made under the Plan and
any forfeiture, which may be required under the Plan, of unvested interests
attributable to Employer Contributions. The Plan Administrator will give
written instructions to the Trustee specifying the manner in which Employer
Contributions and any forfeiture of the nonvested portion of Accounts, as
allocated by the Plan Administrator in accordance with the provisions of the
Plan, are to be credited to the various Accounts maintained for Participants.
1.3 PROSPECTUS TO BE PROVIDED. The Plan Administrator shall ensure that
a Participant who makes a nondeductible voluntary contribution has previously
received or receives a copy of the then current prospectus relating to the
Shares. Delivery of such a nondeductible voluntary contribution, pursuant to
the provisions of the Plan by the Plan Administrator to the Trustee shall
entitle the Trustee to assume that the Participant has received such a
prospectus.
ARTICLE II
RECEIPT OF CONTRIBUTIONS
The Trustee shall accept and hold in the Trust contributions made by the
Employer and Participants under the Plan. The Plan Administrator shall give
written instructions to the Trustee specifying the Participants' Accounts to
which contributions are to be credited, the amount of each such credit which is
attributable to Employer Contributions, and the amount, if any, which is
attributable to the Participant's nondeductible voluntary contributions. If
written instructions are not received by the Trustee, or is such instructions
are received but are deemed by the Trustee to be unclear, upon notice to the
Employer and Plan Administrator, the Trustee may elect to hold all or part of
any such contribution in cash, without liability for rising security prices or
distributions made, pending receipt by it from the Plan Administrator of
written instructions or other clarification, or the Trustee may return the
contribution to the Employer. If any contributions or earnings are less than
any minimum which the then current prospectus for the Shares requires, the
Trustee may hold the specified portion of contributions or earnings in cash,
without interest, until such time as the proper amount has been contributed or
earned so that the investment in the Shares required under the Plan may be
made. All payments to the Trust shall be remitted in U.S. currency or other
property to the Trustee at the address specified by it. Any payments not in U.S.
currency may, in the sole discretion of the Trustee, be refused.
ARTICLE III
INVESTMENT POWERS OF THE TRUSTEE
3.1 INVESTMENT OF ACCOUNT ASSETS. The Trustee shall invest the amount of
each contribution made hereunder and all earnings on the Trust in full and
fractional Shares in accordance with the current prospectus for such Shares, in
such amounts and proportions as shall from time to time be designated by the
Plan Administrator on forms provided by the Sponsor, and shall credit such
Shares to the Accounts of each Participant on whose behalf or by whom the
contributions are made and any forfeitures are allocated. All dividends and
capital gain distributions received on the Shares held by the Trustee in each
Account, shall, if received in cash, be reinvested in such Shares in accordance
with the current prospectus for such Shares and shall in any event be credited
to such Account. If any distribution on Shares may be received at the election
of the shareholder in additional Shares, the Trustee shall so elect. The Trustee
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<PAGE>
shall deliver, or cause to be executed and delivered, to the Plan
Administrator, all notices, prospectuses, financial statements, proxies, and
proxy soliciting materials relating to Shares held hereunder. The Trustee shall
not vote any of the Shares held hereunder, except in accordance with the
written instructions of the Plan Administrator. If no such written instructions
are received, such Shares shall not be voted. The obligations of the Trustee
hereunder may be delegated by it as provided in Sections 9.1 and 9.2.
The Trustee shall sell Shares and purchase Shares to accomplish any change
in investments desired by the Employer as indicated on any amended Adoption
Agreement or other instructions in accordance with the terms of the Plan.
Notwithstanding the above, if periodic payments are being made to a
Participant pursuant to ARTICLE IV hereof, any dividends received on Shares held
in such Participant's Account, which dividends are invested at an offering price
which includes a sales charge, need not be invested in additional Shares but may
be held for distribution to the Participant in periodic payments. In such
instances, the Trustee may make any election necessary to receive any such
dividends in cash.
3.2 DIRECTED INVESTMENTS. When so instructed by the Plan Administrator,
the Trustee shall invest all or any portion of the individual Account of any
Participant in accordance with the direction of the Employer or such
Participant in lieu of participation in the general assets of the Trust. Such
directed investments shall be accounted for separately for each Participant.
Except as otherwise provided herein, the Trustee shall not have any discretion,
and is specifically prohibited from exercising any control or discretion, with
respect to such directed investments. Each Participant who directs the
investment of his Account shall be solely and absolutely responsible for the
investment or reinvestment of all directed investment assets held on is behalf
in Trust, and, except as otherwise provided herein, the Trustee shall not
question any such direction, review any securities or other such assets, or make
suggestions with respect to the investment, retention or disposition of any such
assets; provided that:
(a) If any contributions are transmitted to otherwise received or
held as directed investment assets without investment directions from the
Participant, the Trustee shall retain such amounts in a noninterest-bearing
savings account in a federally insured institution for the benefit of the
Participant.
(b) The Trustee may establish such reasonable rules and regulations,
applied on a uniform basis to all Participants, with respect to the
requirements for, and the form and manner of, effectuating any transaction with
respect to directed investment assets including, without limitation, minimum
amounts, rules applicable to conversion of directed investments into general
assets of the Trust, and appropriate adjustments (based on fair market values)
to Accounts to reflect any such conversion, as the Trustee shall determine to
be consistent with the purposes of the Plan. Any such rules and regulations
shall be binding upon all persons interested in the Trust.
(c) The Trustee may establish a procedure for the periodic review of
directed investment assets to determine, in light of the facts and
circumstances reasonably known to it, whether any actual or proposed investment
of such assets constitutes or would constitute a prohibited transaction as that
term is defined in sections 406-408 of ERISA and the corresponding provisions
of the Code. If the Trustee determines that any investment constitutes or would
constitute a prohibited transaction, the Trustee shall promptly communicate
this determination to the Plan Administrator, and shall recommend that the
investment be prevented or disposed of, as the case may be, and may recommend
any other action authorized or required by law, to prevent or remedy the
transaction.
(d) In accordance with and pursuant to uniform and nondiscriminatory
rules established under and in accordance with the Plan, the Trustee may deny
the Plan Administrator's application to allow a directed investment proposed by
a Participant.
(e) Notwithstanding anything herein to the contrary, in no event
shall the Trustee engage in any transaction that would be prohibited under
ERISA.
3.3 GENERAL INVESTMENT POWERS. Subject to any investment limitations or
minimum requirements for investments in Shares imposed by the Sponsor, and
subject to investment instructions given by the Plan Administrator, the Trustee
shall be authorized and empowered to invest and reinvest all or any part of the
Trust in any property, real or personal or mixed, including, but not being
limited to, capital or common stock (whether voting or nonvoting or whether or
not currently paying a dividend), preferred or preference stock (whether voting
or nonvoting or whether or not paying a dividend), Shares of regulated
investment companies, convertible securities, corporate and governmental
obligations, leaseholds, ground rents, mortgages, and other interests in
realty, trust, and participation certificates, oil, mineral or gas properties,
royalty interests or rights, including equipment pertaining thereto, notes and
other evidences of indebtedness or ownership, secured or unsecured, contracts,
choses in action, and warrants, and other instruments entitling the owner
thereof to subscribe to or purchase any of the aforesaid. Subject to any
investment limitations or requirements imposed by the Sponsor relating to the
type of permissible investments in the Trust or the minimum percentage of Trust
assets to be invested in Shares, and subject to the provisions of ARTICLE VIII
hereof, in making and retaining such investments and reinvestments pursuant
hereto, the Trustee shall not be bound as to the character of any investments
by any statute, rule of court, or custom governing the investment of Trust
funds.
3.4 INVESTMENT IN COMBINED FUNDS. If the Trustee is a banking
institution, subject to any investment limitations or minimum requirements for
investment in Shares imposed by the Sponsor, and subject to investment
instructions given by the Plan Administrator, it may, subject to the election
of the Sponsor or the Employer, cause funds
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of this Trust to be invested in its commingled funds for qualified employee
benefit plan trusts and such commingled funds are hereby adopted and made a
part of the Plan of which this Trust is a part, and any funds of this Trust
invested in any such commingled funds shall be subject to all the provisions
thereof, as the same may be amended from time to time.
3.5 OTHER POWERS OF THE TRUSTEE. The Trustee is authorized and empowered
with respect to the Trust:
(a) Subject to any investment limitations or minimum requirements
for investment in Shares imposed by the Sponsor, and subject to investment
instructions given by the Plan Administrator, to sell, exchange, convey,
transfer, or otherwise dispose of, either at public or private sale, any
property, real or personal or mixed, at any time held by it, for such
consideration and on such terms and conditions as to credit or otherwise as
the Trustee may deem best.
(b) Subject to the provisions of section 3.1, to vote in person or
by proxy any stocks, bonds, or other securities held by it; to exercise any
options appurtenant to any stocks, bonds, or other securities, or to exercise
any rights to subscribe for additional stocks, bonds, or other securities, and
to make any and all necessary payments therefor, to join in, or to dissent
from, and to oppose, the reorganizations, consolidation, liquidation, sale, or
merger of corporations, or properties in which if may be interested as Trustee,
upon such terms and conditions as it may deem wise.
(c) To make, execute, acknowledge, and deliver any and all documents
of transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted.
(d) To register any investment held in the Trust in the name of the
Trust or in the name of a nominee, and to hold any investment in bearer form,
but the books and records of the Trustee shall at all times show that all such
investments are part of the Trust.
(e) To employ suitable agents and counsel (who may also be agents
and/or counsel for the Employer or the Sponsor) and to pay their reasonable
expenses and compensation.
(f) To borrow or raise monies for the purpose of the Trust from any
source and, for any sum so borrowed to issue its promissory note as Trustee and
to secure the repayment thereof by pledging all or any part of the Trust fund,
but nothing herein contained shall obligate the Trustee to render itself liable
individually for the amount of any such borrowing; and no person loaning money
to the Trustee shall be bound to see the application of money loaned or to
inquire into the validity or propriety of any such borrowing.
Each and all of the foregoing powers may be exercised without a court
order or approval. No one dealing with the Trustee need inquire concerning the
validity or propriety of anything that is done or need see to the application
of any money paid or property transferred to or upon the order of the Trustee.
3.6 GENERAL POWERS. The Trustee shall have all of the powers necessary or
desirable to do all acts, take all such proceedings, and exercise all such
rights and privileges, whether or not expressly authorized herein, which it may
deem necessary or proper for the administration and protection of the property
of the Trust and to accomplish any action provided for in the Plan.
3.7 VALUATION OF TRUST. The Trustee, as of the Valuation Date, and at
such other time or times as it determines, shall determine the net worth of the
assets of the Trust. In determining such net worth, the assets of the Trust
shall be evaluated at their fair market value and all expenses shall be
deducted. The Trustee may adopt such methods of valuation as it deems advisable.
3.8 BONDING. Except to the extent otherwise required by law, the Trustee
shall not be required to obtain any bonds in connection with its duties
hereunder. The cost of any bond obtained may be charged as an expense of the
Trust, but if not so charged, shall be paid by the Employer.
3.9 DUTIES NOT ASSIGNED. The duties of the Trustee with respect to the
Plan are limited to those assumed by the Trustee by the terms of this Trust. The
Trustee shall not be deemed, by virtue hereof, to be the administrator or
sponsor of the Plan, and shall not be responsible for filing reports, returns
or disclosures with any government agency except as may otherwise be required
by its duties as Trustee under applicable law.
ARTICLE IV
DISTRIBUTIONS FROM A PARTICIPANT'S ACCOUNT
Distributions from the Trust shall be made by the Trustee in accordance
with proper written directions of the Plan Administrator in accordance with the
provisions of section 15.2 of the Plan, and the Plan Administrator shall have
the sole responsibility for determining that the directions given conform to
provisions of the Plan and applicable law, including (without limitation)
responsibility for calculating the vested interests of the Participant, for
calculating the amounts payable to a Participant pursuant to ARTICLE 11 of the
Plan, and for determining the proper person to whom benefits are payable under
the Plan. Except to the extent otherwise provided in the Plan, the interest of
Participants and Beneficiaries in the Trust and in the net earnings and profits
thereof may not be assigned or used by a Participant or Beneficiary as
collateral for a loan and shall not be subject to garnishment, attachment, levy
or execution of any kind for the debts or defaults of the Trustee or of any
person, natural or legal, having interest in the Trust.
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ARTICLE V
REPORTS OF THE TRUSTEE AND THE PLAN ADMINISTRATOR
The Trustee shall keep accurate and detailed records of all receipts,
investments, disbursements, and other transactions required to be performed
hereunder with respect to the Trust. The Trustee shall file with the Plan
Administrator a written report or reports reflecting the receipts,
disbursements, and other transactions effected by it with respect to the Trust
during such Plan Year and the assets and liabilities of the Trust at the close
of the Plan Year. Such report or reports shall be open to inspection by any
Participant for a period of one hundred eighty (180) days immediately following
the date on which it is filed with the Plan Administrator. Except as otherwise
prescribed by ERISA, upon the expiration of such one hundred eighty (180) day
period, the Trustee shall be forever released and discharged from all liability
and accountability to anyone with respect to its acts, transactions, duties,
obligations, or responsibilities as shown in or reflected by such report,
except with respect to any such acts or transactions as to which the Plan
Administrator shall have filed written objections with the Trustee within such
one hundred eighty (180) day period, and except for willful misconduct or lack
of good faith on the part of the Trustee.
ARTICLE VI
TRUSTEE'S FEES AND EXPENSES OF THE TRUST
The Trustee's fees for performing its duties hereunder shall be such
reasonable amounts as shall be established by it from time to time. The Trustee
shall furnish the Employer with its current schedule of fees and shall give
written notice to the Employer whenever its fees are changed or revised. Such
fees, any taxes of any kind whatsoever which may be levied or assessed upon or
in respect of the Trust, to the extent incurred by the Trustee and any and all
reasonable expenses incurred by the Trustee in the performance of its duties,
including fees for legal services rendered to the Trustee, shall, unless paid by
the Employer, be paid from the Trust in the manner provided in the Plan.
Unless paid by the Employer, all fees of the Trustee and taxes and other
expenses charged to a Participant's Account may be collected by the Trustee
from the amount of any contribution to be credited or distribution to be
charged to such Account or may be paid by redeeming or selling assets credited
to such Account.
ARTICLE VII
DUTIES OF THE EMPLOYER AND THE PLAN ADMINISTRATOR
7.1 INFORMATION AND DATA TO BE FURNISHED THE TRUSTEE. In addition to
making the contributions called for in ARTICLE II hereof, the Employer, through
the Plan Administrator, agrees to furnish the Trustee with such information and
data relative to the Plan as is necessary for the proper administration of the
Trust established hereunder.
7.2 LIMITATION OF DUTIES. Neither the Employer nor any of its officers,
directors, or partners, nor the Plan Administrator shall have any duties or
obligations with respect to this Trust Agreement, except those expressly set
forth herein and in the Plan.
ARTICLE VIII
LIABILITY OF THE TRUST
8.1 TRUSTEE'S LIABILITY
(a) The Employer shall indemnify and save the Trustee (including its
affiliates, representatives and agents) harmless from and against any
liability, cost or other expense, including, but not limited to, the payment of
attorneys' fees that the Trustee may incur in connection with this Trust
Agreement or the Plan unless such liability, cost or other expense (whether
direct or indirect) arises from the Trustee's own willful misconduct or gross
negligence. The Employer recognizes that a burden of litigation may be imposed
upon the Trustee as a result of some act or transaction for which it has no
responsibility or over which it has no control under this Trust Agreement.
Therefore, the Employer agrees to indemnify and hold harmless and, if
requested, defend the Trustee (including its affiliates, representatives and
agents) from any expenses (including counsel fees, liabilities, claims,
damages, actions, suits or other charges) incurred by the Trustee in
prosecuting or defending against any such litigation.
(b) The Trustee shall not be liable for, and the Employer will
indemnify and hold harmless the Trustee (including its affiliates,
representatives and agents) from and against all liability or expense
(including counsel fees) because of (i) any investment action taken or omitted
by the Trustee in accordance with any direction of the Employer or a
Participant, or investment inaction in the absence of directions from the
Employer or a Participant or (ii) any investment action taken by the Trustee
pursuant to an order to purchase or sell securities placed by the Employer or a
Participant directly with a broker, dealer or issuer. It is understood that
although, when the Trustee is subject to the direction of the Employer or a
Participant the Trustee will perform certain ministerial duties with respect to
the portion of the Fund subject to such direction (the "Directed Fund"), such
duties do not involve the exercise of any discretionary authority or other
authority to manage and control assets of the Directed Fund and will be
performed in the normal course of business by officers and employees of the
Trustee or its affiliates, representatives or agents who may be unfamiliar with
investment management. It is agreed that the Trustee is not undertaking any
duty or obligation, express or implied, to review, and will not be deemed to
have any knowledge of or responsibility with respect to, any transaction
involving the investment of the Directed Fund as a result of the performance of
its ministerial duties. Therefore, in the event that "knowledge" of the Trustee
shall be a prerequisite to imposing a duty upon or determining liability of the
Trustee under the Plan or this Trust or any law or regulation regulating the
conduct of the Trustee with
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respect to the Directed Fund, as a result of any act or omission of the
Employer or any Participant, or as a result of any transaction engaged in by
any of them, then the receipt and processing of investment orders and other
documents relating to Plan assets by an officer or other employee of the
Trustee or its affiliates, representatives or agents engaged in the performance
of purely ministerial functions shall not constitutes "knowledge" of the
Trustee.
(c) Notwithstanding the foregoing provisions of this Trust
Agreement, the Trustee shall discharge its duties hereunder with the care,
skill, prudence and diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character and with like aims. Any
investment selected by the Trustee without specific direction from the Employer
shall be selected to diversify the investments of the Trust fund so as to
minimize the risk of large losses, unless in the circumstances it is clearly
prudent not to do so. The Trustee shall perform its duties in accordance with
this Trust Agreement insofar as this Trust Agreement is consistent with the
provisions of ERISA. To the extent not prohibited by ERISA, the Trustee shall
not be responsible in any way for any action or omission of the Employer or the
Plan Administrator with respect to the performance of their duties and
obligations set forth in the Plan. To the extent not prohibited by ERISA, the
Trustee shall not be responsible for any action or omission of any of its
agents, or with respect to reliance upon advice of its counsel (whether or not
such counsel is also counsel to the Employer or to the Plan Administrator),
provided that such agents or counsel were prudently chosen by the Trustee and
that the Trustee relied in good faith upon the action of such agent or the
advice of such counsel. The Trustee shall be indemnified and held harmless by
the Employer against liability or losses occurring by reason of any act or
omission of the Trustee under this Trust Agreement, unless such act or omission
is due to its own willful nonfeasance, malfeasance, or misfeasance or other
breach of duty under ERISA, to the extent that such indemnification does not
violate ERISA or any other federal or state laws.
ARTICLE IX
DELEGATION OF POWERS
9.1 DELEGATION BY THE TRUSTEE. With respect to Shares held by the Plan,
the Trustee hereby delegates to the custodian or other agent designated by the
Sponsor the functions designated in (a) through (d) hereunder, other than the
investment, management or control of the Trust assets. With respect to assets
other than Shares, the Trustee may delegate in writing pursuant to a procedure
permitted and established by the Sponsor, to a person (individual, corporate,
or other entity) designated by the Sponsor as an agent or custodian, any of the
powers or functions of the Trustee hereunder other than the investment,
management or control of the Trust assets, including (without limitation):
(a) custodianship of all or any part of the assets of the Trust;
(b) maintaining and accounting for the Trust and for Participants
and other Accounts as a part thereof;
(c) distribution of benefits as directed by the Plan Administrator;
and
(d) Preparation of the annual report on the status of the Trust.
The agent or custodian so appointed may act as agent for the Trustee,
without investment responsibility, for fees to be mutually agreed upon by the
Employer and the agent or custodian and paid in the same manner as Trustee's
fees. The Trustee shall not be responsible for any act or omission of the
agent or custodian arising from any such delegation, except to the extent
provided in ARTICLE VIII.
9.2 DELEGATION WITH EMPLOYER APPROVAL. The Trustee (whether or not a bank
or trust company) and the Employer may, by mutual agreement, arrange for the
delegation by the Trustee to the Plan Administrator or any agent of the
Employer of any powers of functions of the Trustee hereunder other than the
investment and custody of the Trust assets. The Trustee shall not be
responsible for any act or omission of such person or persons arising from any
such delegation, except to the extent provided in ARTICLE VIII.
ARTICLE X
AMENDMENT
As provided in section 16.1 of the Plan, and subject to the limitations
set forth herein, the prototype Adoption Agreement, Plan and Trust Agreement
may be amended at any time, in whole or in part, by the Sponsor. The Trustee
hereby delegates authority to the Sponsor, and to any successor Sponsor, to so
amend the prototype Adoption Agreement, Plan and Trust Agreement and the
Trustee hereby agrees that it shall be deemed to have consented to any
amendment so made which does not increase the duties of the Trustee without its
consent.
ARTICLE XI
RESIGNATION OR REMOVAL OF TRUSTEE
The Trustee may resign at any time upon thirty (30) days notice in writing
to the Employer, and may be removed by the Sponsor or Employer at any time upon
thirty (30) days notice in writing to the Trustee. Upon such resignation or
removal, the Sponsor or Employer shall appoint a successor Trustee or
Trustees. Upon receipt by the Trustee of written acceptance of such
appointment by the successor Trustee, the Trustee shall transfer and pay over
to such successor the assets of the Trust and all records pertaining thereto,
provided that any successor Trustee shall agree not to dispose of any such
records without the Trustee's consent. The successor Trustee shall be entitled
to rely upon all accounts, records, and other documents received by it from the
Trustee, and shall not incur any liability whatsoever for such reliance. The
Trustee is authorized, however, to reserve such sum of money or property as it
may deem advisable
78
<PAGE>
for payment of all its fees, compensation, costs, and expenses, or for payment
of any other liabilities constituting a charge on or against the reasonable
assets of the Trust or on or against the Trustee, with any balance of such
reserve remaining after the payment of all such items to be paid over to the
successor Trustee. Upon the assignment, transfer, and payment over of the
assets of the Trust, and obtaining a receipt thereof from the successor
Trustee, the Trustee shall be released and discharged from any and all claims,
demands, duties, and obligations arising out of the Trust and its management
thereof, excepting only claims based upon the Trustee's willful misconduct or
lack of good faith. The successor Trustee shall hold the assets paid over to
it under terms similar to those of this Trust Agreement under a trust that will
qualify under section 401 of the Code. If within thirty (30) days after the
Trustee's resignation or removal, the Employer or Sponsor has not appointed a
successor Trustee which has accepted such appointment, the Trustee may apply to
a court of competent jurisdiction for appointment or a successor or appoint
such successor itself.
ARTICLE XII
TERMINATION OF THE TRUST
12.1 TERM OF THE TRUST. This Trust shall continue as to the Employer so
long as the Plan is in full force and effect. If the Plan ceases to be in full
force and effect, this Trust shall thereupon terminate unless expressly
extended by the Employer.
ARTICLE XIII
MISCELLANEOUS
13.1 NO DIVERSION OF ASSETS. At no time shall it be possible for any part
of the assets of the Trust to be used for or diverted to purposes other than
for the exclusive benefit of Participants and their Beneficiaries or revert to
the Employer, except as specifically provided in the Plan or this Trust
Agreement.
13.2 NOTICES. Any notice from the Trustee to the Employer or from the
Employer to the Trustee provided for in the Plan and Trust shall be effective
if sent by first class mail to their respective last address of record.
13.3 MULTIPLE TRUSTEES. In the event that there shall be two (2) or more
of the Trustees serving hereunder, any action taken or decision made by any
such Trustee may be taken or made by a majority of them with the same effect as
if all had joined therein, if there be more than two (2), or unanimously if
there be two (2).
13.4 CONFLICT WITH PLAN. In the event of any conflict between the
provisions of the Plan and those of this Trust Agreement, the Plan shall
prevail.
13.5 APPLICABLE LAW. Except to the extent otherwise required by ERISA,
as amended, this Trust Agreement shall be construed in accordance with the laws
of the state where the Trustee has its principal place of business.
13.6 RETURNED CONTRIBUTIONS.
(a) A contribution made by the Employer by a mistake of fact shall,
if the Administrator so directs, be returned to the Employer within one (1)
year after its repayment. The Administrator shall, in its sole discretion,
determine whether the contribution was made by mistake of fact based upon such
evidence as it deems appropriate.
(b) A contribution made by the Employer that is conditioned on
deductibility under section 404 of the Code shall, to the extent such deduction
is disallowed, be returned to the Employer within one (1) year after the
disallowance, if the Administrator so directs.
13.7 GENERAL UNDERTAKING. All parties to this Trust and all persons
claiming any interest whatsoever hereunder agree to perform any and all acts
and execute any and all documents and papers which may be necessary or
desirable for the carrying out of the Trust or any of its provisions.
13.8 INVALIDITY OF CERTAIN PROVISIONS. If any provision of this Trust
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof and the Trust shall be construed
and enforced as if such provisions had not been included.
13.9 COUNTERPART ORIGINALS. This Trust may be executed in one or more
counterpart originals.
IN WITNESS WHEREOF, the Employer and the Trustee(s) have signed this Trust
effective as of the date specified in the Adoption Agreement.
----------------------------
Attest: [NAME OF EMPLOYER]
------------------ BY: ---------------------
Secretary President
TRUSTEE(S)
----------------------------
----------------------------
79
<PAGE>
-------------------------------------
)
) SS
)
I,_______________________________________, a notary public in and for the
jurisdiction above named, do hereby certify that _____________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
did personally appear before me and do acknowledge that they executed the
foregoing Trust as their free act and deed.
Subscribed and sworn to before me this_____ day of ______________, 19____.
-------------------------------------
Notary Public
My Commission
Expires:
--------------------
80
<PAGE>
EMPLOYEE NOTICES
81
<PAGE>
SPD, Pension and Welfare Benefits Administration
Room N-5644
U.S. Department of Labor
200 Constitution Avenue N.W.
Washington, DC 20210
Re:
Dear Sir or Madam:
Enclosed is a copy of the _____________ Summary Plan Description. This copy is
(Plan Name)
respectfully being submitted to Department of Labor in order to satisfy the
disclosure requirements of ERISA for Qualified Plans.
Should you have any questions, please feel free to contact me at your earliest
convenience.
Sincerely,
Plan Sponsor
82
<PAGE>
MODEL
SUMMARY PLAN DESCRIPTION
OF THE
-------------------------------
[INSERT NAME OF EMPLOYER)
PROFIT SHARING PLAN
Copyright 1990 Investment Company Institute March 1990
83
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
I. INTRODUCTION ........................................................... 3
II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS .......................... 3
A. Terms With Special Meanings ...................................... 3
B. Participation .................................................... 4
C. Individual Accounts .............................................. 4
D. Contributions .................................................... 4
E. Allocations ...................................................... 5
F. Vesting .......................................................... 7
G. Forfeitures ...................................................... 8
H. Distributions of Benefits ........................................ 8
I. Investment of Plan Assets ........................................ 9
J. Withdrawals ...................................................... 10
K. Loans ............................................................ 10
L. Insurance ........................................................ 10
III. CLAIMS PROCEDURE ....................................................... 11
IV. CHANGES TO THE PLAN .................................................... 11
V. GENERAL INFORMATION .................................................... 11
VI. NON-APPLICATION OF PBGC GUARANTEES ..................................... 12
VII. SPECIAL RIGHTS UNDER ERISA ............................................. 12
</TABLE>
84
<PAGE>
MODEL
SUMMARY PLAN DESCRIPTION
OF THE
-------------------------------
(INSERT NAME OF EMPLOYER)
PROFIT SHARING PLAN
I. INTRODUCTION
_____________________________[INSERT NAME OF EMPLOYER] (the "Employer") is
pleased to be able to provide you with the ____________________ [INSERT NAME OF
EMPLOYER] Profit Sharing Plan (the "Plan" or the "Profit Sharing Plan"). The
Plan is effective as of ________________________________[INSERT EFFECTIVE DATE].
The Plan is a defined contribution plan, to which the Employer makes
contributions to an account held in your name. With this type of plan, the
retirement benefit you receive will depend on the investment performance of the
amounts that are in your account. The Plan is designed to provide retirement
income to employees who remain with the Employer until retirement and to those
who have a vested interest in their account when they terminate their employment
with the Employer.
Only the main features of the Plan am explained in this Summary Plan
Description. Any questions which are not answered here should be referred to
_________________________________________________(INSERT NAME OF DEPARTMENT OR
PERSONNEL RESPONSIBLE FOR PARTICIPANT INFORMATION), if there is any
inconsistency between the Plan as described in this Summary Plan Description
and the Plan document itself, the terms of the Plan document will govern.
Copies of the Plan document and the Trust Agreement are available for your
inspection during regular working hours.
II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS
A. TERMS-WITH SPECIAL MEANINGS
Certain words and terms used in this Summary have special meanings.
Many of these terms am defined in this section, while others are
explained in the text of the Summary. To assist you in identifying
these terms within the text; they are capitalized.
1. BENEFICIARY. Your designated Beneficiary is the person you name
to receive your benefit distribution in the event of your death.
If you are married, you will need written consent from your
spouse to name someone other than your spouse as your
Beneficiary.
2. BREAK IN SERVICE. A Break in Service occurs if you complete
less than 501 Hours of Service with the Employer during a Plan
Year.
3. COMPENSATION. Compensation is the total compensation paid to you
by the Employer during any portion of a Plan Year during which
you were a Plan Participant. If you an self employed, your
Compensation is your earned income less your deductible
contributions to any qualified retirement plans.
4. HOURS OF SERVICE. Each hour for which you are paid or entitled to
be paid by the Employer. In addition, uncompensated authorized
leaves of absence that do not exceed two years, military leave
while your reemployment rights are protected by law, and absences
from work for maternity or paternity reasons may be credited as
Hours of Service for the purpose of determining whether you had a
Break in Service.
5. PARTICIPANT. A Participant is an employee who has met the
requirements for participating in this Plan, and whose account
has been neither completely forfeited nor distributed.
6. PLAN YEAR. The Plan Year is the 12-month period ending on the
date shown in section V of this Summary.
7. SPONSOR. The Sponsor is the organization which has made this Plan
available to the Employer.
8. TRUST. The Trust is a fund maintained by the Trustee for the
investment of Plan assets, including the amount in your account.
9. YEAR OF SERVICE. A Year of Service is the applicable 12-month
period during which you complete 1,000 [INSERT NUMBER OF HOURS)
or more Hours of Service. For eligibility purposes, the
applicable 12-month period Is your first year of employment or
any Plan Year,
85
<PAGE>
beginning after your hire date. For vesting purposes, the
applicable 12-month period is the Plan Year.
B. PARTICIPATION
You will be eligible to participate in the Plan after you have met the
following eligibility requirements:
[CHECK ALL APPLICABLE ITEMS]
X You have reached age 21
- -
X You have completed 1 Year (s) of Service.
- -
X You are not a member of a collective bargaining unit.
- -
X You are not a nonresident alien.
- -
The first entry date, or date in which you can first participate in
the Plan if you meet these requirements, is _________________________ [INSERT
EFFECTIVE DATE). Thereafter, the entry date(s) will be January 1 & July 1 of
each year.
Once you become a Participant, you will remain a Participant as long
as you do not incur a Break in Service. If you do incur a Break in Service, and
are later reemployed by the Employer, you will be reinstated as a Participant
and any previous Hours of Service will be reinstated as of the date of your
reemployment.
C. INDIVIDUAL-ACCOUNTS
A separate account will be maintained for you within the Plan. This
account will be further divided into subaccounts, which will be
credited with the different types of contributions that are described
in the next section, the subaccounts that will be maintained for you
are as follows:
1. PROFIT SHARING CONTRIBUTION SUBACCOUNT. This subaccount will be
credited with your share of Employer Profit Sharing
Contributions, forfeitures (if any), distributions from this
subaccount, and the earnings and losses attributable to this
subaccount.
2. TRUSTEE TRANSFER AND ROLLOVER SUBACCOUNTS. These subaccounts will
be credited with any rollover contributions or transfer
contributions you may make to the Plan, any distributions from
this subaccount, and the earnings and losses attributable to this
subaccount. Include the following item if your plan permits
voluntary employee contributions:
3. NONDEDUCTIBLE VOLUNTARY CONTRIBUTION SUBACCOUNT. This subaccount
will be credited with your Voluntary Employee Contributions, any
distributions from this subaccount, and the earnings and losses
attributable to this subaccount.
D. CONTRIBUTIONS
X 1. EMPLOYER PROFIT SHARING CONTRIBUTIONS. The Employer will make
- Profit Sharing Contributions to the Plan each Plan Year in
accordance with the following contribution formula:
[CHECK ONE OF THE FOLLOWING]:
X Contributions will be made in an amount to be determined
each year by the Employer.
_ Contributions will be made in an amount equal to ___________
INSERT CONTRIBUTION PERCENTAGE] of each Participant's
Compensation, plus any discretionary amount the Employer may
choose to contribute.
2. ROLLOVER CONTRIBUTIONS AND DIRECT TRANSFERS. If you have
participated in other pension or profit sharing plans, you will
be permitted to make a rollover contribution to the Plan of
certain amounts you may receive from those other plans. You will
also be permitted, with the approval of
86
<PAGE>
the Plan Administrator, to authorize a direct transfer to the
Plan of amounts that are attributable to your participation
in other pension or profit sharing plans.
CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY
EMPLOYEE CONTRIBUTIONS:
3. VOLUNTARY EMPLOYEE CONTRIBUTIONS. To increase your
retirement benefits from this Plan, you may choose to make
voluntary contributions to the Plan of up to NA [INSERT
MAXIMUM VOLUNTARY EMPLOYEE CONTRIBUTION PERCENTAGE] of your
compensation. Such contributions will not be permitted,
however, for Plan Years beginning after __________ [THE PLAN
YEAR IN WHICH THE PLAN IS ADOPTED]. The minimum contribution
you must make if you choose to make a voluntary,contribution
is as follows:
[CHECK ONE OF THE FOLLOWING ITEMS]:
___ The minimum voluntary contribution is __________[INSERT
MINIMUM VOLUNTARY CONTRIBUTION PERCENTAGE] of your
Compensation.
X There is no minimum voluntary contribution.
E. ALLOCATIONS.
ELIGIBILITY FOR ALLOCATIONS. Each Plan Year the Employer may make a
Profit Sharing Contribution to the Plan in accordance with the formula
described in the previous section . If the Employer chooses to make a Profit
Sharing Contribution for a year, your account will be allocated a share of
that contribution. If you are an employee as of the last day of the Plan Year.
X Unless you terminate your employment during the Plan year with not more
- than 500 Hours of Service. (You will receive an allocation, however, if
you die, retire or become disabled during the Plan Year).
Under some circumstances, special minimum allocation rules may result in your
receiving an allocation even if you do not meet any of the requirements set
forth above.
AMOUNT OF ALLOCATION. If you are eligible, your account will be
credited with a portion of the Profit Sharing Contribution (and any
forfeitures) as follows:
[CHECK ONE OF THE FOLLOWING ITEMS]:
X * Your account will be credited with a portion of the Profit Sharing
- - Contribution that is equal to the ratio of your Compensation to the
Compensation of all Participants for such year.
For example, if your Compensation for a Plan Year was $10,000 and the
total Compensation of all Participants was $100,000, your account would
be credited with $10,000/$100,000 = 1/10 of the total contribution made
by the Employer for that Plan Year.
[CHOOSE IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY AND YOU HAVE
NOT ADOPTED THE MONEY PURCHASE PENSION PLAN)
__ * Profit Sharing Contributions WILL be allocated to eligible Participants
in four steps as follows:
Step One: Your account will be credited with a portion of the Profit
Sharing Contribution that is equal to the ratio of your Compensation to
the Compensation of all Participants for such year, but only up to a
maximum of three percent of each Participant's Compensation.
Step Two: Your account will be credited with a portion of the balance
of the Profit Sharing Contribution (after the allocation in Step One)
that is equal to the ratio of your Compensation in excess of the Plan's
Integration Level to the Compensation in excess of the Plan's
Integration Level of all Participants for such year, but only up to a
maximum of three percent of any Participant's Compensation in excess of
the Plan's Integration Level.
For example, if the Plan's Integration Level were $51,300 and your
Compensation were $61,300, your Compensation in excess of the
Integration Level would be $10,000. If the total Compensation in excess
of the Integration Level of all Participants were $70,000, your account
would be credited with $10,000/$70,000 = 1/7 of the total allocation
made under Step Two (but only up to a maximum of three percent of your
Compensation in excess of the Plan's Integration Level, or $300).
87
<PAGE>
Step Three: Your account will be credited with a portion of the balance
of the Profit Sharing Contribution (after the allocations in Step One
and Step Two) that is equal to the ratio that the sum of your
Compensation plus your Compensation in excess of the Plan's Integration
Level bears to the sum of all Participants' Compensation plus their
Compensation in excess of the Plan's Integration Level for such year,
up to a maximum of the Maximum Profit Sharing Disparity Rate.
The Maximum Profit Sharing Disparity Rate is 2.7 percent if the
Integration Level equals the annual earnings subject to Social Security
(FICA) tax (the taxable wage base). If the Integration Level is lower
(see below), then the Maximum Profit Sharing Disparity Rate is
determined by the following formula:
If the Integration is:
<TABLE>
<CAPTION>
The Applicable
More Than But Not More Than Percentage Is:
--------- ----------------- --------------
<S> <C> <C>
$0 X */ 2.7%
-
X of TWB 80% of TWB 1.3%
80% of TWB Y **/ 2.4%
--
</TABLE>
*/ X = the greater of $10,000 or 20% of the Taxable Wage Base.
- -
**/ Y = any amount more than 80% of the Taxable Wage Base but less
- -- than 100% of the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
For example, if the Maximum Profit Sharing Disparity Rate is 2.7 percent, your
Compensation is $61,300, the Plan's Integration Level is $51,300, the total
Compensation of all Participants is $700,000 and the Compensation of all
Participants that is in excess of the Plan's Integration Level is $70,000, then
the ratio applied under Step Three would be:
(61,300 + 10,000)/(700,000 + 70,000) - 9.25%
However, this exceeds the Maximum Profit Sharing Disparity Rate, so 2.7 percent
is applicable instead, and your account would receive 2.7% of the Employer
contribution under this step.
STEP FOUR: Your account will be credited with a portion of the balance of the
Profit Sharing Contribution (after the allocations in Step One, Step Two and
Step Three) that is equal to the ratio of your Compensation to the Compensation
of all Participants for such year.
[CHOOSE IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY AND YOU HAVE ADOPTED THE
MONEY PURCHASE PENSION PLAN]:
__ Profit Sharing Contributions will be allocated to eligible Participants in
two steps as follows:
STEP ONE: Your account will be credited with a portion of the Profit Sharing
Contribution that is equal to the ratio that the sum of your Compensation plus
your Compensation in excess of the Plan's Integration Level bears to the sum of
all Participants' Compensation plus their Compensation in excess of the Plan's
Integration level for such year, up to a maximum that does not exceed the lesser
of two amounts. The first is the percentage determined by dividing the
allocation by your Compensation up to the Plan's Integration Level. The second
is the Maximum Disparity Rate.
The Maximum Disparity Rate is 5.7 percent if the Integration Level equals the
annual earnings subject to Social Security (FICA) tax (the taxable wage base).
If the Integration Level is lower (see below), then the Maximum Disparity Rate
is determined by the following formula:
If the Integration is:
<TABLE>
<CAPTION>
The Applicable
More Than But Not More Than Percentage Is:
--------- ----------------- --------------
<S> <C> <C>
$0 X*/ 5.7%
-
</TABLE>
88
<PAGE>
X Of TWB 80% of TWB 4.3%
80% of TWB Y **/ 5.4%
*/ X - the greater of $ 10,000 or 20% of the Taxable
- Wage Base.
**/ Y - any amount more than 80% of the Taxable Wage
-- Base but less than 100% of the Taxable Wage
Base.
"TWB" means the Taxable Wage Base.
For example, if the Maximum Disparity Rate is 5.7 percent, your
Compensation is $61,300, the Plan's Integration Level is $51,300, the
total Compensation of all Participants is $700,000 and the
Compensation of all Participants that is in excess of the Plan's
Integration Level is $70,000, then the ratio applied under Step One
would be.
(61,300 + 10,000)/(700,000 + 70,000) = 9.25%
However, this exceeds the Maximum Disparity Rate, so 5.7 percent is
applicable instead. (This assumes the allocation as a percentage of
your Compensation up to the Plan's Integration Level would exceed 5.7
percent).
Step Two: Your account will be credited with a portion of the balance
of the Profit Sharing Contribution (after the allocation in Step One)
that is equal to the ratio of your Compensation to the Compensation
of all Participants for such year.
The Plan's Integration Level is equal to:
[CHECK ONE OF THE FOLLOWING ITEMS)
__ The taxable wage base, which is the annual earnings subject to Social
Security (FICA) tax.
__ A dollar amount equal to $__________________________[INSERT DOLLAR AMOUNT].
__ A percentage of the taxable wage base equal to ___% of the annual earnings
subject to Social Security (FICA) tax.
Under some circumstances, special minimum allocation rules may result in your
receiving a larger allocation than you normally would. The amount that can be
allocated to your Account in any Plan Year, including forfeitures (if any), is
limited by rules applying to all qualified plans.
F. VESTING.
Vesting refers to the nonforfeitable interest you have in each of your
subaccounts. In other words, your vested interest in your account is the
amount you will receive when your account is distributed to you.
You will always have a 100 percent vested and nonforfeitable interest
in the amounts you have in your:
__ * Trustee Transfer and Rollover Subaccounts.
(CHECK THE FOLLOWING ITEM ONLY IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
__ * Nondeductible Voluntary Contribution Subaccount.
You will earn a vested interest in your Profit Sharing Contribution
Subaccount in accordance with the following:
[CHECK ONE OF THE FOLLOWING ITEMS]:
__ * You will always have a 100 percent vested and nonforfeitable interest
in your Profit Sharing Contribution Subaccount.
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<PAGE>
__ * You will have a 100 percent vested and nonforfeitable interest
in your Profit Sharing Contribution Subaccount in the event of any of
the following:
* You reach your Normal Retirement Age or Early Retirement Date.
* You die or become disabled.
Otherwise, you will earn a vested interest in your Profit Sharing Contribution
Subaccount in accordance with the following schedule:
[CHECK ONE OF THE FOLLOWING ITEMS]:
<TABLE>
<CAPTION>
__ * YEARS 0F SERVICE VESTED PERCENTAGE
---------------- -----------------
<S> <C>
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
</TABLE>
For example, if you are employed for six years, you will be entitled
to the entire amount in your Profit Sharing Contribution Subaccount.
However, if you terminate employment with the Employer after only four
years, even though you return to employment with the Employer six
years later, you will be entitled to receive only 60 percent of that
amount.
__ * You will be 100 percent vested after three years of service. If you
terminate employment prior to three years you will not have any vested
interest in your Profit Sharing Contribution Subaccount.
G. FORFEITURES.
[CHECK ONE OF THE FOLLOWING ITEMS]:
__ * You have a 100 percent vested and nonforfeitable interest in the
amounts in your account at all times. Your account therefore will not
be subject to forfeitures.
__ * Forfeitures occur when you terminate employment before becoming fully
vested in your account, as explained in the section on "Vesting."
Effective for the first Plan Year beginning after 1984, any portion of
your Account that is not vested will be forfeited as of the last day
of the Plan Year in which your fifth consecutive Break in Service
occurs. Forfeited amounts will not be reinstated, even if you return
to service with the Employer. Such forfeitures will be allocated among
the Accounts of other Participants in the same manner as Profit
Sharing Contributions.
H. DISTRIBUTION OF BENEFITS.
1. ELIGIBILITY FOR DISTRIBUTION. You will be entitled to receive a
distribution of the vested amounts in your account upon
occurrence of any of the following:
* Your termination of employment with the Employer for any reason.
* Your total and permanent disability.
* Your death.
* Termination of the Plan.
* Your attainment of normal retirement age, which is:
[CHECK ONE OF THE FOLLOWING ITEMS),
X * Age 65
-
__ * Age _____ [INSERT NORMAL RETIREMENT AGE] or the___________
INSERT ANNIVERSARY DATE) of the day you commenced
participation in the plan.
(CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS EARLY RETIREMENT):
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__ * If you elect Early Retirement, attainment of your Early
Retirement Date, which is the first day of the month
coincident with or next following the date you reach age
____________________INSERT EARLY RETIREMENT AGE] and
complete __________ INSERT NUMBER OF YEARS] Years of
Service.
2. TIMING OF DISTRIBUTION. You will begin receiving benefit
distributions in accordance with the following;
* Generally, benefit distributions will commence not later than 60 days
after the end of the Plan Year in which you become eligible to receive
benefits.
* In the event of your death, your spouse, if you are married, will
generally be entitled to receive your benefit distribution. If you are
unmarried, or if your spouse has given written consent, your
designated Beneficiary will receive your benefit distribution, If you
have no spouse or designated Beneficiary, your benefit distribution
will go to your estate.
* If you so elect, you may defer commencement of the distribution of
your benefit beyond the date you first become eligible to receive that
distribution, to a date which you may specify. The date you specify
must not be later than the April 1 following the close of your taxable
year in which you attain age 70-1/2.
* If you attained age 70-1/2 before January 1, 1988, special rules apply
to your distributions.
If you wish to receive benefit distributions before attaining age 59-1/2, you
may be subject to a penalty tax, and you must notify the Plan Administrator in
writing that you am aware of the consequences of this tax.
3. FORM OF DISTRIBUTION. Your benefit will automatically
be distributed or a lump sum payment of cash, or a lump sum payment that
includes an in-kind distribution of all mutual fund shares credited to your
account.
I. INVESTMENT OF PLAN ASSETS
All contributions made to the Plan are kept in the Trust. A separate
account including all of the subaccounts described in the section on
"Participant Accounts," is maintained for you within that Trust. The assets of
the Trust are invested as follows:
[CHECK ONE OF THE FOLLOWING ITEMS]:
X * You must direct the Plan Administrator to invest the amounts in all of
- - your subaccounts in specified investments offered by the Sponsor.
__ * _____________________ (INSERT PERCENTAGE) of the assets of the Trust
are invested in shares or other investments offered by the Sponsor. The
remaining assets are invested in such other investments as are
acceptable to the Trustee.
__ * You ___ [INSERT "MAY" OR "MUST"] direct the Plan Administrator to
invest the amounts in the following subaccount in specified investments
offered by the Sponsor:
[CHECK ONE OR MORE OF THE FOLLOWING ITEMS]:
__ * The amounts in your Nondeductible Voluntary Contribution
Subaccount.
__ * The amounts in your Profit Sharing Contribution Subaccount.
__ * The amounts in your Trustee Transfer and Rollover
Subaccounts.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS WITHDRAWALS]:
J. WITHDRAWALS
You may make the following types of withdrawals from your account:
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<PAGE>
(CHECK ALL APPLICABLE ITEMS]
__ * If you have made Voluntary Employee Contributions to the Plan, you will
be permitted to withdraw the amounts in your Nondeductible Voluntary
Contribution Subaccount. If you are married, your spouse must consent
to the withdrawal.
__ * In the event of an imminent and heavy financial need due to the
purchase or renovation of a primary residence, the educational, medical
or personal expenses of you or a member of your immediate family, or
other hardship, you will be permitted to make a hardship withdrawal of
amounts credited to your Profit Sharing Contribution Subaccount.
All hardship withdrawals are subject to approval by the Plan
Administrator. Such withdrawals can only be made after prior
withdrawal of all amounts in your Nondeductible Voluntary Contribution
Subaccount, and after exhausting all other reasonable sources of
funds. If you are married, your spouse must consent to any withdrawals.
(CHECK THE FOLLOWING ITEM IF PLAN LOANS ARE PERMITTED):
__ K. LOANS.
This Plan contains provisions that permit you to borrow (with the
consent of your spouse) from the Plan part of your vested interest in your
account. Such a loan will not be made, however, if the total of all outstanding
loans to you from all pension and profit sharing plans of the Employer exceed
the lesser of $50,000 (taking into account the highest principal balance of any
loan outstanding at any time during the preceding 12 months) or one-half of the
value of your vested interest in your account.
The Plan Administrator will set the terms of all loans. The maximum
payment term for any loan will generally be five years. The interest rate will
be determined by the Plan Administrator. Your account will be security for the
loan.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS PARTICIPANTS TO PURCHASE LIFE
INSURANCE]:
__ L. INSURANCE.
The Plan contains provisions permitting you to designate a portion of
the amounts in your Profit Sharing Contribution Subaccount to purchase life
insurance. The portion of your Profit Sharing Contribution Subaccount which may
be used to purchase life insurance is equal to____________________ [INSERT
PERCENTAGE] of that subaccount.
III. CLAIMS PROCEDURE
You or your Beneficiary may file a written claim for benefits under
this Plan with the Plan Administrator at any time. If your claim is denied to
any extent by the Plan Administrator, a written notification must be sent to you
within 90 days. If you choose to appeal the decision, a request for review must
be made in writing to the Plan Administrator within 60 days of receipt of
written notification of the denial. Within 60 days after the appeal is filed, or
within 120 days, if there are special circumstances involved, the Plan
Administrator will issue a written decision.
IV. CHANGES TO THE PLAN
A. AMENDMENT OF THE PLAN
The Employer, together with the Sponsor, reserves the right to amend
the Plan at any time. You will be kept informed of any material amendments to
the Plan by updates to this Summary Plan Description.
B. TERMINATION OF THE PLAN
The Employer intends to continue this Plan indefinitely. However, the
Employer reserves the right to terminate the Plan at any time. if a termination
takes place, or If the Employer discontinues making contributions to the Plan,
you WILL have a 100 percent vested and nonforfeitable interest in all of the
amounts in your account. These amounts may be distributed to you at that time,
or may be distributed in accordance with the benefit distribution rules.
C. MERGER, CONSOLIDATION OR TRANSFER OF THE PLAN
In the event of the merger, consolidation or transfer of assets or
liabilities of the Plan to any other plan, your benefits will not be decreased
from what they would have been prior to such an event.
V. GENERAL INFORMATION
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Name of Plan: ______________________________________________________
[INSERT NAME OF EMPLOYER] Profit Sharing Plan
Employer: ______________________________________________________
______________________________________________________
[INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF EMPLOYER)
Type of Plan: Profit Sharing Plan
Type of Administration: Trusteed
Employer's Fiscal Year: ______________________________________________________
Plan Year End: ______________________________________________________
Plan Administrator: ______________________________________________________
[INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF PLAN
ADMINISTRATOR]
Trustees: ______________________________________________________
______________________________________________________
[INSERT NAME, TITLE, ADDRESS AND PHONE NUMBER OF
PRINCIPAL PLACE OF EACH TRUSTEE]
Agent for Service of Legal
Process: ______________________________________________________
[INSERT NAME AND ADDRESS OF PERSON DESIGNATED AS AGENT
FOR SERVICE OF LEGAL PROCESS)
Employer Identification # ______________________________________________________
Plan Number: ______________________________________________________
Also, a complete list of the employers and employee organizations sponsoring the
Plan may be obtained by participants and beneficiaries upon written request to
the Plan administrator, and is available for examination by participants and
beneficiaries, as required by Labor Reg. Section 1.2520.104-bl and Section
2520.104b-30.
VI. NON-APPLICATION OF PBGC GUARANTEES
Because this Plan is a defined contribution plan, the benefits you will
receive are exempt from and not insured by the Pension Benefit Guaranty
Corporation.
VII. SPECIAL RIGHTS UNDER ERISA
As a participant in the [INSERT NAME OF EMPLOYER] Profit Sharing Plan, you
are entitled to certain rights and protections under the Employee Retirement
Income Security Act of 1974 (ERISA). ERISA provides that all Plan Participants
shall be entitled to:
* Examine, without charge, at the Plan Administrator's office and at
other specified locations, all Plan documents, including insurance
contracts, affecting the individual making the request, and copies of
all documents filed by the Plan with the U.S. Department of Labor,
such as annual reports and Plan descriptions.
* Obtain copies of all Plan documents and other Plan information upon
written request to the Plan Administrator. The Plan Administrator may
make a reasonable charge for the copies.
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* Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each Participant with a
copy of this summary annual report.
* obtain a statement of the total value of your account under the Plan
and your vested (nonforfeitable) portion of this account. This
statement must be requested in writing and is not required to be
given more than once a year, The Plan will provide the statement free
of charge.
In addition to creating rights for Plan Participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. These
people who operate your plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan Participants and
Beneficiaries. No one, including your Employer, or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a benefit under this Plan or exercising your rights under ERISA. If
your claim for a benefit is denied in whole or in part you must receive a
written explanation of the reason for the denial. You have the right to have
the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above
rights. For instance, if you request materials from the Plan and do not receive
them within 30 days, you may file suit in a federal court. In such a case, the
court may require the Plan Administrator to provide the materials and pay you up
to $100 a day until you receive the materials unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits which is denied or ignored in whole or in part, you may file
suit in a state or federal court. If it should happen that Plan fiduciaries
misuse the Plan's money, or if you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of Labor, or you may
file suit in a federal court. The court will decide who should pay court costs
and legal fees. If you lose, the court may order you to pay these costs and
fees, for example, if it finds your claim is frivolous. if you have any
questions about your Plan, you should contact the Plan Administrator. If you
have any questions about this statement or about your rights under ERISA, you
should contact the nearest Area Office of the U.S. Labor-Management Services
Administration, Department of Labor.
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MODEL
SUMMARY PLAN DESCRIPTION
OF THE
--------------------------------
[INSERT NAME OF EXPLOYER1
MONEY PURCHASE PENSION PLAN
Copyright 1990 Investment Company Institute March 1990
95
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
I. INTRODUCTION ............................................................. 3
II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS .......................... 3
A. Terms With Special Meanings ......................................... 3
B. Participation ....................................................... 4
C. Individual Accounts ................................................. 4
D. Contributions ....................................................... 4
E. Allocations ......................................................... 5
F. Vesting ............................................................. 6
G. Forfeitures ......................................................... 7
H. Distributions of Benefits ........................................... 7
I. Investment of Plan Assets ........................................... 8
J. Withdrawals ......................................................... 9
K. Loans ............................................................... 9
L. Insurance ........................................................... 9
III. CLAIMS PROCEDURE ....................................................... 9
IV. CHANGES TO THE PLAN .................................................... 9
V. GENERAL INFORMATION .................................................... 10
VI. NON-APPLICATION OF PBGC GUARANTEES ..................................... 11
VII. SPECIAL RIGHTS UNDER ERISA ............................................. 11
</TABLE>
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<PAGE>
MODEL
SUMMARY PLAN DESCRIPTION
OF THE
-------------------------------------
[INSERT NAME OF EMPLOYER]
MONEY PURCHASE PENSION PLAN
I. INTRODUCTION
__________________________________ [INSERT NAME OF EMPLOYER] (the
"Employer") is pleased to be able to provide you with the____________________
[INSERT NAME OF EMPLOYER] Money Purchase Pension Plan (the "Plan" or the
"Pension Plan"). The Plan is effective as of ____________________________
[INSERT EFFECTIVE DATE].
The Plan is a defined contribution plan, to which the Employer makes
contributions to an account hold in your name. With this type of plan; the
retirement benefit you receive will depend on the investment performance of the
amounts that are in your account. The Plan is designed to provide retirement
income to employees who remain with the Employer until retirement and to those
who have a vested interest in their account when they terminate their employment
with the Employer.
Only the main features of the Plan are explained in this Summary Plan
Description. Any questions which are not answered here should be referred to
____________________________ [INSERT NAME OF DEPARTMENT OR PERSONNEL RESPONSIBLE
FOR PARTICIPANT INFORMATION]. If there is any inconsistency between the Plan as
described in this Summary Plan Description and the Plan document itself, the
terms of the Plan document will govern. Copies of the Plan document and the
Trust Agreement are available for your inspection during regular working hours.
II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS
A. TERMS WITH SPECIAL MEANINGS
Certain words and terms used in this Summary have special meanings.
Many of these terms are fined in this section, while others are
explained in the text of the Summary. To assist you in identifying
these terms within the text, they are capitalized.
1. BENEFICIARY. Your designated Beneficiary is the person you name
to receive your benefit distribution in the event of your death.
If you are married, you will need written consent from your
spouse to name someone other than your spouse as your
Beneficiary.
2. BREAK IN SERVICE. A Break in Service occurs if you complete less
than 501 Hours of Service with the Employer during a Plan Year.
3. COMPENSATION. Compensation is the total compensation paid to you
by the Employer during any portion of a Plan Year during which
you were a Plan Participant. If you are self-employed, your
Compensation is your earned income less your deductible
contributions to any qualified retirement plans.
4. HOURS OF SERVICE. Each hour for which you are paid or entitled to
be paid by the Employer. In addition, uncompensated authorized
leaves of absence that do not exceed two years, military leave
while your reemployment rights are protected by law, and absences
from work for maternity or paternity reasons may be credited as
Hours of Service for the purpose of determining whether you had
a Break in Service.
5. PARTICIPANT. A Participant is an employee who has met the
requirements for participating in this Plan, and whose account
has been neither completely forfeited nor distributed.
6. Plan Year. The Plan Year is the 12-month period ending on the
date shown in section V of this Summary.
7. SPONSOR. The Sponsor is the organization which has made this Plan
available to the Employer.
8. TRUST. The Trust is a fund maintained by the Trustee for the
investment of Plan assets, including the amount in your account.
9. YEAR OF SERVICE. A Year of Service is the applicable 12-month
period during which you complete 1,000 or more Hours of Service.
For
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eligibility purposes, the applicable 12-month period is your
first year of employment or any Plan Year, For vesting purposes,
the applicable 12-month period is the Plan Year.
B. PARTICIPATION.
You will be eligible to participate in the Plan after you have met the
following eligibility requirements:
[CHECK ALL APPLICABLE ITEMS]
[X] o You have reached age 21.
[X] o You have completed 1 Year(s) of Service.
[X] o You are not a member of a collective bargaining unit.
[X] o You are not a nonresident alien.
The first entry date, or date in which you can first participate in
the Plan if you meet these requirements, is ________________ [INSERT EFFECTIVE
DATE]. Thereafter, do entry date(s) will be January 1 & July 1 of each Plan
Year.
Once you become a Participant, you will remain a Participant as long
as you do not incur a Break in Service. If you do incur a Break in Service, and
are later reemployed by the Employer, you will be reinstated as a Participant
and any previous Hours of Service will be reinstated as of the date of your
reemployment.
C. INDIVIDUAL ACCOUNTS
A separate account will be maintained for you within the Plan. This account
will be further divided into subaccounts, which will be credited with the
different types of contributions that are described in the next section. The
subaccounts that will be maintained for you are as follows:
1. MONEY PURCHASE PENSION CONTRIBUTION SUBACCOUNT. This subaccount
will be credited with your share of Employer Money Purchase Pension
Contributions, distributions from this subaccount, and the earnings and losses
attributable to this subaccount.
2. TRUSTEE TRANSFER AND ROLLOVER SUBACCOUNTS. These subaccounts will
be credited with any rollover contributions or transfer contributions you
may make to the Plan, any distributions from the subaccount, and the earnings
and losses attributable to the subaccount.
(CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
___ 3. NONDEDUCTIBLE VOLUNTARY CONTRIBUTION SUBACCOUNT. This subaccount
will be credited with our Voluntary Employee Contributions, any distributions
from this subaccount, and the earnings and losses attributable to this
subaccount.
D. CONTRIBUTIONS
The Employer will make, or you will be permitted to make, the
following types of contributions. These contributions will be allocated to the
appropriate subaccounts within your account.
1. EMPLOYER MONEY PURCHASE PENSION CONTRIBUTIONS. The Employer
will make Money Purchase Pension Contributions to the Plan each
Plan Year in accordance with a formula based on your
Compensation. This formula is given in the section on
"Allocations."
2. ROLLOVER CONTRIBUTIONS AND DIRECT TRANSFERS. If you have
participated in other pension or profit sharing plans, you will
be permitted to make a rollover contribution to the Plan of
certain amounts you may receive from those other plans.
You will also be permitted, with the approval of the Plan
Administrator, to authorize a direct transfer to the Plan of
amounts that are attributable to your participation in other
pension or profit sharing plans.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS].
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<PAGE>
3. VOLUNTARY EMPLOYEE CONTRIBUTIONS. To increase your
--- retirement benefits from this Plan, you may choose to make
voluntary contributions to the Plan of up to _____ (INSERT
MAXIMUM VOLUNTARY EMPLOYEE CONTRIBUTION PERCENTAGE) of your
Compensation. Such contributions will not be permitted, however,
for Plan Years beginning after _____________ (THE PLAN YEAR IN
WHICH THE PLAN IS ADOPTED). The minimum contribution you must
make if you choose to make a voluntary contribution is as
follows:
[CHECK ONE OF THE FOLLOWING ITEMS]:
- The minimum voluntary contribution is ____ [INSERT MINIMUM
--- VOLUNTARY CONTRIBUTION PERCENTAGE] of your Compensation.
X - There is no minimum voluntary contribution.
---
E. Allocations
1. ELIGIBILITY FOR ALLOCATIONS. Each Plan Year the Employer will make
a Money Purchase Pension Contribution to the Plan in accordance with the
formula based on your Compensation. Your account will be allocated a
contribution if you are an employee as of the last day of the Plan Year.
[X] o Unless you terminate your employment during the Plan Year with not
more than 500 [INSERT HOURS OF SERVICE REQUIREMENT] Hours of Service.
(You will receive an allocation, however, if you die, retire or become
disabled during the Plan Year).
Under some circumstances, special minimum allocation rules may result in your
receiving an allocation, even if you do not meet any of the requirements set
forth above.
2. AMOUNT OF ALLOCATION. If you are eligible, your account will be
credited with a Money Purchase Pension Contribution as follows:
[CHECK ONE OF THE FOLLOWING ITEMS]
o The Employer will make a contribution on your behalf equal to _______
(INSERT CONTRIBUTION PERCENTAGE) of your Compensation.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN IS INTEGRATED WITH SOCIAL
SECURITY]:
o The Employer will make a contribution equal to ______% of your
- --- Compensation up to the Plan's Integration Level, plus ____% of your
Compensation excess of the Plan's Integration Level.
The Plan's Integration Level is equal to:
(CHECK ONE OF THE FOLLOWING ITEMS):
[ ] o The taxable wage base, which is the annual earnings subject
to Social Security (FICA) tax.
[ ] o A dollar amount equal to ____ [INSERT DOLLAR AMOUNT].
[ ] o A percentage of the taxable wage base equal to ___% of the
annual earnings subject to Social Security (FICA) tax.
For example, suppose that the Plan's taxable wage base is
equal to $51,300, and that your Compensation during a Plan
Year totaled $61,300. You would receive an allocation of
____ [INSERT CONTRIBUTION PERCENTAGE] of your first $51,300
in Compensation, and
____ [INSERT EXCESS CONTRIBUTION PERCENTAGE] on the
remainder of $ 10,000.
Under some circumstances, special minimum allocation rules may cause you to
receive a larger allocation than you normally would. The amount that can be
allocated to your account in any Plan Year is limited by rules applying to all
qualified plans.
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<PAGE>
F. VESTING.
Vesting refers to the nonforfeitable interest you have in each of your
subaccounts. In other words, your vested interest in your account is the amount
you will receive when your account is distributed to you.
You will always have a 100 percent vested and nonforfeitable interest
in the amounts you have in your:
o Trustee transfer and rollover subaccounts.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
o Nondeductible Voluntary Contribution Subaccount.
You will earn a vested interest in your Money Purchase Pension
Contribution Subaccount in accordance with the following:
[CHECK ONE OF THE FOLLOWING ITEMS]:
[ ] o You will always have a 100 percent vested and nonforfeitable interest
in your Money Purchase Pension Contribution Subaccount.
[ ] o You will have a 100 percent vested and nonforfeitable interest in your
Money Purchase Pension Contribution Subaccount in the event of any of
the following:
o You reach your Normal Retirement Age or Early Retirement Date.
o You die or become disabled.
Otherwise, you will earn a vested interest in your Money Purchase
Pension Contribution Subaccount in accordance with the following schedule:
[CHECK ONE OF THE FOLLOWING ITEMS]
[ ] o YEARS OF SERVICE VESTED PERCENTAGE
---------------- -----------------
1 year 0%
2 years 20%
3 yam 40%
4 years 60%
5 years 80%
6 or more years 100%
For example, If you are employed for six years, you will be entitled
to the entire amount in your Money Purchase Pension Contribution
Subaccount. However, If you terminate employment with the Employer
after only four years, even though you return to employment with the
Employer six years later, you will be entitled to receive only 60
percent of that amount.
[ ] o You will be 100 percent vested after three years of service. If you
terminate employment prior to three years you will not have any vested
amount in your Money Purchase Pension Contribution Subaccount.
Any portion of your Money Purchase Pension Contribution Subaccount in
which you do not have a vested interest will be forfeited by you as of
the last day of the Plan Year in which your fifth consecutive Break in
Service occurs.
G. FORFEITURES
[CHECK ONE OF THE FOLLOWING ITEMS]:
[ ] o You have a 100 percent vested and nonforfeitable interest in the
amounts in your account at all times. You will therefore not be
subject to forfeitures.
[ ] o Forfeitures occur when you terminate employment before becoming fully
vested in your account, as explained in the section on "Vesting."
Effective for the Trust Plan Year beginning after 1984, any portion of
your account that is not vested will be forfeited as of the last day
of the Plan Year in which your fifth consecutive Break in Service
occurs. Forfeited amounts will not be reinstated, even if you return
to service with the Employer. Such forfeitures either will be:
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<PAGE>
[CHECK ONE OF THE FOLLOWING ITEMS]:
[ ] o Used by the Employer as a credit against its future
contributions to the Plan; or
[ ] o Reallocated among the accounts of remaining Participants in
proportion to their pay.
H. DISTRIBUTION OF BENEFITS.
1. ELIGIBILITY FOR DISTRIBUTION. You will be entitled to receive a
distribution of the vested amounts in your account upon occurrence of any of the
following:
o Your termination of employment with the Employer for any reason.
o Your total and permanent disability.
o Your death.
o Termination of the Plan.
o Your attainment of normal retirement age, which is:
[CHECK ONE Of THE FOLLOWING ITEMS]:
[X] o Age 65.
[ ] o Age ____ [INSERT NORMAL RETIREMENT AGE] or the ____________
[INSERT ANNIVERSARY DATE] of the day you commenced
participation in the Plan.
[CHECK THE FOLLOWING IF YOUR PLAN PERMITS EARLY RETIREMENT]:
[ ] o If you elect early retirement, attainment of your early
retirement date, which is the first day of the month
coincident with or next following the date you reach age _
(INSERT EARLY RETIREMENT AGE) and complete _________ [INSERT
NUMBER OF YEARS] Years of Service.
2. TIMING OF DISTRIBUTIONS. You will begin receiving benefit
distributions in accordance with the following:
o Generally, benefit distributions will commence not later then 60 days
after the end of the Plan Year in which you become eligible to receive
benefits.
o In the event of your death, your spouse, if you are married, will
generally be entitled to receive your benefit distribution. If you are
unmarried, or if your spouse has given written consent, your
designated Beneficiary will receive your benefit distribution. If you
have no spouse or designated Beneficiary, your benefit distribution
will go to your estate.
o If you so elect, you may defer commencement of the distribution of
your benefit beyond the date you first become eligible to receive that
distribution, to a date which you may specify. The date you specify
must not be later than the April 1 following the close of your taxable
year in which you attain age 70-1/2.
o If you attained age 70-1/2 before January 1, 1988, special rules apply
to your distributions.
If you wish to receive benefit distributions before attaining age
59-1/2, you may be subject to a penalty tax, and you must notify the Plan
Administrator in writing that you are aware of the consequences of this tax.
3. FORM OF DISTRIBUTION. Your benefit will automatically be
distributed in the form of a in a lump sum payment of cash, or a lump sum
payment that includes an in-kind distribution of all mutual fund shares credited
to your account.
I. INVESTMENT OF PLAN ASSETS
All contributions made to the Plan are kept in the Trust. A separate
account, including all of the subaccounts described in the section on
"Participant accounts," is maintained for you within that Trust. The assets of
the Trust are invested as follows:
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(CHECK ONE OF THE FOLLOWING ITEMS::
[X] o All of the assets of the Trust are invested in shares or other
investments offered by the Sponsor.
[ ] o _________ [INSERT PERCENTAGE] of the assets of the Trust are invested
in shares or other investments offered by the Sponsor. The remaining
assets are invested in such other investments as are acceptable to the
Trustee.
[ ] o You ______ [INSERT "may" OR "must"] direct the Plan Administrator to
invest the amounts in the following subaccount in specified
investments offered by the Sponsor:
(CHECK ONE OR MORE OF THE FOLLOWING ITEMS):
[ ] o The amounts in your Nondeductible Voluntary Contribution Subaccount.
[ ] o The amounts in your Money Purchase Pension Contribution Subaccount.
[ ] o The amounts in your trustee transfer and rollover subaccounts.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] J. WITHDRAWALS
If you have made Voluntary Employee Contributions to the Plan, you
will be permitted to withdraw the amounts in your Nondeductible Voluntary
Contribution Subaccount. If you are married, your spouse must consent to the
withdrawal.
[CHECK THE FOLLOWING ITEM IF PLAN LOANS ARE PERMITTED]
[ ] K. LOANS
The Plan contains provisions that permit you to borrow from the Plan
part of your vested interest in your account. Such a loan will not be made,
however, if the total of all outstanding loans to you from all pension and
profit sharing plans of the Employer exceed the lower of $50,000 (taking into
account the highest principal balance of any loan outstanding at any time during
the preceding 12 months) or one-half of the value of your vested interest in
your account.
The Plan Administrator will set the terms of all loans. The maximum
payment term for any loan will generally be five years. The interest rate will
be determined by the Plan Administrator, your account will be security for the
loan.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS PARTICIPANTS TO PURCHASE
LIFE INSURANCE]:
[ ] L. INSURANCE.
The Plan contains provisions permitting you to designate a portion of
the amounts in your Money Purchase Pension Contribution Subaccount to purchase
life insurance. The portion of your Money Purchase Pension Contribution
Subaccount which may be used to purchase life insurance is equal to ________
[INSERT PERCENTAGE] of that subaccount.
III. CLAIMS PROCEDURE
You or your Beneficiary may file a written claim for benefits under this
Plan with the Plan Administrator at any time. If your claim is denied to any
extent by the Plan Administrator, a written notification must be sent to you
within 90 days. If you choose to appeal the decision, a request for review must
be made in writing to the Plan Administrator within 60 days of receipt for
written notification of the denial. Within 60 days after the appeal is filed, or
within 120 days, if there are special circumstances involved, the Plan
Administrator will issue a written decision.
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IV. CHANGES TO PLAN
A. AMENDMENT OF THE PLAN
The Employer, together with the Sponsor, reserves the right to amend
the Plan at any time. You will be kept informed of any material amendments to
the Plan by updates to this Summary Plan Description.
B. TERMINATION OF THE PLAN
The Employer intends to continue this Plan indefinitely. However, the
Employer reserves the right to terminate the Plan at any time. If a termination
takes place, or if the Employer discontinues making contributions to the Plan,
you will have a 100 percent vested and nonforfeitable interest in all of the
amounts in your account. These amounts may be distributed to you at that time,
or may be distributed in accordance with the benefit distribution rules.
C. Merger, Consolidation, or Transfer of the Plan
In the event of the merger, consolidation or transfer of assets or
liabilities of the Plan to any other plan, your benefits will not be decreased
from what they would have been prior to such an event.
V. GENERAL INFORMATION
NAME OF PLAN: _____________________________________________________
Money Purchase Pension Plan
EMPLOYER: _____________________________________________________
_____________________________________________________
TYPE OF PLAN: Money Purchase Pension Plan
TYPE OF ADMINISTRATION: Trusteed
EMPLOYER'S FISCAL YEAR: __________________________
PLAN YEAR END: __________________________
PLAN ADMINISTRATOR: _____________________________________________________
_____________________________________________________
_____________________________________________________
Trustees: _____________________________________________________
_____________________________________________________
_____________________________________________________
[INSERT NAME, TITLE, ADDRESS AND PHONE NUMBER OF
PRINCIPAL PLACE OF BUSINESS OF EACH TRUSTEE)
AGENT FOR SERVICE OF LEGAL PROCESS: __________________________________________
__________________________________________
INSERT NAME AND ADDRESS OF PERSON DESIGNATED
AS AGENT FOR SERVICE OF LEGAL PROCESS)
EMPLOYER IDENTIFICATION NUMBER: __________________________________________
PLAN NUMBER: __________________________________________
Also, a complete list of the employers and employee organizations sponsoring the
Plan may be obtained by participants and beneficiaries upon written request to
the Plan administrator, and is available for examination by participants and
beneficiaries, as required by Labor Reg. Section 2520.104b-1 and Section
2520.104b-30.
V1. NON-APPLICATION OF PBGC GUARANTEES
Because this Plan is a defined contribution plan, the benefits you will
receive are exempt from and not insured by the Pension Benefit Guaranty
Corporation.
103
<PAGE>
VII. SPECIAL RIGHTS UNDER ERISA
As a participant in the ________________________________ [INSERT NAME OF
EMPLOYER] Money Purchase Pension Plan, you are entitled to certain rights and
protections under the Employee Retirement Income Security Act of 1974 (ERISA).
ERISA provides that all Plan Participants shall be entitled to:
o Examine, without charge, at the Plan Administrator's office and at
other specified locations, all Plan documents, including insurance
contracts, affecting the individual making the request, and copies of
all documents filed by the Plan with the U.S. Department of Labor, such
as detailed annual reports and Plan descriptions. Obtain copies of all
Plan documents and other Plan information upon written request to the
Plan Administrator. The Plan Administrator may make a reasonable charge
for the copies.
o Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each Participant with
a copy of this summary annual report.
o Obtain a statement of the total value of your account under the
Plan and your vested (nonforfeitable) portion of this account. This
statement must be requested in writing and is not required to be
given more than once a year. The Plan will provide the statement
free of charge.
In addition to creating rights for Plan Participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. These
people who operate your plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan Participants and
Beneficiaries. No one, including your Employer, or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a benefit under this Plan or exercising your rights under ERISA. If
your claim for a benefit is denied in whole or in part you must receive a
written explanation of the reason for the denial. You have the right to have
the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights.
For instance, if you request materials from the Plan and do not receive them
within 30 days, you may file suit in a federal court. In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to
$100 a day until you receive the materials unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits which is denied or ignored, in whole or in part, you may file
suit in a state or federal court. If it should happen that Plan fiduciaries
misuse the Plan's money, or if you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of Labor, or you may
file suit in a federal court. The court will decide who should pay court costs
and legal fees. If you lose, the court may order you to pay these costs and
fees, for example, if it finds your claim is frivolous. If you have any
questions about your Plan, you should contact the Plan Administrator. If you
have any questions about this statement or about your rights under ERISA, you
should contact the nearest Area Office of the U.S. Labor-Management Services
Administration, Department of Labor.
NOTICE TO INTERESTED PARTIES
Current employees of ________________________________ are hereby notified that
(Name of Employer)
___________________________ has adopted the __________________________________
(Name of Adopting Employer) (Name of Plan or Plans)
as its employee retirement benefit plan.
The employee eligible to participate under this Plan are
____________________________________.
(Insert Eligible Class of Employees)
It is not expected that this Plan will be submitted to the Internal Revenue
Service for an advance determination as to whether or not the Plan meets the
qualification requirements of section 401(a) of the Internal Revenue Code.
However, this Plan is a prototype plan and the Internal Revenue Service has
previously issued a favorable opinion letter to the sponsor with regard to the
this plan.
As in interested party, you have the right to submit to the Key District
Director of the Internal Revenue Service, either individually or jointly with
other interested parties, your comments as to whether this Plan meets the
qualification requirements of the Internal Revenue Code.
104
<PAGE>
You may also, either or jointly with other interested parties, request that the
Department of Labor submit, on your behalf, comments to the Key District
Director regarding qualification of this Plan.
If the Department of Labor declines to comment on all or some of the matters you
raise, you may, individually or jointly if your request was made to the
Department jointly, submit your comments on these matters directly to the Key
District Director as the following address:
___________________________________________
(NAME AND ADDRESS OF KEY DISTRICT DIRECTOR)
The Department of Labor may not comment on behalf of interested parties unless
requested to do so by the lesser of 10 employees or 10 percent of the employees
who qualify as interested parties. The number of persons needed for the
Department of Labor to comment with respect to this Plan is ___________________.
A request to the Department of Labor should be sent to the following address:
Administrator of Pension and Welfare Benefit Programs
U.S. Department of Labor
200 Constitution Avenue N.W.
Washington, D.C. 20216
Attention: 3001 Comment Request
Any comment you submit to the Key District to the Key District Director, or any
request to the Department of Labor must include the name of the Plan, the Plan
number, the opinion letter number, the adopting employer's identification
number, the name and address of the sponsor, and the name and address of the
Plan administrator. Any request to the Department of Labor must also include
the address of the Key District Director. This information can be found at the
end of this Notice.
A comment to the Key District must be received by
____________________________________.
(Date 45 Days After Plan is Adopted)
if you wish to preserve your right to comment to the Key District Director, or
by ____________________________________ if you wish to waive that right.
(Date 55 Days After Plan is Adopted)
If there are matters upon which you request the Department of Labor to comment
upon on your behalf, and the Department declines to do so, you may submit
comments on these matters directly to the Key District Director. These comments
must be received by the Key District Director within 15 days from the time the
Department of Labor notifies you that it will not comment on a particular
matter, or by ___________________________________ whichever is later.
(Date 75 Days After The Plan is Adopted).
Detailed instructions regarding the requirements for submitting comments may
be found in sections 6,7, and 8 of Revenue Procedure 80-30.
Additional information concerning this Plan (including, where applicable, a
description of the circumstances which may result in eligibility of loss of
benefits, a description of the source of financing of the plan, and copies of
section 6 of Revenue Procedure 80-30) is available at_________________________
(LOCATION)
during the hours of _________________, for inspection of copying. There may be
a normal charge for copying and/or mailing.
The following information will be needed for correspondence with the Department
of Labor or the Key District Director:
___________________________________
(Name of Adopting Employer)
105
<PAGE>
______________________________________
(Name of Plan or Plans)
______________________________________
Plan Identification Number(s)
______________________________________
(Opinion Letter Number)
______________________________________
(Name of Sponsor)
______________________________________
(Address of Sponsor)
______________________________________
(Adopting Employer's EIN)
______________________________________
(Name of Plan Administrator)
______________________________________
(Address of Plan Administrator)
______________________________________
(Address of Key District Director)
106
<PAGE>
FORMS
107
<PAGE>
[AIM LOGO APPEARS HERE]
ASSET TRANSFER FORM
AIM Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Phone Number 1-800-347-1919 (ext. 506)
THIS FORM SHOULD BE USED ONLY IF YOU ARE TRANSFERRING PLAN ASSETS DIRECTLY
TO AIM.
================================================================================
1. PRINT PLAN NAME AND ADDRESS HERE
- --------------------------------------------------------------------------------
Plan Name/Trustees
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip
Tax ID Number
-------------------------------------------------------------------
Telephone ( )
-----------------------------------------------------------------
================================================================================
2. ACCOUNT TO BE TRANSFERRED TO AIM
- --------------------------------------------------------------------------------
Account Number
- --------------------------------------------------------------------------------
Name of Resigning Trustee/Custodian
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
City State Zip
- --------------------------------------------------------------------------------
Attention Telephone
================================================================================
3. PLEASE TELL US WHERE TO INVEST THE MONEY YOU ARE TRANSFERRING
Please deposit proceeds in my [ ] existing [ ]* new
[ ] Money Purchase Plan
[ ] Profit Sharing
* Application Attached
- --------------------------------------------------------------------------------
Fund Name Account Number
- --------------------------------------------------------------------------------
Fund Name Account Number
If assets are to be invested in multiple participant accounts you must submit a
separate statement identifying each participant and the percentage to be
invested in each fund(s).
If transferred assets are to be invested in "pooled" accounts you must indicate
the percentage (%) to be invested in each funds.
================================================================================
4. PLEASE AUTHORIZE YOUR CURRENT OR CUSTODIAN TO TRANSFER ACCOUNT TO THE AIM
FUNDS
To Resign Trustee or Custodian:
Please transfer [ ] all or [ ] part ($_________________) of our assets listed in
Section 2 to The AIM Funds.
[ ] immediately [ ] at maturity
[ ] Please transfer [ ] all or part (__________________) of the assets to AIM
Fund Acct# ___________________________.
- --------------------------------------------------------------------------------
Signature/Trustee Date
An Important note: Your current investment manager or custodian may require your
signature to be guaranteed.
Call that institution for requirement.
Signature guaranteed by:
- --------------------------------------------------------------------------------
Name of Bank or Firm
- --------------------------------------------------------------------------------
Signature of Officer and Title
================================================================================
5. CUSTODIAN ACCEPTANCE OF PLAN
This to advise you that _______________________, trustee custodian, will accept
the account identified above for: Plan Name ________________________________
Account Number _____________________________
This transfer of assets is to be executed from fiduciary to fiduciary and will
not place the participant in actual receipt of all or any of the plan assets.
NO FEDERAL INCOME TAX IS TO BE WITHHELD FROM THIS TRANSFER OF ASSETS.
If you have any further questions regarding the transfer, please feel free to
contact us at the above toll-free number.
- --------------------------------------------------------------------------------
Authorized Signature/Trustee
- --------------------------------------------------------------------------------
Date
================================================================================
6. RESIGNING TRUSTEE OR CUSTODIAN
Please Indicate Account Number on all documents sent to AIM.
Please attach a copy of this form to the check.
Check Payable to: AIM Funds, FBO: (Plan Name)
c/o AIM Fund Services, Inc,
P.O. Box 4739
Houston, TX 77210-4739
108
<PAGE>
EXHIBIT 14(d)
403(b) PLAN [AIM LOGO APPEARS HERE]
ACCOUNT APPLICATION
To open your AIM 403(b) Plan account.
Employer mail to: A I M Fund Services, Inc., P.O. Box 4399, Houston, TX
77210-4399. Phone: 800-959-4246
ALL sections must be fully completed.
- --------------------------------------------------------------------------------
1. EMPLOYEE INFORMATION (please print)
Participant
--------------------------------- Birth Date / /
First Name Middle Last Name ---- ---- ---
Address
-------------------------------------------------------------------
Street City State Zip Code
Social Security # Daytime Telephone
-------------------- -------------------
Employer
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. INVESTMENT INFORMATION (Minimum investment in any AIM Fund is $25 per pay
period per Fund.)
CONTRIBUTIONS:
[ ] I will be making salary-deferral contributions in the amount of
$_______________ or______% of compensation.
[ ] This is a transfer of 403(b) assets only; no salary-deferral
contribution will be made at this time.
Each contribution to the Custodial Account shall be invested in the
following AIM Funds in the amounts specified.
<TABLE>
<CAPTION>
EQUITY FUNDS $ OR % OF ASSETS CLASS OF SHARES FIXED INCOME FUNDS $ OR % OF ASSETS CLASS OF SHARES
(CHECK ONE) (CHECK ONE)
<S> <C> <C> <C> <C> <C>
AIM Blue Chip Fund $ Class [ ] A [ ] B AIM Balanced Fund $ Class [ ] A [ ] B
------------ ------------
AIM Capital AIM Global Income Fund $ Class [ ] A [ ] B
Development Fund $ Class [ ] A [ ] B ------------
------------ AIM Intermediate
AIM Charter Fund $ Class [ ] A [ ] B Government Fund $ Class [ ] A [ ] B
------------ ------------
AIM High Yield Fund $ Class [ ] A [ ] B
AIM Global Aggressive ------------
Growth Fund $ Class [ ] A [ ] B AIM Income Fund $ Class [ ] A [ ] B
------------ ------------
AIM Global Growth Fund $ Class [ ] A [ ] B
------------ AIM Limited Maturity
AIM Constellation Fund $ Class [ ] A Treasury Shares $ Class [ ] A
------------ ------------
AIM Growth Fund $ Class [ ] A [ ] B MONEY MARKET FUNDS $
------------ ------------
AIM Money Market Fund $ Class [ ] A [ ] B [ ] C
AIM International ------------
Equity Fund $ Class [ ] A [ ] B Total $
------------ ------------
AIM Global Utilities
Fund $ Class [ ] A [ ] B
------------
AIM Value Fund $ Class [ ] A [ ] B
------------
AIM Weingarten Fund $ Class [ ] A [ ] B
------------
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, where Class C Shares will be
purchased.
BILLING: PLEASE CONFIRM WITH YOUR EMPLOYER THAT THIS IS REQUIRED BEFORE
COMPLETING THIS SECTION. MY EMPLOYER HAS REQUESTED THAT AIM FORWARD A
BILLING EACH MONTH FOR SUBMISSION OF MY ON-GOING SALARY-DEFERRAL
CONTRIBUTION. (NOTE: BILLING IS ONLY AVAILABLE WHEN AN ORGANIZATION HAS 10
OR MORE 403(B) PARTICIPANTS WITH AIM.)
PLEASE REMIT THE BILLING TO:
Employer's Name Attention
-------------------------- -------------------
Address Telephone
---------------------------------- -------------------
- --------------------------------------------------------------------------------
3. ACCOUNT OPTIONS
Please indicate options you desire, if any.
TELEPHONE EXCHANGE PRIVILEGE. Unless indicated below, I authorize the
Transfer Agent to accept from any person instructions to exchange shares in
my account(s) by telephone for shares of other AIM Funds within the same
Class of Shares, in accordance with the procedures and conditions set forth
in the Fund's current prospectus.
[ ] I DO NOT want the telephone exchange privilege.
11
<PAGE>
REDUCED SALES CHARGE (optional/available for Class A shares only)
Right of Accumulation
I apply for Right of Accumulation reduced sales charges based on the
following accounts in The AIM Family of Funds(--Registered Trademark--):
Fund(s) Account No(s).
--------------------------- -------------------------
LETTER OF INTENT
I agree to the Letter of Intent provisions in the prospectus. I plan to
invest during a 13-month period a dollar amount of at least:
[ ]$25,000 [ ]$50,000 [ ]$100,000 [ ]$250,000 [ ]$500,000 [ ]$1,000,000
- --------------------------------------------------------------------------------
4. BENEFICIARY DESIGNATION
Primary Beneficiary:
I hereby designate the following individual(s) to receive the full value of
the assets of my 403(b) plan with A I M Distributors, Inc. upon my death.
This revokes any and all prior Beneficiary Designations made by me and
filed with the Custodian. (If you designate a beneficiary other than your
spouse, your spouse must acknowledge the designation by signing this form.)
Full Name
------------------------------------------------------------------
Address
-------------------------------------------------------------------
Social Security #
----------------------------------------------------------
Relationship
---------------------------------------------------------------
Percentage of Assets
-------------------------------------------------------
Please complete and sign the beneficiary designation. We cannot accept this
application without proper designation of beneficiary. If you wish to
identify additional or contingent beneficiaries, please attach a separate
letter identifying the same information requested above.
- --------------------------------------------------------------------------------
5. AUTHORIZATION AND SIGNATURE
I hereby adopt the A I M Distributors, Inc. 403(b)(7) Custodial Agreement
appointing Boston Safe Deposit and Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the 403(b)(7)
custodial agreement and consent to the custodial account fee as specified.
I understand that an annual AIM 403(b)(7) Maintenance Fee (currently $10)
will be deducted in early December from my 403(b)(7) Fund account.
Under the Interest and Dividend Tax Compliance Act of 1983, the Fund is
required to have the following certification. Please refer to the Fund
prospectus for complete instructions regarding backup withholding. Under
the penalties of perjury, I certify that (i) the number shown in Section 1
is my correct Social Security/Taxpayer Identification Number and (ii) I am
not subject to backup withholding because the Internal Revenue Service (a)
has not notified me that I am subject to backup withholding as a result of
failure to report all interest or dividends, or (b) has notified me that I
am no longer subject to backup withholding (does not apply to real estate
transactions, mortgage interest paid, the acquisition or abandonment of
secured property, contributions to an individual retirement arrangement
[403(b)(7)], and payments other than interest and dividends).
Certification Instructions-You must cross out item (b) above if you have
been notified by the IRS that you are currently subject to backup
withholding because of underreporting of interest or dividends on your tax
return.
[ ] Exempt from Backup Withholding (i.e. exempt entity as described in the
prospectus)
[ ] Nonresident alien [Form(s) W-8 attached]
Your Signature Date / /
------------------------------------------- --- --- ---
- --------------------------------------------------------------------------------
6. BROKER/DEALER INFORMATION:
Name of Broker/Dealer Firm
-------------------------------------------------
Branch Address
-------------------------------------------------------------
Rep. Name and Number
-------------------------------------------------------
Rep. Signature
-------------------------------------------------------------
Rep. Telephone
----------------------
12 [AIM LOGO APPEARS HERE] A I M Distributors, Inc.
<PAGE>
403(b) PLAN [AIM LOGO APPEARS HERE]
ASSET-TRANSFER FORM
To move assets from another 403(b) custodian to AIM.
Use this form only when transferring assets from an existing 403(b)
(account # __________) to an AIM 403(b) (account # __________).
If you do not already have an AIM 403(b), you must also submit a 403(b)
Application. AIM will arrange the transfer for you.
- --------------------------------------------------------------------------------
1. INVESTOR INFORMATION (please print)
Name
-----------------------------------------------------------------------
Address
--------------------------------------------------------------------
City State Zip
----------------------------------- ----------- -----------
Social Security Number Daytime Telephone
----------------- ----------------
- --------------------------------------------------------------------------------
2. CURRENT CUSTODIAN
Name of Resigning Trustee Account Number
--------------- -------------------
Address of Resigning Trustee
-----------------------------------------------
City State Zip
----------------------------------- ----------- -----------
Attention Telephone
------------------------------ -------------------------
- --------------------------------------------------------------------------------
3. 403(b) ACCOUNT INFORMATION
Please deposit proceeds in my
[ ] existing [ ] new*
<TABLE>
<CAPTION>
EQUITY FUNDS $ OR % OF ASSETS CLASS OF SHARES (CHECK ONE)
<S> <C> <C>
AIM Blue Chip Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Capital Development Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Charter Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Global Aggressive Growth Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Global Growth Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Constellation Fund $ [ ] Class A
-------------------------------
AIM Growth Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM International Equity Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Global Utilities Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Value Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Weingarten Fund $ [ ] Class A [ ] Class B
-------------------------------
FIXED INCOME FUNDS CLASS OF SHARES (CHECK ONE)
AIM Balanced Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Global Income Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Intermediate Government Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM High Yield Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Income Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Limited Maturity Treasury Shares $ [ ] Class A
-------------------------------
MONEY MARKET FUNDS CLASS OF SHARES (CHECK ONE)
AIM Money Market Fund $ [ ] Class A [ ] Class B [ ] Class C
-------------------------------
Total $
-------------------------------
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, where Class C Shares will be
purchased.
- --------------------------------------------------------------------------------
4. TRANSFER INSTRUCTIONS
To Resigning Trustee or Custodian:
Please liquidate [ ] all or [ ] part of the account(s) listed in Section 2
and transfer the proceeds to my 403(b) account with Boston Safe Deposit and
Trust Company.
13
<PAGE>
[ ] Partial amount to transfer $
-------------------
[ ] immediately [ ] at maturity ( / / )
---- ---- ----
[ ] Please transfer "In Kind" [ ] all [ ] part of the shares of the AIM
Fund held in my account to Boston Safe Deposit and Trust Company.
Percent of shares to transfer %
-----
- --------------------------------------------------------------------------------
5. AUTHORIZATION AND SIGNATURE
I have established a 403(b) account with the AIM Funds and have appointed
Boston Safe Deposit and Trust Company as the successor Custodian. Please
accept this as your authorization and instruction to liquidate or transfer
in kind the assets noted above, which your company holds for me.
Your Signature Date / /
------------------------------------ ---- ---- ----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Firm
-------------------------------------------------------
Signature Guaranteed by
----------------------------------------------------
(Name & Title)
- --------------------------------------------------------------------------------
6. CUSTODIAN ACCEPTANCE
This is to advise you that Boston Safe Deposit and Trust Company, as
custodian, will accept the account identified above for:
Depositor's Name Account Number
------------------------------- ------------
This transfer of assets is to be executed from fiduciary to fiduciary and
will not place the participant in actual receipt of all or any of the plan
assets. No federal income tax is to be withheld from this transfer of
assets.
Authorized Signature
---------------------------------------------------
(Boston Safe Deposit and Trust Company)
Mailing Date / /
---- ---- ----
- --------------------------------------------------------------------------------
7. INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check. Indicate account number on
all documents. Return this completed form and completed 403(b) Application
to Boston Safe Deposit and Trust Company, c/o A I M Fund Services, Inc.,
P.O. Box 4399, Houston, TX 77210-4399. Phone: 800-959-4246.
- --------------------------------------------------------------------------------
8. DISTRIBUTION ELECTION INFORMATION
If this participant is age 70-1/2 or older this year, the resigning
Trustee/Custodian must complete this section. Election made by the
participant as of the required beginning date:
1. Method of calculation (check one): [ ] declining years
[ ] recalculation
2. Life expectancy (check one): [ ] single life payout
[ ] joint life payout*
3. The amount withheld from this transfer to satisfy this year's required
distribution: $
-------------------
Were any previous distributions made to the participant this year?
[ ] No [ ] Yes $
------------------------------
The factor used to calculate this required payment was
---------------------
Name of Designated Beneficiary
--------------------------------------------
Relationship Date of Birth / /
------------------------------------ --- --- ---
Signature of Current Custodian/Trustee
-------------------------------------
[AIM LOGO APPEARS HERE] A I M Distributors, Inc.
14
<PAGE>
403(b) PLAN
EXCHANGE AND CONTRIBUTION CHANGE FORM [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. PARTICIPANT INFORMATION (PLEASE PRINT)
Employee Name
--------------------------------------------------------------
Social Security Number Account Number
---------------------- ---------------
Employer Name
--------------------------------------------------------------
- --------------------------------------------------------------------------------
2. FUND EXCHANGE
An AIM Fund exchange is the transfer of existing fund assets from one AIM
Fund to another AIM Fund. Please consult your investment adviser first.
Fund exchanges will not effect how your future 403(b) contributions are
invested. You must indicate under the 403(b) Contribution Section any
changes with respect to your future contribution.
From AIM Fund to AIM Fund Shares, or $ or %
---------- --------- ----- ---- ----
From AIM Fund to AIM Fund Shares, or $ or %
---------- --------- ----- ---- ----
- --------------------------------------------------------------------------------
3. 403(b) CONTRIBUTIONS
MARK BELOW THE STATEMENT THAT APPLIES
[ ] All future contributions are to be invested as previously indicated.
[ ] All future contributions (indicate % or dollar amount) are to be
invested as indicated below.
INVESTMENT SELECTION
I wish to change the investment of my future 403(b) contributions to the
AIM Funds listed below. This change is to be effective with the first
payroll contribution received following receipt of this form.
A. Fund %
--------------------------------- -----------------------
B. Fund %
--------------------------------- -----------------------
C. Fund %
--------------------------------- -----------------------
D. Fund %
--------------------------------- -----------------------
Total: 100%
Signature Date
--------------------------------------- ------------------
Please return the completed form to A I M Fund Services, Inc.,
Attn: Qualified Plan Services Department, P.O. Box 4399, Houston, TX
77210-4399. Phone: 800-959-4246.
If you have any questions, please call one of our Client Services
Representatives. Please retain a photocopy of this form for your records.
15 A I M Distributors, Inc.
<PAGE>
403(b) PLAN
AGREEMENT FOR SALARY DEFERRAL [AIM LOGO APPEARS HERE]
Use this form only if your employer does not supply you with its own form.
Submit this form to your employer.
[ ] Original Authorization
[ ] Amended Authorization
BY THIS AGREEMENT MADE BETWEEN
(the "Employee")
-----------------------------------------------------------
(Please Print)
and
(the "Employer")
-----------------------------------------------------------
the parties hereto agree as follows:
Effective with the paycheck dated ______________________________ , 19_____
(which date is subsequent to the date of execution of this Agreement), the
Employee's basic salary will be deferred by the amount indicated in item
(1) or (2) below, as designated by the Employee.
This Agreement shall be legally binding and irrevocable as to each of the
parties hereto while employment continues; provided, however, that either
party may terminate this Agreement by giving at least 30 days written
notice of the date of termination.
The amount of the Employee's salary deferral cannot exceed the Exclusion
Allowance under Section 403(b) of the Internal Revenue Code or the
limitations under Section 402(g) and 415 of the Internal Revenue Code.
The amount of the Employee's salary deferral will be: (select one)
1. $ per pay period beginning .
------------------- --------------------------
2. % of basic salary beginning .
------------------ -------------------------
It is understood that the amount of such salary deferral will be sent by
the Employer directly to A I M Fund Services, Inc., P.O. Box 4399, Houston,
Texas 77210-4399. Checks should be made payable to Boston Safe Deposit and
Trust Company. If your employer is requesting a billing from AIM, please
indicate this on the application.
Signed this day of , 19 .
---------------------- --------------------------- ----
Employee Signature
---------------------------------------------------------
Signed this day of , 19 .
---------------------- --------------------------- ----
Name of Employer
-----------------------------------------------------------
By
-------------------------------------------------------------------------
(Accepted)
Title
----------------------------------------------------------------------
17 A I M Distributors, Inc.
<PAGE>
403(b) PLAN
SALARY-DEFERRAL WORKSHEET [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. INSTRUCTIONS
Under current IRS rules, the maximum amount you may defer from your salary
is based upon a formula using a number of factors, including current
salary, years of service, type of employer, and plan contributions made on
your behalf in past years.
Simplified, the contribution to your 403(b) plan is the lesser of:
o Basic Exclusion Allowance
o 20% of your gross salary
o $9,500
It is important not to exceed the maximum permitted contribution in any tax
year. Excess contributions may be subject to federal taxes unless corrected
by April 15 of the tax year following the tax year for which the
contribution is made. Excess contributions, not corrected, are also subject
to a 6% non-deductible annual excise tax.
Please note that some employees of certain church organizations and
employees of more than one qualified organization are subject to somewhat
different limitations. Also, special "catch-up" provisions may permit you
to exceed the basic limits. If you think you may qualify for such special
treatment, consult your tax adviser for details.
The worksheet below will help you determine the amount you may defer.
However, you may be required to further reduce this amount if your employer
is making plan contributions in addition to your deferrals or you are
currently making salary-deferral contributions to other retirement plans.
You should keep this worksheet for your own records. Do not return it to
AIM.
- --------------------------------------------------------------------------------
2. WORKSHEET DEFINITIONS
Current Salary $ = Current annual salary (before
--------------- salary-deferral contributions)
Service Years = Years of service with current
--------------- employer (enter whole and fractional
years; however, if less than 1 year,
use "1" year).
Prior Contributions $ = All contributions (excluding this
--------------- year's salary deferrals) made by
your present employer to a pension
or profit sharing plan, state
teachers retirement plan,403(b)
plan, 457 deferred compensation
plan or SEP-IRA.
Prior Deferrals $ = All salary deferrals made to 403(b)
--------------- plans, including tax-sheltered
annuities, 457 plans (relating to
state deferred compensation plans),
SAR-SEP, and 401(k) plans on your
behalf by your present employer in
past years.
Current Deferrals $ = Your salary-deferral contributions
--------------- made in the current tax year. This
amount may be zero or the amount
deferred year to date.
- --------------------------------------------------------------------------------
3. BASIC EXCLUSION ALLOWANCE FOR SALARY DEFERRALS:
<TABLE>
<S> <C> <C>
a. $ x x .1667 = $
------------------------------------- --------------- ------------------------------
Current Salary Service Years
b. $ + $ = $
------------------------------------- ----------------------- ------------------------------
Prior Contributions Prior Deferrals
c. $ - $ = $
------------------------------------- ----------------------- ------------------------------
Total Line a Total Line b Basic Exclusion Allowance
d. $ x .20 = $
------------------------------------- ------------------------------
Current Salary Employer's Contribution Limit
e. $9,500 - = $
----------------------------- ------------------------------
Current Year's Salary Deferral Salary Deferral Limit
f. Your Basic Salary Deferral Limit is the lesser of c, d, or e = $
------------------------------
</TABLE>
19
<PAGE>
4. SPECIAL INCREASE IN DOLLAR LIMITATION:
This option is only available if you have at least 15 years of service with
the same qualified employer. This Special Increase in the Dollar Limitation
may permit you to exceed the $9,500 salary-deferral limit.
<TABLE>
<S> <C> <C>
g. ($5,000 x ) - $ = $
-------------------------- ------------------------ -----------------------------
Service Years Prior Deferrals
h. Total of Special Increase Dollars(1) used in prior years
under this option = $
-----------------------------
i. $15,000 - $ = $
------------------------ -----------------------------
Amount on Line h
j. Lesser of lines g or i or $3,000 = $
-----------------------------
k. $9,500 + = $
--------------------------- -----------------------------
Amount on Line j Special Deferral Limit
l. The maximum amount you can defer is the lesser of lines
c, d, or k = $
-----------------------------
</TABLE>
- --------------------------------------------------------------------------------
5. "CATCH-UP" OPTIONS
Employees of a qualified organization(2) may elect to use one of three
special "catch-up" options to increase your 403(b) contribution. Each
option is irrevocable and once chosen, no other "catch-up" option may be
used in future years. However, an individual may choose to use the Basic
Exclusion Allowance in any year instead of the "catch-up" option. NOTE: The
"catch-up" options calculate the total amount your employer plus you may
contribute. Your salary deferral may not exceed $9,500 even if the total
"catch-up" amount is greater than $9,500.
<TABLE>
<CAPTION>
OPTION A-May be elected only in the year in which the participant separates
from service.
<S> <C>
m. Amount on line c, recalculated using steps a, b, c based on
only the last 10 years of service = $
------------------------------
n. The option's limit is the lesser of line m or $30,000
(Your salary-deferral contribution is limited to $9,500.) = $
------------------------------
OPTION B-May be elected in any year of service.
o. Amount on line c = $
------------------------------
p. $3,200 + $ = $
---------------------- ------------------------------
Total Line d
q. Option b overall limit = $ $15,000
------------------------------
r. The maximum contribution under this option is the lesser
of line o, p or q
(Your salary-deferral contribution is limited to $9,500.) = $
------------------------------
OPTION C-May be elected in any year of service.
s. x .20 = $
--------------------------- ------------------------------
Current Salary
t. The maximum contribution under this option is the lesser
of line s, or $30,000
(Your salary-deferral contribution is limited to $9,500.) = $
------------------------------
</TABLE>
(1) Special Increase in Dollar Limitation permits you an additional
lifetime contribution up to $15,000, not to exceed $3,000 extra in any one
year. Step h accounts for previous contributions made under this option.
(2) A "qualified organization" is an educational organization [described
in IRC Section 170(b)(1)(A)(ii)], hospital, home health service agency
[described in IRC Section 501(c)(3) and which has been determined by the
Secretary of Health, Education, and Welfare to be a home health agency, as
defined in Section 1861(o) of the Social Security Act], health and welfare
service agency, church or convention or association of churches [described
in IRC Section 414(e)] or an organization which is exempt from tax under
IRC Section 501 and which is controlled by or associated with a church or a
convention or association of churches.
You should review these calculations with your tax adviser. You may also
want to consult the Internal Revenue Service Publication 571 as an
additional source of information. The Custodian, its agent or the sponsor
of the AIM 403(b) Plan will not provide legal or tax advice, nor calculate
your 403(b) plan contributions.
20 [AIM LOGO APPEARS HERE] A I M Distributors, Inc.
<PAGE>
403(b)(7) PLAN
CUSTODIAL AGREEMENT
ARTICLE I. EFFECTIVE DATE
This AIM 403(b)(7) Custodial Agreement shall become effective on the date on
which the Custodian or its agent, A I M Distributors, Inc., receives
incorporated AIM 403(b)(7) Application executed by the Employee.
ARTICLE II. DEFINITIONS
2.01. ACCOUNT OR FUND(S) means the separate account or accounts established
and maintained by the Custodian for an Employee pursuant to this Agreement.
2.02. AGREEMENT OR AIM 403(b)(7) AGREEMENT means this document and the
Application.
2.03. AIM FUND(S) means any of the mutual funds which are distributed by
A I M Distributors, Inc. and are part of The AIM Family of Funds--Registered
Trademark--.
2.04. APPLICATION OR AIM 403(b)(7) APPLICATION means the document(s) which
established the Agreement and is (are) executed by the Employer, Employee and
Custodian.
2.05. BENEFICIARY means the person or persons (including entities) designated
by the Employee as entitled to receive the Account balance, if any, at the
Employee's death. If at the time of the Employee's death, no designated
Beneficiary is alive, Beneficiary shall mean the Employee's surviving spouse or,
if the Employee does not have a surviving spouse, the Employee's estate.
2.06. CODE means the Internal Revenue Code of 1986, as amended.
2.07. CONTRIBUTIONS shall mean Salary Reduction Contributions and/or Employer
Contributions.
2.08. CUSTODIAN means the party who executed the Application as Custodian,
and any successor thereto, provide that such successor is either a bank or
another person who satisfies the requirements of Code Section 401(f)(2).
2.09. DESIGNATION OF BENEFICIARY means a form executed and submitted to the
Custodian in accordance with the terms of Article IX.
2.10. DISABILITY means the inability of the Employee to engage in any
substantial gainful activity because of any medically determinable physical or
mental impairment which can be expected to result in death or to be of
long-continued and indefinite duration. The Employee shall not be considered to
be suffering from Disability until the Custodian has received certification from
the Employer to such effect.
2.11. DISTRIBUTOR means A I M Distributors, Inc. and any successor thereto.
2.12. EMPLOYEE means an individual who is employed by the Employer and who
has properly executed the Application.
2.13. EMPLOYER means the employer who is listed on the Application.
2.14. EMPLOYER CONTRIBUTIONS mean the amount, if any, transmitted by the
Employer to the Custodian for addition to the Employee's Account other than
Salary Reduction Contributions.
2.15. SALARY REDUCTION CONTRIBUTION means the amount not included in the
Employee's compensation pursuant to a written salary reduction agreement and
transmitted by the Employer to the Custodian for addition to the Employee's
Account.
ARTICLE III. MAINTENANCE OF A CUSTODIAL ACCOUNT
3.01. SALARY REDUCTION CONTRIBUTIONS TO THE ACCOUNT. The Employee may make
Salary Reduction Contributions to the Account. Any salary reduction agreement
between the Employer and the Employee shall be effective only as to amounts
earned by the Employee after such agreement becomes effective. Each such
agreement shall be legally binding and irrevocable with respect to compensation
subsequently earned. A salary reduction agreement may be terminated by written
notice received at least 30 days prior to the date of termination. The Employer
and Employee shall not enter into more than one salary reduction agreement in
any one taxable year of the Employee.
3.02. TRANSFERS TO AND FROM THE ACCOUNT. All direct or indirect asset
transfers to an Account from an existing custodial account described in Code
Section 403(b)(7) or an annuity contract qualified under Code Section 403(b)(1)
shall be in cash unless the Custodian otherwise consents. Direct transfers into
an account may be accepted to the extent permitted by the Code. The Employee has
the right by proper written instruction to cause a transfer of cash or, if
agreed to by the Custodian, shares of AIM Fund(s) to another custodial account
described in Code Section 403(b)(7), an annuity contract qualified under Code
Section 403(b)(1), an individual retirement account described in Code Section
408(a) or an individual retirement annuity described in Code Section 408(b).
3.03. ROLLOVERS TO THE ACCOUNT. The Employee shall be permitted to make
rollover contributions to the Account of an amount received by the Employee that
is attributable to participation in another annuity or custodial account which
meets the requirements of Section 403(b) of the Code. Neither the Custodian nor
the Distributor shall have responsibility to ensure that contributions under
3.02 or 3.03 satisfy the applicable provisions of the Code.
3.04. EMPLOYER CONTRIBUTIONS. In addition to Salary Reduction Contributions,
the Employer may make a contribution to the Account on behalf of the Employee in
accordance with any retirement plan, fund or program for which the Employee is
eligible, subject to the limitations under 3.05.
3.05. CONTRIBUTION LIMITS.
(a) Unless the Employee has made a special election as described under
Section 415(c)(4) of the Code, the total amount of annual additions that may be
made to the Account on behalf of the Employee for any limitation year shall not
exceed the lesser of:
(i) $30,000 (or, if greater, one-fourth the defined benefit plan
dollar limitation in effect under Section 415(b)(1) of the Code for the
limitation year); or
(ii) 25 percent of the Employee's compensation (within the meaning of
Section 415(c)(3) of the Code) for the limitation year.
(b) For purposes of this subsection (a) above, the term "annual additions"
shall include contributions to the Account under 3.01 (pertaining to Salary
Reduction Contributions) for the limitation year.
(c) The term "limitation year" shall mean the calendar year, unless the
Employee elects to change the limitation year to another twelve-month period by
attaching a statement to his or her federal income tax return in accordance with
the regulations under Section 415 of the Code. If the Employee is in control of
the Employer (within the meaning of Code Section 414(b) or (c), as modified by
Code Section 415(h)), the limitation year shall be the same as the limitation
year of the Employer under Section 415 of the Code.
(d) If the Employer or any affiliated employer as described in Section
415(h) of the Code makes contributions on behalf of the Employee to any other
annuity contract described in Section 403(b) of the Code, then the contributions
to such annuity contract shall be combined with the contributions to the Account
for purposes of the limitations of subsection (a) above.
3.06. LIMITATIONS ON SALARY REDUCTION CONTRIBUTIONS. For any taxable year
beginning after December 31, 1986, Salary Reduction Contributions shall not
exceed the amount of $9,500, as adjusted in accordance with Code Section
402(g)(4), or such greater amount as may be permitted with respect to the
Employee for the taxable year under Code Section 402(g)(8).
ARTICLE IV. INVESTMENT OF CONTRIBUTIONS
4.01. PURCHASE OF SHARES. As soon as is practical after the Custodian
receives a Contribution, it shall invest such Contribution in shares of the
designated AIM Fund(s).
4.02. REPORTS AND VOTING OF SECURITIES. The Custodian shall deliver to
the Employee or, if applicable, his other Beneficiary, any notices,
prospectuses, financial statements, proxies and proxy solicitation materials
received by it with respect to investments made for the Employee's Account.
4.03. DIVIDEND. All capital gain distributions and dividends received on the
shares of the selected AIM Fund(s) shall be automatically reinvested in shares
of the Fund consistent with the Employee's investment instruction in effect on
the date such dividend or distribution is paid.
ARTICLE V. DISTRIBUTIONS AND WITHDRAWALS
5.01. INSTRUCTIONS TO CUSTODIAN. The Custodian shall not be responsible for
making any distributions until such time as it has been notified in writing by
the Employee to begin making distributions. No distribution will be made upon
the death of the Employee unless the Custodian has been notified in writing of
the Employee's death. The Custodian may require adequate verification of such
death. Distributions to the Employee (or, if applicable, his or her Beneficiary)
of amounts in the Account shall be made in cash and/or, if the Distributor
consents, in kind.
5.02. EMPLOYEE WITHDRAWALS.
(a) After Attainment of Age 59-1/2. At any time after the Employee attains
age 59-1/2, he or she may withdraw amounts from his or her Account by making
written instructions to the Custodian as to the amounts to be so withdrawn.
(b) Hardship Withdrawals. An Employee who has a financial hardship,
as determined by the Employer, and who has made all available withdrawals
pursuant to the paragraph above and pursuant to the provisions of any other
plans of the Employer and any related entities of which he is a member and who
has obtained all available loans pursuant to the provisions of any other plans
of the Employer and any related entities of which he or she is a member may
withdraw from his Account an amount not to exceed the lesser of the balance of
21
<PAGE>
his Account or the amount determined by the Employer as being available for
withdrawal pursuant to this paragraph. For purposes of this paragraph, financial
hardship means the immediate and heavy financial needs of the Employee. A
withdrawal based upon financial hardship pursuant to this paragraph shall not
exceed the amount required to meet the immediate financial need created by the
hardship and not reasonably available from other resources of the Employee. The
determination of the existence of an Employee's financial hardship and the
amount required to be distributed to meet the need created by the hardship shall
be made by the Employer. A withdrawal shall be deemed to be made on account of
an immediate and heavy financial need of an Employee if the withdrawal is on
account of:
(i) medical expenses described in Section 213(d) of the Code incurred by
the Employee, the Employee's spouse or any dependents of the Employee (as
defined in Section 152 of the Code);
(ii) purchase (excluding mortgage payments) of a principal residence of
the Employee;
(iii) payment of tuition for the next semester or quarter of
post-secondary education of the Employee, or the Employee's spouse, children or
dependents (as defined in Section 152 of the Code);
(iv) the need to prevent the eviction of the Employee from his principal
residence or foreclosure on the mortgage of the Employee's principal residence;
(v) such other financial needs which the Commissioner of Internal Revenue
may deem to be immediate and heavy financial needs through the publication of
revenue rulings, notices and other documents of general applicability; or
(vi) such other circumstances as the Employer determines, and certifies,
as an immediate and heavy financial need of the Employee in accordance with
applicable governmental regulations and procedures adopted by the Employer.
The decision of the Employer shall be final and binding, provided that all
Employees similarly situated shall be treated in a uniform and nondiscriminatory
manner. The above notwithstanding, (a) withdrawals under this paragraph from an
Employee's Account shall be limited to the sum of the Employee's Salary
Reduction Contributions to his Account, plus income allocable thereto and
credited to the Employee's Account as of December 31,1988, less any previous
withdrawals of such amounts. An Employee who makes a withdrawal under this
paragraph may not again make Salary Reduction Contributions or employee
contributions to the Account or to any other qualified or nonqualified plan of
the Employer or any related entity for a period of twelve months following such
withdrawal. Further, such Employee may not make Salary Reduction Contributions
to the Account or to any other plan maintained by the Employer or any related
entity for such Employee's taxable year immediately following the taxable year
of the withdrawal in excess of the applicable limit set forth in Section 402(g)
of the Code for such next taxable year less the amount of such Employee's Salary
Reduction Contributions for the taxable year of the withdrawal.All hardship
withdrawals shall be made by executing the Financial Hardship Form prescribed by
AIM Distributors and completed and signed by the Employer and filing such form
with AIM Distributors prior to the proposed date of withdrawal.
5.03. DISTRIBUTIONS AT SEPARATION FROM SERVICE. Unless the Employee otherwise
irrevocably elects in writing within 60 days after the Employee's separation
from service with the Employer, and the Custodian consents to such election,
distribution of the Account shall be made in a lump sum 90 days after the
Employee's separation from service. If the Employee makes such an election,
distribution of the Account shall not commence until the date specified in such
election unless the Employee earlier dies or becomes disabled as defined in this
Agreement.
If the Employee wishes to make such an irrevocable election, he or she may do
so by filing a written notice with the Custodian in a form acceptable to
the Custodian. The written notice to the Custodian shall list the date on which
distribution shall commence, the period over which distribution shall be made,
and amount(s) of each distribution. The Employee may not elect either (a) a date
for commencement of distribution which delays the commencement of distribution
from the Account beyond April 1 following the calendar year during which the
Employee attains age 70-1/2 or (b) a form of distribution which results in the
present value (determined at the time distribution commences) of payments to be
made to the Employee over the Employee's life expectancy (as determined under
Section 1.72-9 of the Treasury Regulations) equaling less than 50% of the
present value of the total payments to be made.
5.04. DISTRIBUTIONS AT THE EMPLOYEE'S DEATH. At the Employee's death, if such
Employee has not already specified the form of distribution, the Beneficiary (or
each beneficiary if there is more than one) may elect the form of distribution.
Such election, which will be irrevocable, must be in writing and provided to the
Custodian within 60 calendar days after the Custodian has received notification
of the Employee's death. If such an election is not made in the time provided,
distribution of the Account shall be made in a lump sum 90 days after the
Custodian receives notification of the Employee's death. Any form of
distribution must comply with the following requirements:
(a) Death While Receiving Distributions. If the Employee had already
begun to receive distributions from the Account and the Employee's spouse is not
the Beneficiary, the Account balance which remains at the time of the Employee's
death shall be distributed to the Beneficiary at least as rapidly as under the
distribution method being used at the time of the Employee's death.
(b) Death Prior to Receiving Distributions. If the Employee had not begun
to receive distributions at his or her death and the Employee's spouse is not
the Beneficiary, the entire Account balance which remains at the time of the
Employee's death shall be distributed to the Beneficiary either (i) within five
(5) years, or (ii) in installments over a period not exceeding the life
expectancy of the Beneficiary (as determined as of the date of the Employee's
death by using the return multiples contained in Section 1.72-9 of the Treasury
Regulations), provided that such distributions commence within one year after
the date of the Employee's death.
(c) Spousal Beneficiary. If the Employee's spouse is the Beneficiary,
regardless of whether distributions to the Employee have already commenced, this
Section 5.04 shall be applied to the spouse as though the spouse were the
Employee and, as though the spouse, as Employee, separated from service with the
Employer on the date of the Employee's death.
5.05. DISTRIBUTION UPON DISABILITY. If the Employee becomes disabled
as defined in this Agreement after his or her separation from service with the
Employer, he or she shall receive a lump sum distribution of the Account 90 days
after the date of such Disability unless, within 60 days after the date of such
Disability, the Employee elects another time for commencement and/or form of
distribution and the Custodian consents to such election. The Employee may not
elect either (a) a date for commencement of distribution which delays the
commencement of distribution from the Account beyond the first April 1 following
the calendar year during which the Employee attains age 70-1/2 or (b) a form of
distribution which results in the present value (determined at the time
distribution commences) of payments to be made to the Employee over the
Employee's life expectancy (as determined under Section 1.72-9 of the Treasury
Regulations) equaling less than 50% of the present value of the total payments
to be made.
5.06. DISTRIBUTION OF EXCESS DEFERRAL. Upon written notice to the Custodian
from the Employee, by the first March 1 following the close of the taxable year
of the Employee, that "excess deferrals" (as that term is defined in Code
Section 402(g)(2)(A)) have been made with respect to the Account for such
taxable year, the Custodian shall distribute to the Employee such "excess
deferrals" not later than the first April 15 following the close of such taxable
year. The Employer shall have sole responsibilities for determining such an
excess deferrals and timely notification to the Custodian.
5.07. DISTRIBUTION TO INCOMPETENTS. If a distribution is payable to a person
known by the Custodian to be a minor or a person under a legal disability, the
Custodian may, in its absolute discretion, make all or any part of the
distribution to (a) a parent of such person, (b) the guardian, committee or
other legal representative, wherever appointed, of such person, including a
custodian for such person under a Uniform Gifts to Minors Act or similar act,
(c) any person having the control and custody of such person, or (d) to such
person directly.
ARTICLE VI. CUSTODIAN
6.01. DUTIES. The Custodian shall:
(a) Receive transmitted Contributions;
(b) Provide safekeeping for the assets in the Account;
(c) Collect income;
(d) Execute orders for purchase, sale or exchange of shares of the AIM
Fund(s) and make settlements in accordance with general practice;
(e) Maintain records of all transactions in the Account;
(f) Transmit to each Employee, not less frequently than annually,
appropriate statements of the amount of the Custodian's compensation, if any,
charged to the Account;
(g) File with the Internal Revenue Service and/or any other government
agency such returns, reports, forms and other information as may be prescribed
as the responsibility of the Custodian in its capacity as Custodian by the
applicable statue and regulations thereunder; and
(h) Perform all other duties and services consistent with the purposes and
intentions of this Agreement.
The Custodian may perform any of its administrative duties through other persons
designated by the Custodian from time to time, including persons otherwise
unaffiliated with the Custodian.
6.02. SHARE REDEMPTIONS. If cash funds are required to pay taxes, fees, or
other expenses pursuant to Article VI or to make payments to the Employee or his
or her Beneficiary pursuant to Article V, the Employee (or Beneficiary, if
applicable) shall redeem shares of the AIM Fund(s) held in the Employee's
Account.
6.03. LIMITATIONS ON LIABILITIES AND DUTIES.
(a) The Custodian shall be fully protected in acting or omitting to take
any action in reliance upon any document, order or other direction believed by
the Custodian to be genuine and properly given. Conversely, the Custodian shall
22
<PAGE>
be fully protected in acting or omitting to take any action in reliance on its
belief that any document, order or other direction either is not genuine or was
not properly given.
(b) To the extent permitted by law, 30 days after providing to the Employee
the statements required under Section 6.01(f), the Custodian shall be released
and discharged from all liability to the Employee or any third party as to the
matters contained in such statement unless the Employee files written objections
with the Custodian within such 30-day period.
(c) In no event shall the Custodian or Distributor be under a fiduciary
duty to the Employee in regard to the selection of investments or be liable for
any loss incurred on account of a selected investment.
(d) The Custodian and Distributor shall have no responsibility with regard
to the initial or continued qualification of the Account under Code Section
403(b)(7) or with regard to whether the Account or any Contributions
to the Account satisfy any applicable minimum participation, coverage or
nondiscrimination requirements under the Code.
(e) Neither the Custodian nor the Distributor shall be obligated to
determine the amount of any Contribution due or to collect any Contribution from
the Employee or Employer.
(f) Neither the Custodian nor the Distributor shall be held responsible for
determining the amount, character, or timing of any distribution to the
Employee.
(g) Neither the Custodian nor the Distributor shall have responsibility,
and the Employee shall have sole responsibility, with respect to the computation
of the Employee's "exclusion allowance" as defined in Code Section 403(b)(2),
any applicable limitation(s) on contributions under Code Section 402(g) and Code
Section 415(c), any election available to the Employee under Code Section 415,
or any matters relating to any tax consequences with respect to Contributions,
Account earnings, Account distributions, transfers or rollovers.
(h) The Custodian shall not be required to carry out any instructions not
given in accordance with this Agreement and neither the Custodian nor the
Distributor shall be liable for loss of income, or for appreciation or
depreciation in share value that shall result from the Custodian's failure to
follow instructions not given in accordance with this Agreement.
(i) If instructions are received that, in the opinion of the Custodian, are
unclear, neither the Custodian nor the Distributor shall be liable for loss of
income, or for appreciation or depreciation in share value during the period
preceding the Custodian's receipt of written clarification of the instructions.
(j) The Custodian shall have no responsibility to make any distribution or
process any withdrawal by order of the Employee or Beneficiary unless and until
the requisite written instructions specify the occasion for such action and the
Custodian is furnished with any and all applications, certificates, tax waivers,
signature guarantees and other documents (including proof of any legal
representative's authority) deemed necessary or advisable by the Custodian.
(k) The Custodian shall neither assume nor have any duty of inquiry about
any matter arising under the Plan.
(l) Neither the Custodian nor the Distributor shall have any liability to
the Employee or Beneficiary for any tax penalty or other damages resulting from
any inadvertent failure by the Custodian to make a distribution under this
Agreement.
(m) Neither the Custodian nor the Distributor shall be liable for interest
on temporary cash balances, if any, maintained in the Account.
(n) To the extent permitted by law, the Employee shall always fully
indemnify the Custodian and hold it harmless from any and all liability
whatsoever which may arise either (i) in connection with this Agreement and
matter which it contemplates (except that which arises due to the Custodian's
gross negligence or willful misconduct) or (ii) with respect to making or
failing to make distribution, other than for failure to make distribution in
accordance with instructions therefore which are in full compliance with both
Article IX and this Section 6.03.
(o) Except as required by law, the Custodian shall not be obligated or
expected to commence or to defend a legal action or proceeding in connection
with this Agreement, unless the Custodian and the Employer agree that the
Custodian will defend a given legal action and the Custodian is fully
indemnified for so doing to its satisfaction.
(p) In no event shall the Employee, Employer, or Distributor have any
responsibility or liability for any acts or omissions of the Custodian (or its
agents or designees) hereunder.
6.04. COMPENSATION. In consideration for its services hereunder, the
Custodian shall be entitled to receive the applicable fees specified in its then
current fee schedule, if any. The Custodian may substitute a revised fee
schedule from time to time upon 30 days' written notice to the Employer or
Employee. The Custodian shall be entitled to such reasonable additional fees as
it may from time to time determine for services required of it and not clearly
identified on the fee schedule.
6.05. RESIGNATION AND REMOVAL. The Custodian may resign at any time
by giving at least 30 days' written notice to the Employer or Employee. The
Distributor may remove the Custodian hereunder by giving at least 30 days'
written notice to the Custodian. In each case, the Distributor shall designate a
successor custodian qualified pursuant to Section 2.07 hereof, which successor
custodian shall accept such appointment by a writing to be submitted to the
Employer or Employee and the Custodian.
On the effective date of its resignation or removal, the Custodian shall
transfer to the designated successor custodian the assets and records (or copies
thereof) of the Account provided, however, that the Custodian may retain
whatever assets it deems necessary for payment of its fees, costs, expenses,
compensation and any other liabilities which constitute a charge on or against
the assets of the Account or on or against the Custodian.
ARTICLE VII. FEES, TAXES AND OTHER EXPENSES
Any income taxes or other taxes of any kind whatsoever that may be levied
or assessed upon or in respect of the Account (including any transfer taxes
incurred in connection with the investment and reinvestment of Account assets),
expenses, fees and administrative costs incurred by the Custodian in the
performance of its duties (including fees for legal services rendered to the
Custodian), and the Custodian's compensation as determined under Section 6.04,
if any, shall constitute a charge upon the assets of the Account. At the
Custodian's option, such fee, tax or expense shall be paid from the Account or
directly by the Employee.
ARTICLE VIII. PROTECTION OF EMPLOYEE BENEFITS
At no time shall any part of the Account be used for purposes other than for
the exclusive benefit of the Employee. The Employee's rights to Contributions
shall be nonforfeitable at all times after such Contributions are transferred to
the Custodian.
ARTICLE IX. BENEFICIARY DESIGNATION
Each Employee may submit to the Custodian a properly executed written
Designation of Beneficiary acceptable to the Custodian who will receive any
undistributed assets held in the Account at the time of the Employee's death.
Any such Designation of Beneficiary shall not be effective unless it is filed
during the Employee's lifetime with the Custodian at the Custodian's home
office. Whether or not fully dispositive of the Account, the most recently filed
Designation of Beneficiary accepted by the Custodian shall be controlling and
all previously filed designations shall be considered superseded and shall have
no effect. To the extent that the Account is not fully disposed of at the time
of the Employee's death, it shall go to the Employee's surviving spouse, if any;
otherwise, to the Employee's estate. If a Beneficiary dies while receiving
distributions, the portion of the Account to which the Beneficiary would have
been entitled (had he or she survived) shall be paid to the Beneficiary's
beneficiary or beneficiaries (or if impossible, to the Beneficiary's estate) in
a lump sum within 90 days after the Custodian receives notification of the
Beneficiary's death.
ARTICLE X. AMENDMENT
10.01. BY THE DISTRIBUTOR. The Distributor may amend this Agreement in
its entirety or any portion thereof. The Distributor shall provide copies of
such amendment to the Employer and/or Employee. Neither this Section nor any
other portion of this agreement shall impose on the Distributor an affirmative
obligation to amend the Agreement.
10.02. LIMITATIONS. No amendment shall be made:
(a) Which would cause or permit any part of the Account to be diverted to
purposes other than for the exclusive benefit of the Employee and/or his or her
Beneficiary, or cause or permit any portion of such assets to revert to or
become the property of the Employer;
(b) Without the written consent of the Custodian; or
(c) Which would retroactively deprive any Employee of any benefit to which
he or she was entitled under the Agreement, unless such amendment is necessary,
in the opinion of counsel, to conform the Agreement to, or satisfy the
conditions of, Code Section 403(b), any other law, or any Governmental
regulation or ruling, provided that this prohibition shall not be construed to
prohibit prospective amendment of the Agreement (including prospective amendment
to eliminate a benefit) where such prospective amendment is permitted by law.
ARTICLE XI. TERMINATION
11.01. AUTOMATIC TERMINATION ON DISTRIBUTION. This Agreement shall terminate
when all the assets held in the Account established hereunder have been
distributed or otherwise transferred out of the Account.
11.02. TERMINATION ON DISQUALIFICATION. This Agreement shall terminate if,
after notification by the Internal Revenue Service that the Employee's Account
does not qualify under Code Section 403(b)(7), the Employer and/or Distributor
do not make the amendments necessary to so qualify the Account. On such
23
<PAGE>
termination of this Agreement, the Custodian shall distribute in cash or in
kind, to the Employee or, in the event of the Employee's death, to the
Beneficiary, subject to the Custodian's right to reserve funds as provided in
Section 6.05.
ARTICLE XII. LOANS
12.01. LOAN APPLICATION AND CONDITIONS. The Custodian may make a loan to an
Employee from the Employee's Account upon the Custodian's receipt of the
Employee's written application in a form acceptable to the Custodian, provided
the following conditions are satisfied:
(i) each loan shall satisfy rules adopted by the Custodian regarding the
minimum and maximum loan amounts permitted, which rules may be changed at any
time, provided, however, that in no event shall the total of all outstanding
loans to any Employee exceed the lesser of $50,000 (reduced by the highest
outstanding balance of loans from Account during the one year period ending the
day before the day on which such loan is made), or 50% of the balance in the
Employee's Account;
(ii) each loan shall be evidenced by the Employee's execution of a personal
demand note on a form supplied or approved by the Custodian, and each note shall
specify a reasonable rate of interest as determined by the Custodian and shall
require that the loan be repaid by the Employee in approximately equal
installments (not less frequently than quarterly) over a specified period of
time not exceeding five years;
(iii) each loan shall be secured by the Employee's Account balance.
12.02. DEFAULT. If the Employee dies or fails to pay any installment of the
loan when due, the unpaid balance of the loan shall become immediately due and
payable. The Employee may satisfy the loan by paying the outstanding balance of
the loan within such time as may be specified in the note and according to rules
adopted by the Custodian. If the loan and interest are not repaid within the
time specified, the Custodian shall treat the unpaid balance as a deemed
distribution from the Employee's Account, and shall offset the unpaid balance
before making any distribution payment otherwise due under this Agreement to the
Employee or his Beneficiary.
If an Employee does not repay any portion of the principal amount of a loan
within the required term, the Employee shall continue to be liable for the
unpaid balance of the loan including interest owed on principal payments not
made.
12.03. RULES OF ADMINISTRATION. The Custodian shall adopt such rules as from
time to time it deems proper under this Article XII (including, but not limited
to rules regarding maximum and minimum amounts of loans, and permitted number of
loans outstanding) which rules shall be applied on a uniform and
non-discriminatory basis. The Custodian reserves the right to charge an
administrative fee for processing and maintaining loans.
ARTICLE XIII. MISCELLANEOUS
13.01. APPLICABLE LAW. To the extent not preempted by Federal law, this
Agreement shall be construed and administered in accordance with the laws of the
state in which the home office of the Custodian is located. No provision of this
Agreement shall be construed to conflict with any provision of an Internal
Revenue Service regulation, ruling or order affecting the status of this
Agreement under Code Section 403(b)(7).
13.02. EMPLOYER'S SIGNATURE. If the Employer does not sign the Application
and is not required to do so under the Code and the regulations thereunder, the
Employee, to the extent allowed by law, assumes all obligations and
responsibilities of the Employer under this Agreement.
13.03. CHANGE OF ADDRESS. The Employer or if permitted by the Custodian, the
Employee, shall notify the Custodian in writing of any change of address within
30 days of such change.
13.04. NOTICE. Any notice from the Custodian to the Employee pursuant to this
Agreement shall be effective when sent by U.S. Mail to the address of record of
the Employer or Employee. Any notice to the Custodian pursuant to this Agreement
shall be by first class mail addressed to its home of office.
13.05. SUCCESSORS. This Agreement shall be binding upon and shall inure
to the benefit of the successors in interest of the parties hereto.
13.06. CONSTRUCTION. It is intended that this Agreement, together with the
other documents that compose the 403(b)(7) arrangement pursuant to which the
Employee's funds are invested under this Agreement, qualify as a custodial
account under Code Section 403(b)(7). This Agreement shall be construed and
limited by applicable laws, and the powers and discretions conferred hereunder
shall be exercised in a manner consistent with that purpose. Subject to the
foregoing provisions of this Section 12.06, in the event of any conflict between
these Articles I through XII and the documents incorporated in this Agreement by
reference, the provisions of these Articles I through Xll shall prevail.
13.07. SEPARABILITY. If any provision of this Agreement shall be held invalid
or illegal for any reason, such determination shall not affect any remaining
provisions of this Agreement, but this Agreement shall be construed and enforced
as if such invalid or illegal provision had never been included in this
Agreement.
13.08. STATUTORY REQUIREMENTS. In the event any applicable state or local
law, regulating or rule conflicts with and/or supplements the terms of this
Agreement, such law, regulation or rule shall be deemed to supersede and/or
supplement the terms of this Agreement, provided that the Distributor and the
Custodian receive written notice of such law, regulation or rule.
13.09. RETIREMENT PLAN PROVISIONS SHALL CONTROL. In the event Contributions
are being made to the 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
Section 403(b)(7) of the Code; and
(b) such provisions do not impose any additional responsibilities or
duties on the Custodian without its prior written consent. The Employer shall be
responsible for delivering the most recent copy of any such retirement plan or
program to the Custodian.
13.10. ERISA REQUIREMENTS. If the Agreement is determined to constitute part
of an "employee benefit plan" established or maintained by the Employer within
the meaning of Title I of the Employee Retirement Income Security Act of 1974,
as amended, then the Employer shall have sole responsibility and be solely
responsible for ensuring that such employee benefit plan complies at all times
within such law, including, but not limited to, any reporting and disclosure
requirement thereunder.
13.11. PLAN ADMINISTRATION. Absent a separate written agreement to the
contrary, neither the Custodian nor the Distributor shall be considered the plan
administrator for any purpose under the Code or the Employee Retirement Income
Security Act of 1974, as amended.
24
<PAGE>
AIM 403(b) PLAN
LOAN PROVISION TERMS AND CONDITIONS
Please retain for your records
AMOUNT
o The maximum loan amount is the lesser of:
50% of your AIM 403 (b) Plan Employee account balance or $50,000 (reduced
by the highest outstanding loan balance in past 12 months).
o The minimum loan amount is $1,000.
o Each account may have no more than one outstanding loan at any time.
o Contact our Customer Service department at 1 (800) 949-4246 ext. 5222
for details.
o Loans are not available for AIM B Shares
LOAN DURATION
The maximum loan duration is five years. The AIM 403(b) Plan does not provide
an extended loan term for the purchase of a principal residence.(1)
RATE OF INTEREST
The interest rate shall be based on the prime rate plus one point as quoted in
The Wall Street Journal on the first business day of the month in which the loan
is granted.
AUTOMATIC REPAYMENT METHOD
If you choose this method, loan payments will be deducted directly from your
checking account on or about the twenty-fifth (25th) of each month, starting on
the second month following the issuance of the loan check. Repayments (principal
and interest) are applied to the particular fund from which the loan was
granted or the fund currently selected to receive repayments. IF A LOAN IS FROM
MORE THAN ONE FUND, THE LOAN REPAYMENTS MUST BE MADE TO ONE PREDESIGNATED AIM
FUND ONLY. (Repayments will not be accepted through payroll deductions.)
COUPON REPAYMENT METHOD
If this method is chosen, A I M Fund Services, Inc. (with its affiliates,
referred to in this agreement as "AIM") will provide you with a repayment
coupon booklet that specifies your monthly payment schedule for the duration of
the loan. You will be responsible for mailing your loan repayments and the
coupon stub directly to AIM. Payments must be received by the 25th of each
month, starting on the second month following the issuance of the loan check.
(continued)
[AIM LOGO APPEARS HERE]
<PAGE>
AIM 403(b) PLAN
LOAN PROVISION TERMS AND CONDITIONS
Please retain for your records
LOAN APPLICATION FEE
If you choose the Automatic Repayment Method, there is a $50 application fee.
If you choose the Coupon Repayment Method, the application fee is $100. The
application fees are non-refundable and must be paid by check (made payable to
A I M Fund Services, Inc.). The application fee must accompany the loan
application to initiate the loan process.
ANNUAL FEES
For the Automatic Repayment Method the annual fee is $25. The annual fee for
Coupon Repayment Method is $50. The annual fee is deducted directly from your
AIM 403(b) Plan account in early December and cannot be paid with a separate
check.
LOAN PROCESS
Participants wishing to exercise the AIM 403(b) Plan loan provision are required
to complete and sign the Loan Application, Promissory Note and Security
Agreement, Automatic Repayment Method Authorization Form (if applicable), and
Truth in Lending Disclosure Statement. When all documents are received in good
order, a check for the requested loan amount will be mailed to your address of
record within 10 business days.
REPAYMENT PROCEDURE
All loans must be repaid in monthly installments and within the lesser of five
years or by the time required distributions must begin at age 70 1/2 or before
all of the assets are transferred out of the account.
DEFAULT PROCEDURES
A default shall occur upon AIM's failure to receive two consecutive monthly
installments when due. In the event of default, AIM shall serve the Participant
with a written notice of default. Within fifteen (15) days of the date of such
notice, the Participant shall tender to AIM all outstanding principal and
interest payments due as of the date of the notice of default. If the
Participant fails to remit such amount, AIM may deem the outstanding principal
balance to be a distribution of the Participant's account and will generate a
Form 1099R in the amount of the deemed distribution at the end of the year.
PREPAYMENT
Loans may be prepaid at any time. There is no prepayment penalty. Please
contact a Qualified Plans Representative at 1-800-949-4246 ext. 5222 for your
pay-off amount.
SECURITY
As security for the payment of this note, the Participant hereby grants to AIM
a security interest in the Participant's account balance in the account.
IMPORTANT
AIM assumes no responsibility for current or future tax consequences resulting
from this transaction. Participants should consult their tax advisers for
information concerning their particular situations. Participants assume
responsibility for all tax consequences if monthly payments are not made on a
timely basis.
[AIM LOGO APPEARS HERE]
<PAGE>
AIM 403(b) PLAN
LOAN APPLICATION
Please complete this loan application and send it with your application fee to
the address below. Once received, AIM will return the necessary documentation
to begin the loan process. Please allow 3-4 weeks for AIM to secure the
necessary documentation and to complete the loan process.
I hereby submit to AIM this application to borrow funds from my AIM 403(b)
Plan account.
Date of Application AIM Account No.
------------------------ -------------------
Social Security Number Date of Birth
--------------------- ---------------------
Name
----------------------------------------------------------------------------
Address
-------------------------------------------------------------------------
City State Zip
--------------------------------------- ------------- -----------
Phone: Home ( ) Work ( )
-------------------------- ------------------------
Please write in the name of each AIM fund from which the loan will be
withdrawn:
AIM Fund $
------------------------------------------- ---------------------
AIM Fund $
------------------------------------------- ---------------------
AIM Fund $
------------------------------------------- ---------------------
AIM Fund $
------------------------------------------- ---------------------
Total MUST equal amount of loan $
---------------------
REPAYMENTS: My loan repayments are to be made to the AIM _______________ Fund.
(ONE fund only)
All provisions of the AIM 403(b) Plan Custodial Agreement, as amended from time
to time, are incorporated herein by reference. Applicant assumes responsibility
for all tax consequences. AIM assumes no responsibility for current or future
tax consequences resulting from this transaction. We suggest that you consult
your tax adviser for information concerning your particular situation.
X
-------------------------------------- ----------------------------------
Applicant's Signature Date
IMPORTANT: A check made payable to A I M FUND SERVICES, INC. for your
non-refundable application fee must accompany this application to initiate the
loan process.
My loan repayment method is: [ ] Automatic Repayment ($50 application fee) or
[ ] Coupon Repayment ($100 application fee)
A I M Fund Services, Inc., Attn: 403(b) Loan Applications, P.O. Box 4399,
Houston, TX 77210-4399
[AIM LOGO APPEARS HERE]
<PAGE>
AIM 403(b) PLAN
AUTOMATIC REPAYMENT METHOD AUTHORIZATION
The Automatic Repayment Method enables you to make monthly loan repayments via
bank drafts from your checking account. The bank drafts are an electronic
transfer of funds from your bank to AIM's bank through the National Automated
Clearing House Association (NACHA). Please verify whether your bank participates
in the National Automated Clearing House Association (NACHA) before submitting
this authorization. (If it does not, you must repay your loan by monthly check
and the loan application fee is $100.) As soon as your bank has accepted your
authorization, and only if your bank is a member of the National Automated
Clearing House Association (NACHA), the amount of each payment will be
electronically deducted from your checking account on, or about, the
twenty-fifth (25th) of each month, starting the second month following the
issuance of the loan check. The bank will process the Electronic Fund Transfer
and a debit entry will appear on your checking account statement.
Please complete this form to authorize AIM to have your loan repayments
deducted from your personal checking account. Attach a voided personal check
in the space provided below.
Make each of my pre-authorized loan payments for $___________ (amount of
monthly loan repayment), and invest into the:
AIM ____________________ Fund.
ATTACH YOUR VOIDED CHECK HERE.
------------------------------------------------------------------------
John Doe 000
123 Main St.
Anywhere, USA 12345
______________________________________ $_____________________
_________________________________________________________________
___________________________ ___________________________
------------------------------------------------------------------------
Name of Bank
----------------------------------------------------------------
Address of Bank Bank Phone #
------------------------------- --------------------
Bank Account # ABA Routing #
------------------------------- -------------------
Please honor drafts on my account by A I M Fund Services, Inc. ("AIM"). Your
authority to so do shall continue until you receive further notice from me
revoking this authority. You may terminate your participation in this
arrangement by written notice either to AIM or me. I agree that your rights
with respect to each draft shall be the same as if it were drawn by me. I
further agree that should any draft be dishonored, with or without cause,
intentionally or inadvertently, you shall be under no liability whatsoever.
<TABLE>
<S> <C>
- ---------------------------------------- -------------------------------------------------
Depositor's Name (please print) Signature (exactly as it appears on bank records)
-------------------------------------------------
Date
</TABLE>
Please complete and return to:
A I M Fund Services, Inc., P.O. Box 4399, Houston, TX 77210-4399
Phone 800-949-4246 ext. 5242
[AIM LOGO APPEARS HERE]
<PAGE>
EXHIBIT 14(e)
SIMPLE IRA APPLICATION [AIM LOGO APPEARS HERE]
Complete Sections 1 - 10
Employee: Return completed application to your employer.
Employer: Return completed applications and check to: A I M Fund Services, Inc.,
P. O. Box 4739, Houston, TX 77210-4739.
Phone: 800-959-4246. Minors cannot open an AIM SIMPLE IRA Account. Make check
payable to INVESCO Trust Company.
- --------------------------------------------------------------------------------
1 PARTICIPANT INFORMATION (Please print or type)
Name
----------------------------------------------------------------------
First Name Middle Last Name
Address
-----------------------------------------------------------------
Street City State ZIP Code
Social Security Number Birth Date / /
-------------------- ------ ------ ------
Month Day Year
Home Telephone ( ) Work Telephone ( )
---- ------------------ ---- -------------
- --------------------------------------------------------------------------------
2 EMPLOYER INFORMATION (Please print or type)
Name Contact Person
--------------------------------------- ---------------
Address
-------------------------------------------------------------------
Street City State ZIP Code
Phone ( )
---- ------------------------
- --------------------------------------------------------------------------------
3 DEALER INFORMATION (To be completed by registered securities dealer)
Name of Broker/Dealer Firm
------------------------------------------------
Home Office Address
-------------------------------------------------------
Representative Name and Number
---------------------------------------------
Authorized Signature of Dealer
---------------------------------------------
Branch Address
------------------------------------------------------------
Branch Phone Number ( )
--------- ------------------------
/ / Authorized for NAV purchase (If authorized for NAV purchase, other
than the Broker, please attach NAV Certification Form)
- --------------------------------------------------------------------------------
4 ACCOUNT INFORMATION
Date of Initial Deposit / /
------ ------ ------
Month Day Year
Contribution Type:
/ / Elective Deferral
/ / Employer Contribution
/ / Rollover from SIMPLE IRA
/ / Transfer from SIMPLE IRA
11
<PAGE>
5 FUND INVESTMENT
Indicate Fund(s) and contribution amount(s). MAKE CHECK PAYABLE TO INVESCO
TRUST COMPANY (ITC)
<TABLE>
Fund Amount of Investment Class of Shares (check one)
<S> <C> <C> <C> <C>
/ / AIM Advisor Flex Fund $_________________ / / A Shares (522) / / C Shares (322)
/ / AIM Advisor Income Fund _________________ / / A Shares (521) / / C Shares (321)
/ / AIM Advisor International Value Fund _________________ / / A Shares (526) / / C Shares (326)
/ / AIM Advisor Large Cap Value Fund _________________ / / A Shares (520) / / C Shares (320)
/ / AIM Advisor MultiFlex Fund _________________ / / A Shares (524) / / C Shares (324)
/ / AIM Advisor Real Estate Fund _________________ / / A Shares (525) / / C Shares (325)
/ / AIM Aggressive Growth Fund _________________ Fund Currently Closed To New Investors (407)
/ / AIM Blue Chip Fund _________________ / / A Shares (515) / / B Shares (615) / / C Shares (315)
/ / AIM Capital Development Fund _________________ / / A Shares (514) / / B Shares (614) / / C Shares (314)
/ / AIM Constellation Fund _________________ / / A Shares (002) / / B Shares (602) / / C Shares (302)
/ / AIM Limited Maturity Treasury Fund _________________ Only "A Shares" Available (007)
/ / AIM Balanced Fund _________________ / / A Shares (006) / / B Shares (685) / / C Shares (306)
/ / AIM Charter Fund _________________ / / A Shares (010) / / B Shares (645) / / C Shares (310)
/ / AIM Global Aggressive Growth Fund _________________ / / A Shares (081) / / B Shares (691) / / C Shares (381)
/ / AIM Global Growth Fund _________________ / / A Shares (082) / / B Shares (692) / / C Shares (382)
/ / AIM Global Income Fund _________________ / / A Shares (083) / / B Shares (693) / / C Shares (383)
/ / AIM Global Utilities Fund _________________ / / A Shares (408) / / B Shares (655) / / C Shares (308)
/ / AIM Growth Fund _________________ / / A Shares (406) / / B Shares (650) / / C Shares (350)
/ / AIM High Yield Fund _________________ / / A Shares (425) / / B Shares (675) / / C Shares (375)
/ / AIM Income Fund _________________ / / A Shares (402) / / B Shares (665) / / C Shares (365)
/ / AIM Intermediate Government Fund _________________ / / A Shares (404) / / B Shares (660) / / C Shares (360)
/ / AIM International Equity Fund _________________ / / A Shares (016) / / B Shares (694) / / C Shares (316)
/ / AIM Money Market Fund _________________ / / A Shares (401) / / B Shares (680) / / C Shares (380)
/ / AIM Cash Reserve Shares (421)
/ / AIM Value Fund _________________ / / A Shares (405) / / B Shares (690) / / C Shares (305)
/ / AIM Weingarten Fund _________________ / / A Shares (001) / / B Shares (640) / / C Shares (301)
Total $_________________
</TABLE>
(Please note that if no class of shares is selected, Class A shares will be
purchased with the exception of the AIM Money Market Fund where AIM Cash
Reserve Shares will be purchased.)
- --------------------------------------------------------------------------------
6 TELEPHONE EXCHANGE PRIVILEGE
Unless indicated below, I authorize A I M Fund Services, Inc., to accept
instructions from any person to exchange shares in my account(s) by
telephone in accordance with the procedures and conditions set forth in the
AIM Fund's current prospectus.
/ / I DO NOT want the Telephone Exchange Privilege.
- --------------------------------------------------------------------------------
7 REDUCED SALES CHARGE (Optional)
Right of Accumulation (This option is for Class A shares only.) I apply for
Right of Accumulation reduced sales charges based on the following accounts
in The AIM Family of Funds-Registered Trademark-:
<TABLE>
<S> <C>
Fund(s)/Account No(s). Social Security No(s).
-------------- --------------
-------------- --------------
-------------- --------------
</TABLE>
LETTER OF INTENT
I agree to the Letter of Intent provisions in the prospectus. I plan to
invest during a 13-month period a dollar amount of at least:
/ / $25,000 / / $50,000 / / $100,000 / / $250,000
/ / $500,000 / / $1,000,000
12
<PAGE>
8 BENEFICIARY INFORMATION
I hereby designate the following beneficiary to receive the balance in my
SIMPLE IRA custodial account upon my death. To be effective, the
designation of beneficiary and any subsequent change in designation of
beneficiary must be filed with the Custodian prior to my death. The balance
of my account shall be distributed in equal amounts to the beneficiary(ies)
who survives me. If no beneficiary is designated or no designated
beneficiary or contingent beneficiary survives me, the balance in my IRA
will be distributed to the legal representatives of my estate. This
designation revokes any prior designations. I retain the right to revoke
this designation at any time. I hereby certify that there is no legal
impediment to the designation of this beneficiary.
PRIMARY BENEFICIARY(IES)
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
CONTINGENT BENEFICIARY
In the event that I die and no primary beneficiary listed above is alive,
distribute all Fund accounts in my SIMPLE IRA to the following contingent
beneficiary(ies) who survives me, in equal amounts. If more than on, please
attach a list.
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
13
<PAGE>
9 AUTHORIZATION AND SIGNATURE
I hereby establish the A I M Distributors, Inc. SIMPLE Individual
Retirement Account appointing INVESCO Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the SIMPLE IRA
custodial agreement and disclosure statement and consent to the custodial
account fees as specified. I understand that a $10 annual AIM Fund SIMPLE
IRA Maintenance Fee will be deducted early in each December from my AIM
SIMPLE IRA.
WITHHOLDING INFORMATION (SUBSTITUTE FORM W-9)
Under the penalties of perjury I certify by signing this Application as
provided below that:
(1) The number shown in Section 1 of this Application is my correct Social
Security (or Tax Identification) Number, and
(2) I am not subject to backup withholding because (a) I am exempt from
backup withholding, (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding as
a result of a failure to report all interest or dividends, (c) the IRS
has notified me that I am no longer subject to backup withholding.
(This paragraph (2) does not apply to real estate transactions,
mortgage interest paid, the acquisition or abandonment of secured
property, contributions to an individual retirement arrangement and
payments other than interest and dividends.)
YOU MUST CROSS OUT PARAGRAPH (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS
THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE OF
UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN.
In addition, the Fund hereby incorporates by reference into this section of
the Application either the IRS instructions for Form W-9 or the substance
of those instructions whichever is included in the prospectus.
SIGNATURE PROVISIONS
I, THE UNDERSIGNED DEPOSITOR, HAVE READ AND UNDERSTAND THE FOREGOING
APPLICATION AND THE ATTACHED MATERIAL INCLUDED HEREIN BY REFERENCE. IN
ADDITION, I CERTIFY THAT THE INFORMATION WHICH I HAVE PROVIDED AND THE
INFORMATION WHICH IS INCLUDED WITHIN THE APPLICATION AND THE ATTACHED
MATERIAL INCLUDED HEREIN BY REFERENCE IS ACCURATE INCLUDING BUT NOT LIMITED
TO THE REPRESENTATIONS CONTAINED IN THE WITHHOLDING INFORMATION SECTION OF
THIS APPLICATION. [THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR
CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS
REQUIRED TO AVOID BACKUP WITHHOLDING.]
Dated / /
----- ----- -----
Month Day Year
Signature of SIMPLE IRA Shareholder
----------------------------------------
10 SERVICE ASSISTANCE
Our knowledgeable Client Service Representatives are available to assist
you between 7:30 a.m. and 5:30 p.m. Central time at 800-959-4246.
[AIM LOGO APPEARS HERE]
A I M Distributors, Inc. 12/97
14
<PAGE>
AIM SIMPLE IRA ASSET-TRANSFER FORM [AIM LOGO APPEARS HERE]
USE THIS FORM ONLY WHEN TRANSFERRING ASSETS FROM AN EXISTING SIMPLE IRA TO AN
AIM SIMPLE IRA.
Note: Use this form ONLY if you want AIM to request the money directly from
another custodian.
Complete Sections 1 - 5.
If you do not already have an AIM SIMPLE IRA, you must also submit an AIM SIMPLE
IRA Application. AIM will arrange the transfer for you.
- --------------------------------------------------------------------------------
1 INVESTOR INFORMATION (Please print or type.)
Name
----------------------------------------------------------------------
First Name Middle Last Name
Address
-----------------------------------------------------------------
Street
- --------------------------------------------------------------------------------
City State ZIP Code
Social Security Number Birth Date / /
-------------------- ------ ------ ------
Month Day Year
Home Telephone ( ) Work Telephone ( )
---- ------------------ ---- -------------
- --------------------------------------------------------------------------------
2 CURRENT TRUSTEE/CUSTODIAN
Name of Resigning Trustee
--------------------------------------------------
Account Number of Resigning Trustee
----------------------------------------
Address of Resigning Trustee
-----------------------------------------------
Street
- --------------------------------------------------------------------------------
City State ZIP Code
Attention Telephone
------------------------ ------------------------------
- --------------------------------------------------------------------------------
3 IRA ACCOUNT INFORMATION
Please deposit proceeds in my
/ / New*
/ / Existing AIM SIMPLE IRA Account Number
---------------------------
INVESTMENT ALLOCATION:
<TABLE>
<S> <C> <C>
Fund Name Class %
----------------------------- ------------------- --------
Fund Name Class %
----------------------------- ------------------- --------
Fund Name Class %
----------------------------- ------------------- --------
</TABLE>
*If this is a new AIM SIMPLE IRA account, you must attach a completed AIM
SIMPLE IRA Application. If no class of shares is selected, Class A shares
will be purchased, except in the case of AIM Money Market Fund, where AIM
Cash Reserve Shares will be purchased.
- --------------------------------------------------------------------------------
4 TRANSFER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
OPTION 1: Please liquidate from the account(s) listed in Section 2 and
issue a check in cash to my SIMPLE IRA with INVESCO Trust Company.
Amount to liquidate: / / All / / Partial amount of $
----------------
When to liquidate: / / Immediately / / At maturity / /
--- --- ---
OPTION 2: (If the account listed in Section 2 contains shares of an AIM
Fund, you may choose to transfer them "in kind.") Please deposit "in kind"
the shares of the AIM Fund held in my account to INVESCO Trust Company.
NOTE: ONLY AIM FUND SHARES MAY BE TRANSFERRED IN KIND. TO TRANSFER ALL
OTHER ASSETS, THEY MUST BE LIQUIDATED.
Amount to transfer "in kind": / / All / / Partial amount of shares
---------
15
<PAGE>
5 AUTHORIZATION AND SIGNATURE
I have established a SIMPLE IRA with the AIM Funds and have appointed
INVESCO Trust Company as the successor Custodian. Please accept this as
your authorization and instruction to liquidate or transfer in kind the
assets noted above, which your company holds for me.
Your Signature Date / /
---------------------------------- ---- ---- ----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Brokerage Firm
---------------------------------------------
Signature Guaranteed by
---------------------------------------------------
(Name and title)
- --------------------------------------------------------------------------------
6 DISTRIBUTION ELECTION INFORMATION
SECTION 6 OF FORM TO BE COMPLETED BY PRIOR CUSTODIAN
If this participant is age 70 1/2 or older this year, the resigning
Trustee/Custodian must complete this section.
Election made by the participant as of the required beginning date:
1. Method of calculation / / declining years / / recalculation
/ / annuitization / / amortization
2. Life expectancy
/ / single life payout / / joint life expectancy factor-Joint birth
date and relationship
--------
3. The amount withheld from this rollover to satisfy this year's required
distribution $
------------------------------------------------------
The life-expectancy ages used to calculate this required payment was
---------------------------------------------------------------------------
Signature of Current Custodian/Trustee
------------------------------------
- --------------------------------------------------------------------------------
REMAINDER OF FORM TO BE COMPLETED BY AIM
7 CUSTODIAN ACCEPTANCE
This is to advise you that INVESCO Trust Company, as custodian, will accept
the account identified above for:
Depositor's Name Account Number
--------------------------- ---------------
This transfer of assets is to be executed from fiduciary to fiduciary and
will not place the participant in actual receipt of all or any of the plan
assets. No federal income tax is to be withheld from this transfer of
assets.
Authorized Signature /s/ Illegible Mailing Date / /
---------------------------- ---- ---- ----
(INVESCO Trust Company)
- --------------------------------------------------------------------------------
8 INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check and return to:
INVESCO Trust Company, c/o A I M Fund Services, Inc., P. O. Box 4739,
Houston, TX 77210-4739.
Make check payable to INVESCO Trust Company.
Indicate the AIM account number and the social security number of the
SIMPLE IRA holder on all documents.
[AIM LOGO APPEARS HERE]
A I M Distributors, Inc. 12/97
16
<PAGE>
SIMPLE INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT [AIM LOGO APPEARS HERE]
FORM 5305-SA (December 1996)
Department of the Treasury
Internal Revenue Service (under Sections 408(a) and 408(p) of the Internal
Revenue Code)
ARTICLE I
1.01 THE CUSTODIAN WILL ACCEPT CASH CONTRIBUTIONS made on behalf of the
participant by the participant's employer under the terms of a SIMPLE plan
described in section 408(p). In addition, the Custodian will accept transfers or
rollovers from other SIMPLE IRAs of the participant. No other contributions will
be accepted by the Custodian.
ARTICLE II
2.01 THE PARTICIPANT'S INTEREST in the balance in the custodial account is
nonforfeitable.
ARTICLE III
3.01 NO PART OF THE CUSTODIAL ACCOUNT MAY BE INVESTED IN LIFE INSURANCE
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
3.02 NO PART OF THE CUSTODIAL ACCOUNT MAY BE INVESTED IN COLLECTIBLES
(within the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold and silver coins and
coins issued under the laws of any state.
ARTICLE IV
4.01 NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT to the contrary, the
distribution of the participant's interest in the custodial account shall be
made in accordance with the following requirements and shall otherwise comply
with section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are herein incorporated by reference.
4.02 UNLESS OTHERWISE ELECTED by the time distributions are required to
begin to the participant under paragraph 3, or to the surviving spouse under
paragraph 4, other than in the case of a life annuity, life expectancies shall
be recalculated annually. Such election shall be irrevocable as to the
participant and the surviving spouse and shall apply to all subsequent years.
The life expectancy of a nonspouse beneficiary may not be recalculated.
4.03 THE PARTICIPANT'S ENTIRE INTEREST IN THE CUSTODIAL ACCOUNT must be, or
begin to be, distributed by the participant's required beginning date (April 1
following the calendar year-end in which the participant reaches age 70 1/2). By
that date, the participant may elect, in a manner acceptable to the Custodian,
to have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the participant.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last survivor lives of
the participant and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified
period that may not be longer than the participant's life expectancy.
(e) Equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last survivor expectancy
of the participant and his or her designated beneficiary.
4.04 IF THE PARTICIPANT DIES before his or her entire interest is
distributed to him or her, the entire remaining interest will be distributed as
follows:
(a) If the participant dies on or after distribution of his or her
interest has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the participant dies before distribution of his or her interest
has begun, the entire remaining interest will, at the election of the
participant or, if the participant has not so elected, at the election of the
beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the participant's death, or
(ii) Be distributed in equal or substantially equal payments over
the life or life expectancy of the designated beneficiary or beneficiaries
starting by December 31 of the year following the year of the participant's
death. If, however, the beneficiary is the participant's surviving spouse, then
this distribution is not required to begin before December 31 of the year in
which the participant would have reached age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced, distributions are treated as having begun on the participant's
required beginning date, even though payments may actually have been made before
that date.
(d) If the participant dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
4.05 IN THE CASE OF A DISTRIBUTION OVER LIFE EXPECTANCY in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the participant's entire interest in the custodial account as
of the close of business on December 31 of the preceding year by the life
expectancy of the participant (or the joint life and last survivor expectancy of
the participant and the participant's designated beneficiary, or the life
expectancy of the designated beneficiary, whichever applies). In the case of
distributions under paragraph 3, determine the initial life expectancy (or joint
life and last survivor expectancy) using the attained ages of the participant
and designated beneficiary as of their birthdays in the year the participant
reaches age 70 1/2. In the case of a distribution in accordance with section
404(b)(ii), determine life expectancy using the attained age of the designated
beneficiary as of the beneficiary's birthday in the year distributions are
required to commence.
4.06 THE OWNER OF TWO OR MORE INDIVIDUAL RETIREMENT ACCOUNTS may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
5.01 THE PARTICIPANT AGREES TO PROVIDE THE CUSTODIAN with information
necessary for the Custodian to prepare any reports required under sections
408(i) and 408(l)(2) and Regulations section 1.408-5 and 1.408-6.
5.02 THE CUSTODIAN AGREES TO SUBMIT REPORTS to the Internal Revenue Service
and the participant as prescribed by the Internal Revenue Service.
5.03 THE CUSTODIAN ALSO AGREES TO PROVIDE THE PARTICIPANT'S EMPLOYER the
summary description described in section 408(l)(2) unless this SIMPLE IRA is a
transfer SIMPLE lRA.
ARTICLE VI
6.01 NOTWITHSTANDING ANY OTHER ARTICLES which may be added or incorporated,
the provisions of Articles I through III and this sentence will be controlling.
Any additional articles that are not consistent with sections 408(a) and 408(p)
and related regulations will be invalid.
ARTICLE VII
7.01 THIS AGREEMENT WILL BE AMENDED from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
ARTICLE VIII
8.01 APPLICABLE LAW: This Custodial Agreement shall be governed by the laws
of the state where the Trust resides.
8.02 ANNUAL ACCOUNTING: The Custodian shall, at least annually, provide the
Participant or Beneficiary (in the case of death) with an accounting of such
Participant's account. Such accounting shall be deemed to be accepted by the
Participant, if the Participant or Beneficiary does not object in writing within
60 days after the mailing of such accounting statement.
8.03 AMENDMENT: The Participant irrevocably delegates to the Custodian the
right and power to amend this Custodial Agreement. Except as hereafter provided,
the Custodian will give the Participant 30 days prior written notice of any
amendment. In case of a retroactive amendment required by law, the Custodian
will provide written notice to the Participant of the amendment within 30 days
after the amendment is made or, if later, by the time that notice of the
amendment is required to be given under regulations or other guidance provided
by the IRS. The Participant shall be deemed to have consented to any such
amendment unless the Participant notifies the Custodian to the contrary within
30 days after notice to the Participant and requests a distribution or transfer
of the balance in the account.
17
<PAGE>
8.04 RESIGNATION AND REMOVAL OF CUSTODIAN:
(a) The Custodian may resign at any time by giving at least 30 days
notice to the Participant. The Custodian may resign and appoint a successor
trustee or custodian to serve under this agreement or under another governing
instrument selected by the successor trustee or custodian by giving the
Participant written notice at least 30 days prior to the effective date of such
resignation and appointment, which notice shall also include a copy of such
other governing instrument, if applicable, and the related disclosure statement.
The Participant shall then have 30 days from the date of such notice to either
request a complete distribution of the account balance or designate a different
successor trustee or custodian. If the Participant does not request distribution
of the account or designate a different successor within such 30 days, the
Participant shall be deemed to have consented to the appointment of the
successor trustee or custodian and the terms of any new governing instrument,
and neither the Participant nor the successor shall be required to execute any
written document to complete the transfer of the account to the successor
trustee or custodian. The successor trustee or custodian may rely on any
information, including beneficiary designations, previously provided by the
Participant.
(b) The Participant may at any time remove the Custodian and replace
the Custodian with a successor trustee or custodian of the Participant's choice
by giving 30 days written notice to the Custodian. In such event, the Custodian
shall then deliver the assets of the account as directed by the Participant.
However, the Custodian may retain a portion of the assets of the SIMPLE IRA as a
reserve for payment of any anticipated remaining fees and expenses, and shall
pay over any remainder of this reserve to the successor trustee or custodian
upon satisfaction of such fees and expenses.
8.05 CUSTODIAN'S FEES AND EXPENSES:
(a) This Section 8.05 of the Custodial Agreement shall be governed by
the requirements of Section 408(p)(7) and IRS Notice 97-6, Section J, and is
further explained in the accompanying SIMPLE IRA Disclosure Statement.
(b) The Participant agrees to pay the Custodian any and all fees
specified in the Custodian's current published fee schedule for establishing and
maintaining this SIMPLE IRA, including any fees for distributions from,
transfers from, and terminations of this SIMPLE IRA. The Custodian may change
its fee schedule at any time by giving the Participant 30 days prior written
notice.
(c) The Participant agrees to pay any expenses incurred by the
Custodian in the performance of its duties in connection with the account. Such
expenses include, but are not limited to, administrative expenses, such as legal
and accounting fees, and any taxes of any kind whatsoever that may be levied or
assessed with respect to such account.
(d) All such fees, taxes, and other administrative expenses charged to
the account shall be collected either from the assets in the account or from any
contributions to or distributions from such account if not paid by the
Participant, but the Participant shall be responsible for any deficiency.
(e) In the event that for any reason the Custodian is not certain as
to who is entitled to receive all or part of the custodial account, the
Custodian reserves the right to withhold any payment from the custodial account,
to request a court ruling to determine the disposition of the custodial assets,
and to charge the custodial account for any expenses incurred in obtaining such
legal determination.
8.06 WITHDRAWAL REQUESTS: All requests for withdrawal shall be in writing
on the form provided by the Custodian. Such written notice must also contain the
reason for the withdrawal and the method of distribution being requested.
8.07 AGE 70 1/2 DEFAULT PROVISIONS:
(a) Unless the Custodian (or the Participant, if the Custodian
permits) elects otherwise, life expectancies for purposes of calculating the
required minimum distribution shall not be recalculated.
(b) If the Participant does not choose any of the distribution methods
under Section 4.03 of this Custodial Agreement by April 1st following the
calendar year in which he/she reaches age 70 1/2, distribution shall be made to
the Participant based on such Participant's single life expectancy.
8.08 DEATH BENEFIT DEFAULT PROVISIONS: Unless the Custodian (or the
Beneficiary, if the Custodian permits) elects otherwise, life expectancies for
purposes of calculating the required minimum death distribution shall not be
recalculated. If the Participant dies before his or her required beginning date
and the beneficiary does not select a method of distribution described in
section 4.04(b)(i) or (ii) by December 31st following the year of death, then
distributions will be made pursuant to proposed regulation 1.401(a)(9)-1.
8.09 INVESTMENT PROVISIONS: Pursuant to IRS Notice 97-6, Q&A J-4, if the
Custodian is the Designated Financial Institution (DFI) and the Participant
timely elects that his or her balance be transferred without cost or penalty to
another SIMPLE IRA in accordance with the provisions described in the
accompanying SIMPLE IRA Disclosure Statement, the Custodian reserves the right
to restrict the participant's choice of investment alternatives as determined by
the Custodian.
8.10 RESPONSIBILITIES: Participant agrees that all information and
instructions given to the Custodian by the Participant is complete and accurate
and that the Custodian shall not be responsible for any incomplete or inaccurate
information provided by the Participant or Participant's beneficiary(ies).
Participant agrees to be responsible for all tax consequences arising from
contributions to and distributions from this Custodial Account and acknowledges
that no tax advice has been provided by the Custodian.
8.11 DESIGNATION OF BENEFICIARY: Except as may be otherwise required by
State law, in the event of the Participant's death, the balance in the account
shall be paid to the beneficiary or beneficiaries designated by the Participant
on a beneficiary designation acceptable to and filed with the Custodian. The
Participant may change the Participant's beneficiary or beneficiaries at any
time by filing a new beneficiary designation with the Custodian. If no
beneficiary designation is in effect, if none of the named beneficiaries survive
the Participant, or if the Custodian cannot locate any of the named
beneficiaries after reasonable search, any balance in the account will be
payable to the Participant's estate.
ARTICLE IX
SELF-DIRECTED SIMPLE IRA PROVISIONS
9.01 INVESTMENT OF CONTRIBUTIONS: At the direction of the Participant, the
Custodian shall invest all contributions to the account and earnings thereon in
investments acceptable to the Custodian, which may include marketable securities
traded on a recognized exchange or "over the counter" (excluding any securities
issued by the Custodian), covered call options, certificates of deposit, and
other investments to which the Custodian consents, in such amounts as are
specifically selected and specified by Participant in orders to the Custodian in
such form as may be acceptable to the Custodian, without any duty to diversify
and without regard to whether such property is authorized by the laws of any
jurisdiction as a trust investment. The Custodian shall be responsible for the
execution of such orders and for maintaining adequate records thereof. However,
if any such orders are not received as required, or, if received, are unclear in
the opinion of the Custodian, all or a portion of the contribution may be held
uninvested without liability for loss of income or appreciation, and without
liability for interest pending receipt of such orders or clarification, or the
contribution may be returned. The Custodian may, but need not, establish
programs under which cash deposits in excess of a minimum set by it will be
periodically and automatically invested in interest-bearing investment funds.
The Custodian shall have no duty other than to follow the written investment
directions of the Participant, and shall be under no duty to question said
instructions and shall not be liable for any investment losses sustained by the
Participant.
9.02 REGISTRATION: All assets of the account shall be registered in the
name of the Custodian or of a suitable nominee. The same nominee may be used
with respect to assets of other investors whether or not held under agreements
similar to this one or in any capacity whatsoever. However, each Participant's
account shall be separate and distinct; a separate account therefor shall be
maintained by the Custodian, and the assets thereof shall be held by the
Custodian in individual or bulk segregation either in the Custodian's vaults or
in depositories approved by the Securities and Exchange Commission under the
Securities Exchange Act of 1934.
9.03 INVESTMENT ADVISOR: The Participant may appoint an Investment Advisor,
qualified under Section 3(38) of the Employee Retirement Income Security Act of
1974, to direct the investment of his SIMPLE IRA. The Participant shall notify
the Custodian in writing of any such appointment by providing the Custodian a
copy of the instruments appointing the Investment Advisor and evidencing the
Investment Advisor's acceptance of such appointment, an acknowledgement by the
Investment Advisor that it is a fiduciary of the account, and a certificate
evidencing the Investment Advisor's current registration under the Investment
Advisor's Act of 1940. The Custodian shall comply with any investment directions
furnished to it by the Investment Advisor, unless and until it receives written
notification from the Participant that the Investment Advisor's appointment has
been terminated. The Custodian shall have no duty other than to follow the
written investment directions of such Investment Advisor and shall be under no
duty to question said instructions, and the Custodian shall not be liable for
any investment losses sustained by the Participant.
9.04 NO INVESTMENT ADVICE: The Custodian does not assume any responsibility
for rendering advice with respect to the investment and reinvestment of
Participant's account and shall not be liable for any loss which results from
Participant's exercise of control over his account. The Custodian and
Participant may specifically agree in writing that the Custodian shall render
such advice, but the Participant shall still have and exercise exclusive
responsibility for control over the investment of the assets of his account, and
the Custodian shall not have any duty to question his investment directives.
9.05 PROHIBITED TRANSACTIONS: Notwithstanding anything contained herein to
the contrary, the Custodian shall not lend any part of the corpus or income of
the account to; pay any compensation for personal services rendered to the
account to; make any part of its services available on a preferential basis to;
acquire for the account any property, other than cash, from; or sell any
property to, any Participant, any member of a Participant's family, or a
corporation con-
18
<PAGE>
trolled by any Participant through the ownership, directly or indirectly, of 50%
or more of the total combined voting power of all classes of stock entitled to
vote, or of 50% or more of the total value of shares of all classes of stock of
such corporation.
9.06 UNRELATED BUSINESS INCOME TAX: If the Participant directs investment
of the account in any investment which results in unrelated business taxable
income, it shall be the responsibility of the Participant to so advise the
Custodian and to provide the Custodian with all information necessary to prepare
and file any required returns or reports for the account. As the Custodian may
deem necessary, and at the Participant's expense, the Custodian may request a
taxpayer identification number for the account, file any returns, reports, and
applications for extension, and pay any taxes or estimated taxes owed with
respect to the account. The Custodian may retain suitable accountants,
attorneys, or other agents to assist it in performing such responsibilities.
9.07 DISCLOSURES AND VOTING: The Custodian shall deliver, or cause to be
executed and delivered, to Participant all notices, prospectuses, financial
statements, proxies and proxy soliciting materials relating to assets credited
to the account. The Custodian shall not vote any shares of stock or take any
other action, pursuant to such documents, with respect to such assets except
upon receipt by the Custodian of adequate written instructions from Participant.
9.08 MISCELLANEOUS EXPENSES: In addition to those expenses set out in
section 8.05 of this plan, the Participant agrees to pay any and all expenses
incurred by the Custodian in connection with the investment of the account,
including expenses of preparation and filing any returns and reports with regard
to unrelated business income, including taxes and estimated taxes, as well as
any transfer taxes incurred in connection with the investment or reinvestment of
the assets of the account.
9.09 NONBANK TRUSTEE PROVISION: If the Custodian is a nonbank trustee, the
Participant shall substitute another trustee or custodian in place of the
Custodian upon receipt of notice from the Commissioner of the Internal Revenue
Service or his delegate that such substitution is required because the Custodian
has failed to comply with the requirements of Income Tax Regulations Section
1.408-2(e), or is not keeping such records, making such returns, or rendering
such statements as are required by applicable law, regulations, or other
rulings. The successor trustee or custodian shall be a bank, insured credit
union, or other person satisfactory to the Secretary of the Treasury pursuant to
Section 408(a)(2) of the Code. Upon receipt by the Custodian of written
acceptance by its successor of such successor's appointment, Custodian shall
transfer and pay over to such successor the assets of the account (less amounts
retained pursuant to section 8.04 of the Custodial Agreement) and all records
(or copies thereof) of the Custodian pertaining thereto, provided that the
successor trustee or custodian agrees not to dispose of any such records without
the Custodian's consent.
- --------------------------------------------------------------------------------
GENERAL INSTRUCTIONS
Section references are to the Internal Revenue Code unless otherwise noted.
PURPOSE OF FORM
Form 5305-SA is a model custodial account agreement that meets the requirements
of sections 408(a) and 408(p) and has been automatically approved by the IRS. A
SIMPLE individual retirement account (SIMPLE IRA) is established after the form
is fully executed by both the individual (participant) and the Custodian. This
account must be created in the United States for the exclusive benefit of the
participant or his or her beneficiaries. Individuals may rely on regulations for
the Tax Reform Act of 1986 to the extent specified in those regulations. Do not
file Form 5305-SA with the IRS. Instead, keep it for your records.
For more information on SIMPLE IRAs, including the required disclosures the
Custodian must give the participant, get Pub. 590, Individual Retirement
Arrangements (IRAs).
DEFINITIONS
Participant - The participant is the person who establishes the custodial
account. Custodian - The Custodian must be a bank or savings and loan
association, as defined in section 408(n), or any person who has the approval of
the IRS to act as Custodian.
TRANSFER SIMPLE IRA
This SIMPLE IRA is a "transfer SIMPLE IRA" if it is not the original recipient
of contributions under any SIMPLE plan. The summary description requirements of
section 408(l)(2) do not apply to transfer SIMPLE IRAs.
SPECIFIC INSTRUCTIONS
Article IV - Distributions made under this article may be made in a single sum,
periodic payment, or a combination of both. The distribution option should be
reviewed in the year the participant reaches age 70 1/2 to ensure that the
requirements of section 408(a)(6) have been met.
Article VIII - Article VIII and any that follow it may incorporate additional
provisions that are agreed to by the participant and Custodian to complete the
agreement. They may include, for example, definitions, investment powers, voting
rights, exculpatory provisions, amendment and termination, removal of the
Custodian, Custodian's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the participant, etc. Use additional pages if
necessary and attach them to this form.
FINANCIAL DISCLOSURE
IN GENERAL: IRS regulations require the Custodian to provide you with a
financial projected growth of your SIMPLE IRA account based upon certain
assumptions.
GROWTH IN THE VALUE OF YOUR SIMPLE IRA: Growth in the value of your SIMPLE IRA
is neither guaranteed nor projected. The value of your SIMPLE IRA will be
computed by totaling the fair market value of the assets credited to your
account. At least once a year the Custodian will send you a written report
stating the current value of your SIMPLE IRA assets. The Custodian shall
disclose separately a description of:
(a) The type and amount of each charge;
(b) the method of computing and allocating earnings, and
(c) any portion of the contribution, if any, which may be used for the purchase
of life insurance.
CUSTODIAN FEES: The Custodian may charge reasonable fees or compensation for its
services and it may deduct all reasonable expenses incurred by it in the
administration of your SIMPLE IRA, including any legal, accounting,
distribution, transfer, termination or other designated fees. Any charges made
by the Custodian will be separately disclosed on an attachment hereto. Such fees
may be charged to you or directly to your custodial account. In addition,
depending on your choice of investment vehicles, you may incur brokerage
commissions attributable to the purchase or sale of assets.
19
<PAGE>
SIMPLE IRA DISCLOSURE STATEMENT [AIM LOGO APPEARS HERE]
RIGHT TO REVOKE YOUR SIMPLE IRA ACCOUNT: You may revoke your SIMPLE IRA within
seven days after you sign the SIMPLE IRA Plan Application by hand delivering or
mailing a written notice to the name and address indicated on the SIMPLE IRA
Plan Application. If you revoke your account by mailing a written notice, such
notice must be postmarked by the seventh day after you sign the Plan
Application. If you revoke your SIMPLE IRA within the seven-day period you will
receive a refund of the entire amount of your contributions to the SIMPLE IRA
without any adjustment for earnings or any administrative expenses. If you
exercise this revocation, we are still required to report certain information to
the IRS.
GENERAL REQUIREMENTS OF A SIMPLE IRA:
1. All SIMPLE contributions must be made in cash, unless you are making a
rollover contribution or transfer, and the Custodian accepts such noncash
assets.
2. The only types of contributions permitted to be made to this SIMPLE IRA are
salary reduction contributions and employer contributions under the
employer's SIMPLE Retirement Plan.
3. The Custodian of your SIMPLE IRA must be a bank, savings and loan
association, credit union or a person who is approved to act in such a
capacity by the Secretary of the Treasury.
4. No portion of your SIMPLE IRA funds may be invested in life insurance
contracts.
5. Your interest in your SIMPLE IRA must be fully vested and is nonforfeitable
at all times.
6. The assets in your SIMPLE IRA may not be commingled with other property
except in a common trust fund or common investment fund.
7. You may not invest the assets of your SIMPLE IRA in collectibles (as
described in Section 408(m) of the Internal Revenue Code.) A collectible is
defined as any work of art, rug or antique, metal or gem, stamp or coin,
alcoholic beverage, or any other tangible personal property specified by
the IRS. However, if the Custodian permits, specially minted U.S. Gold and
Silver bullion coins and certain state-issued coins are permissible SIMPLE
IRA investments.
8. Your interest in your SIMPLE IRA must begin to be distributed to you by the
April 1st following the calendar year you attain the age of 70 1/2. The
methods of distribution, election deadlines and other limitations are
described in detail below.
9. For purposes of the SIMPLE Plan rules, in the case of an individual who is
not a self-employed individual, compensation means the amount described in
section 6051(a)(3) which includes wages, tips and other compensation from
the employer subject to income tax withholding under section 3401(a), and
amounts described in section 6051(a)(8), including elective contributions
made under a SIMPLE plan, and compensation deferred under a section 457
plan. In the case of a self-employed individual, compensation means net
earnings from self-employment determined under section 1402(a), prior to
subtracting any contributions made under the SIMPLE plan on behalf of the
individual.
10. Contributions to a SIMPLE IRA are excludible from federal income tax and
not subject to federal income tax withholding when made to the SIMPLE IRA.
Salary reduction contributions are subject to FICA, FUTA or RRTA tax when
made and must be reported on the employee's Form W-2 wage statement.
Matching and nonelective employer contributions made to a SIMPLE IRA are
not subject to FICA, FUTA or RRTA and are not required to be reported on
Form W-2.
11. A SIMPLE IRA must be established by or on behalf of an employee prior to
the first date by which a contribution is required to be deposited into the
SIMPLE IRA.
ELIGIBLE EMPLOYEES: Under a SIMPLE Retirement Plan established by an Eligible
Employer, all employees of the employer who received at least $5,000 in
compensation from the employer during any two preceding calendar years, whether
or not consecutive, and who are reasonably expected to receive at least $5,000
in compensation during the calendar year, must be eligible to participate in the
SIMPLE Plan for the calendar year. An employer may impose less restrictive
eligibility requirements, such as eliminating or reducing the prior year
compensation requirements, the current year compensation requirement, or both,
under its SIMPLE Plan.
An employer, at its option, may exclude from eligibility employees who are
included in a unit of employees covered by an agreement that the Secretary of
Labor finds to be a collective bargaining agreement between employee
representatives and one or more employers, if there is evidence that retirement
benefits were the subject of good faith bargaining between such employee
representatives and such employer or employers; in the case of a trust
established or maintained pursuant to an agreement that the Secretary of Labor
finds to be a collective bargaining agreement between air pilots represented in
accordance with Title II of the Railway Labor Act and one or more employees, all
employees not covered by that agreement; and employees who are nonresident
aliens and who received no earned income from the employer that constitutes
income from sources within the United States.
PARTICIPATION IN ANOTHER PLAN: An eligible employee may participate in an
employer's SIMPLE Plan, even if he or she also participates in a plan of a
different employer for the same year. However, the employee's salary reduction
contributions are subject to the limitation of section 402(g), which provides an
aggregate limit on the exclusion for elective deferrals for any individual.
Also, an eligible employee who participates in an employer's SIMPLE plan and an
eligible deferred compensation plan described in section 457(b) is subject to
the limitation described in section 457(c). The employee is responsible for
monitoring compliance with these limitations.
ELIGIBLE EMPLOYERS: SIMPLE plans may be established by employers (including
tax-exempt employers and governmental entities) that had no more than 100
employees who earned $5,000 or more in compensation during the preceding
calendar year. For purposes of the 100-employee limitation, all employees
employed at any time during the calendar year are taken into account, regardless
of whether they are eligible to participate in the SIMPLE plan. This means that
otherwise excludible employees (i.e., certain union employees, nonresident
aliens with no U.S.-source income, and those employees who have not met the
plan's minimum eligibility requirements) must be taken into account.
SIMPLE PLAN CONTRIBUTIONS:
ELECTIVE DEFERRALS (SALARY REDUCTION CONTRIBUTIONS) - A salary reduction
contribution is a contribution made pursuant to an employee's election to have
an amount contributed to his or her SIMPLE IRA, rather than have the amount paid
directly to the employee in cash. An eligible employee must be permitted to
elect to have salary reduction contributions made at the level specified by the
employee, expressed as a percentage of compensation for the year or as a
specific dollar amount. The maximum salary reduction contribution per calendar
year may not exceed $6,000, subject to cost of living adjustments. Salary
reduction contributions may not begin until the eligible employee completes a
form provided by the employer designed to permit the employee to elect the
salary reduction percentage or specific dollar amount. An employer may not place
any restrictions on the amount of an employee's salary reduction contributions
(e.g., by limiting the contribution percentage), except to the extent needed to
comply with the annual limit.
EMPLOYER CONTRIBUTIONS - TWO OPTIONS
1. MATCHING CONTRIBUTIONS: Under a SIMPLE plan, an employer is generally
required to make a contribution on behalf of each eligible employee in an amount
equal to the employee's salary reduction contributions, up to a limit of 3% of
the employee's compensation for the entire calendar year.
The 3% limit on matching contributions is permitted to be reduced for a
calendar year at the election of the employer, but only if: the limit is not
reduced below 1%; the limit is not reduced for more than two years out of the
five-year period that ends with and includes the year for which the election is
effective; and employees are notified of the reduced limit within a reasonable
period of time before the 60-day election period during which employees can
enter into salary reduction agreements as described below.
In determining whether the limit was reduced below 3% for a year, any year
before the first year in which an employer (or a predecessor employer) maintains
a SIMPLE plan will be treated as a year for which the limit was 3%. If an
employer chooses to make nonelective contributions for a year in lieu of
matching contributions, that year also will be treated as a year for which the
limit was 3%.
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2. NONELECTIVE CONTRIBUTIONS: Under a SIMPLE plan, an employer may make
nonelective contributions in lieu of matching contributions. These nonelective
contributions must be equal to 2% of each eligible employee's compensation for
the entire calendar year, regardless of whether the employee elects to make
salary reduction contributions for the calendar year. The employer may, but is
not required to, limit nonelective contributions to eligible employees who have
at least $5,000 (or some lower amount selected by the employer) of compensation
for the year. For purposes of this 2% nonelective contribution only, the
compensation taken into account must be limited to the amount of compensation
under section 401(a)(17) for the year. For 1997, this limit is $160,000 and will
be adjusted in accordance with the cost of living.
An employer may substitute the 2% nonelective contribution for the matching
contribution for a year only if eligible employees are notified within a
reasonable period of time before the 60-day election period during which
employees can enter into salary reduction agreements that a 2% nonelective
contribution will be made instead of a matching contribution.
EMPLOYEE ELECTIONS: During the 60-day period immediately preceding January 1st
of a calendar year (i.e., November 2 to December 31 of the preceding calendar
year), an eligible employee must be given the right to enter into a salary
reduction agreement for the calendar year, or to modify a prior agreement
(including reducing the amount subject to this agreement to $0). However, for
the year in which the employee becomes eligible to make salary reduction
contributions, the period during which the employee may enter into a salary
reduction agreement or modify a prior agreement is a 60-day period that includes
either the date the employee becomes eligible or the day before that date. For
example, if an employer establishes a SIMPLE plan effective as of July 1, 1997,
each eligible employee becomes eligible to make salary reduction contributions
on that date and the 60-day period must begin no later than July 1 and cannot
end before June 30, 1997.
During these 60-day periods, employees have the right to modify their salary
reduction agreements without restrictions. In addition, for the year in which an
employee becomes eligible to make salary reduction contributions, the employee
must be able to commence these contributions as soon as the employee becomes
eligible, regardless of whether the 60-day period has ended. An employer may,
but is not required to, provide additional opportunities or longer periods for
permitting eligible employees to enter into salary reduction agreements or to
modify prior agreements.
An employee must be given the right to terminate a salary reduction agreement
for a calendar year at any time during the year even if this is outside a SIMPLE
plan's normal election period. The employer's SIMPLE plan may, however, provide
that an employee who terminates a salary reduction agreement at any time other
than the normal election period is not eligible to resume participation until
the beginning of the next calendar year.
EMPLOYER ADMINISTRATIVE AND NOTIFICATION REQUIREMENTS: An employer must notify
each employee, immediately before the employee's 60-day election period, of the
employee's opportunity to enter into a salary reduction agreement or to modify a
prior agreement. If applicable, this notification must disclose an employee's
ability to select the financial institution that will serve as the trustee or
custodian of the employee's SIMPLE IRA. Such notification must also include the
Summary Description required under section 408(l)(2)(B). Such notification must
also include whether the employer will be making either matching contributions
(including the employer's election to reduce the matching contribution below 3%)
or nonelective contributions as previously described.
If an eligible employee who is entitled to a contribution under the
employer's SIMPLE plan is unwilling or unable to establish a SIMPLE IRA with any
financial institution prior to the date on which the contribution is required to
be made to the SIMPLE IRA of the employee, the employer may execute the
necessary SIMPLE IRA documents on the employee's behalf with a financial
institution selected by the employer.
The employer must deliver the salary reduction contributions to the financial
institution maintaining the SIMPLE IRA as of the earliest date on which the
contributions can reasonably be segregated from the employer's general assets,
but no later than the close of the 30-day period following the last day of the
month in which amounts would otherwise have been payable to the employee in
cash.
Matching and nonelective employer contributions must be made to the financial
institution maintaining the SIMPLE IRA no later than the due date for filing the
employer's income tax return, including extensions, for the taxable year that
includes the last day of the calendar year for which the contributions are made.
ROLLOVERS:
ROLLOVER CONTRIBUTIONS FROM ANOTHER SIMPLE IRA - A rollover contribution to this
SIMPLE IRA is only permitted from another SIMPLE IRA. A rollover contribution
from another SIMPLE IRA is any amount the participant receives from one SIMPLE
IRA and redeposits some or all of it into this SIMPLE IRA. The participant is
not required to roll over the entire amount received from the first SIMPLE IRA.
However, any amount you do not roll over will be taxed at ordinary income tax
rates for federal income tax purposes and may also be subject to an additional
tax if the distribution is a premature distribution described below.
ROLLOVER DISTRIBUTIONS FROM A SIMPLE IRA - A distribution from any SIMPLE IRA
may be rolled over only to another SIMPLE IRA during the two-year period the
participant first participated in the employer's SIMPLE plan. Thus, a
distribution from a SIMPLE IRA during that two-year period qualifies as a
rollover contribution (and is not includible in gross income of the participant)
only if the distribution is paid into another SIMPLE IRA and satisfies the other
requirements that apply to all IRA rollovers under section 408(d)(3). SIMPLE
IRAs may never be rolled into an employer's plan, such as a qualified plan or
section 403(b) plan. After this two-year period, a distribution from a SIMPLE
IRA may be rolled over to any IRA maintained by the individual. This two-year
period begins on the first day on which contributions made by the individual's
employer are deposited in the individual's SIMPLE IRA.
SPECIAL RULES THAT APPLY TO ROLLOVERS -
o The rollover must be completed no later than the 60th day after the day the
distribution was received by you.
o You may have only one IRA-to-IRA rollover during a 12-consecutive-month
period measured from the date you received a distribution of an IRA which
was rolled over to another IRA. (See IRS Publication 590 for more
information.)
o The same property you receive in a distribution must be the same property
you roll over into the second IRA. For example, if you receive a
distribution from an IRA of property, such as stocks, that same stock must
be rolled over into the second IRA.
o You are required to make an irrevocable election indicating that this
transaction will be treated as a rollover contribution.
o You are not required to receive a complete distribution from your IRA in
order to make a rollover contribution into another IRA, nor are you
required to roll over the entire amount you received from the first IRA.
o If you inherit an IRA due to the death of the participant, you may not roll
this IRA into your own IRA unless you are the spouse of the decedent.
o If you are age 70 1/2 or older and wish to roll over to another IRA, you
must first satisfy the minimum distribution requirement for that year and
then the rollover of the remaining amount may be made.
o Rollover contributions to a SIMPLE IRA may not be made from a qualified
plan, 403(b) plan, or any other IRA that is not a SIMPLE IRA.
EXCESS DEFERRALS: Excess elective deferrals (amounts in excess of the $6,000
SIMPLE elective deferral limit) are includible in your gross income in the
calendar year of deferral. Income on the excess elective deferrals is includible
in your income in the year of withdrawal from the SIMPLE IRA. You should
withdraw excess elective deferrals and any allocable income, from your SIMPLE
IRA by April 15 following the year to which the deferrals relate. These amounts
may not be transferred or rolled over tax-free to another SIMPLE IRA. If you
fail to withdraw excess elective deferrals, and any allocable income, by the
following April 15th, the excess elective deferrals will be subject to the IRA
contribution limitations of sections 219 and 408 of the Code and thus may be
considered an excess contribution to your IRA. Such excess deferrals may be
subject to a 6% excise tax for each year they remain in your SIMPLE IRA. Income
on excess elective deferrals is includible in your gross income in the year you
withdraw it from your IRA and must be withdrawn by April 15 following the
calendar year to which the deferrals relate. Income withdrawn from the IRA after
that date may be subject to a 10% tax (or 25% if withdrawn within the first two
years of participation) on early distributions. The rules for determining and
allocating income attributable to excess elective deferrals and other excess
SIMPLE contributions are the same as those governing regular IRA excess
contributions. The trustee or custodian of your SIMPLE IRA will inform you of
the income allocable to such excess amounts.
DISTRIBUTIONS: In general, all distributions from a SIMPLE IRA are subject to
federal income tax by the payee or distributee, whichever the case may be. When
you start withdrawing from your SIMPLE IRA, you may take the distributions in
regular payments, random withdrawals or in a single-sum payment. Generally, all
amounts distributed to you from your SIMPLE IRA are included in your gross
income in the taxable year in which they are received. However, if you have made
nondeductible contributions to any regular IRA as permitted under section
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408(o) of the Code, the nontaxable portion of the distribution, if any, will be
a percentage based upon the ratio of your unrecovered nondeductible
contributions to the aggregate of all IRA balances, including SEP, SIMPLE and
rollover contributions, as of the end of the year in which you take the
distribution, plus distributions from the account during the year. All taxable
distributions from your SIMPLE IRA are taxed at ordinary income tax rates for
federal income tax purposes and are not eligible for either capital gains
treatment or 5/10 year averaging. An employer may not require an employee to
retain any portion of the contribution in the SIMPLE IRA or otherwise impose any
withdrawal restrictions.
PREMATURE DISTRIBUTIONS - In general, if you are under age 59 1/2 and receive
a distribution from your SIMPLE IRA account, a 10% additional income tax will
apply to the taxable portion of the distribution, unless the distribution is
received due to death; disability; a series of substantially equal periodic
payments at least annually over your life expectancy or the joint life
expectancy of you and your designated beneficiary; medical expenses that exceed
7.5% of your adjusted gross income; health insurance premiums paid by certain
unemployed individuals; a qualifying rollover distribution; or the timely
withdrawal of an excess deferral plus income attributable. If you request a
distribution in the form of a series of substantially equal payments, and you
modify the payments before five years have elapsed and before attaining age 59
1/2, the 10% additional income tax will apply retroactively to the year payments
began through the year of such modification. In addition, if you request a
distribution from your SIMPLE IRA within your first two years of participation
in the SIMPLE plan and none of the exceptions listed above applies to the
distribution, the normal 10% additional income tax referred to earlier is
increased to 25%.
AGE 70 1/2 REQUIRED MINIMUM DISTRIBUTIONS - You are required to begin
receiving minimum distributions from your SIMPLE IRA by your required beginning
date (the April 1 of the year following the year you attain age 70 1/2). The
year you attain age 70 1/2 is referred to as your "first distribution calendar
year." Your minimum distribution is based upon the value of your account at the
end of the prior year (less any required distributions you received between
January 1 and April 1 of the year following your first distribution calendar
year) by the joint life expectancy of you and your designated beneficiary. If
you do not have a designated beneficiary then the minimum distribution will be
based upon your single life expectancy.
As you can see, who you designate as beneficiary under your SIMPLE IRA will
affect the period over which distributions may be made. If you have more than
one primary beneficiary, generally the beneficiary with the shortest life
expectancy will be the measuring life expectancy used for determining the period
over which distributions will be made. If no beneficiary is named or you name a
beneficiary which is not an individual (i.e., your estate), distributions will
be based upon your single life expectancy.
By the April 1 following your first distribution calendar year, you must make
certain elections on a form provided by the Custodian. If no election is made,
you will be deemed to have elected to take your distributions over a period not
to exceed your single life expectancy. The required distributions for the second
distribution calendar year and for each subsequent distribution calendar year
must be made by December 31 of such year.
Unless otherwise elected by the Custodian (or by you, if the Custodian
permits) in determining the amount to be distributed for the second distribution
calendar year and subsequent distribution calendar years, your life expectancy
(and your designated beneficiary's life expectancy) shall not be recalculated.
If the Custodian elects (or you elect, if the Custodian permits) to recalculate
your life expectancy or your spouse's life expectancy, you will generally have a
longer period of time over which payments will be made and therefore the minimum
distribution will be less.
CAUTION: If you or your spouse should die, the decedent's life expectancy
that is being recalculated is reduced to zero which will reduce the period of
distribution to the survivor's single life expectancy. If recalculation is not
elected, the death of either person will not have an effect on the payment
period.
In any distribution calendar year you may take more than the required
minimum. However, if you take less than the required minimum with respect to any
distribution calendar year, you are subject to a federal excise tax penalty of
50% of the difference between the amount required to be distributed and the
amount actually distributed.
MINIMUM DISTRIBUTION INCIDENTAL BENEFIT (MDIB) RULE - Basically, this rule
specifies that benefits provided under a retirement plan must be for the primary
benefit of a participant rather than for his/her beneficiaries. If your spouse
is your sole beneficiary, these special MDIB rules do not apply. The amount
required to be distributed under the MDIB rule may in some cases be more than
the amount required under the normal age 70 1/2 required minimum distribution
rules. If someone other than or in addition to your spouse is a named primary
beneficiary, the minimum distribution required is the greater of the amount
determined under the regular 70 1/2 rules and the amount determined under the
MDIB rules. The minimum amount to be distributed under the MDIB rules is the
amount determined by taking the balance in your SIMPLE IRA account and dividing
it by a factor taken from an IRS table specified in IRS regulations. The table
provides life expectancies for you and a beneficiary who is assumed to be 10
years younger.
DEATH DISTRIBUTIONS - If you die after your required beginning date, the
balance in your SIMPLE IRA will be distributed in a manner which is at least as
rapid as the method of distribution being used on the date of your death. If you
die before your required beginning date, the balance in your SIMPLE IRA must
generally be distributed within five years from the date of your death. However
your beneficiary(ies) may elect to receive the balance in your account over the
single life expectancy of your designated beneficiary if distributions begin no
later than the end of the year containing the one year anniversary of your
death. In addition, if your only beneficiary is your surviving spouse,
distributions need not commence until December 31st of the year you would have
attained age 70 1/2.
PROHIBITED TRANSACTIONS - If you or your beneficiary engage in a prohibited
transaction (as defined under Section 4975 of the Internal Revenue Code) with
your SIMPLE IRA, it will lose its tax exemption and you must include the value
of your account in your gross income for that taxable year. If you pledge any
portion of your SIMPLE IRA as collateral for a loan, the amount so pledged will
be treated as a distribution and will be included in your gross income for that
year.
INCOME TAX WITHHOLDING - All withdrawals from your SIMPLE IRA (except a
direct transfer) are subject to federal income tax withholding. You may,
however, elect not to have withholding apply to your SIMPLE IRA distribution in
most cases. If withholding does apply to your distribution, it is at the rate of
10% of the amount of the distribution.
DESIGNATED FINANCIAL INSTITUTION "DFI":
In general, under section 408(p), an employer must permit an employee to select
the financial institution for the SIMPLE IRA to which the employer will make all
contributions on behalf of the employee. In this case, the financial institution
is referred to as a "Non-DFI." Alternatively, under section 408(p)(7), an
employer may require that all SIMPLE contributions initially be made to a single
designated financial institution selected by the employer. In this case, the
financial institution is referred to as a "DFI." Refer to your employer's SIMPLE
Retirement Plan document to determine if the financial institution is a DFI or a
Non-DFI.
USE OF A DESIGNATED FINANCIAL INSTITUTION "DFI" - If an employer requires
that all SIMPLE contributions initially be made to a DFI, the following
requirements must be met:
1. The employer and the financial institution must agree that the
financial institution will be a DFI for the employer's SIMPLE plan;
2. The DFI must agree that, if a participant elects before the expiration
of the employee's 60-day election period, the participant's balance
will be transferred without cost or penalty to another SIMPLE IRA (or
after the two year period no longer applies, to any IRA) to a
financial institution selected by the participant; and
3. Each participant is given written notification describing the
procedures under which, if a participant so elects, the participant's
balance will be transferred without cost or penalty to another SIMPLE
IRA (or after the two year period no longer applies, to any IRA) to a
financial institution selected by the participant.
If the participant elects before the expiration of the 60-day election period
to have the balance transferred without cost or penalty as described above, such
election is valid only with respect to the balance attributable to SIMPLE
contributions for the calendar year following that 60-day election period (or,
for the year in which an employee becomes eligible to make salary reduction
contributions for the remainder of that year) and subsequent calendar years if
such election so provides.
If the participant timely elects the transfer of the balance without cost or
penalty as described above, the participant's balance must be transferred on a
reasonably frequent basis, such as on a monthly basis. If a participant timely
elects this transfer without cost or penalty, the Custodian reserves the right
to restrict the investment to a specified investment option until transferred,
even though a variety of investment options are available with respect to
contributions that the participant has not elected to transfer.
A transfer is deemed to be made without cost or penalty if no liquidation,
transaction, redemption or termination fee, or any commission, load (whether
front-end or back-end) or surrender charge or similar fee or charge is imposed
with respect to the balance being transferred that the participant has filed a
timely election with the DFI. However, the DFI can charge a reasonable annual
administrative fee to a SIMPLE IRA from which balances must be transferred in
accordance with the participant's timely transfer election.
In order to timely elect a transfer without cost or penalty, the participant
must indicate such election on the SIMPLE IRA Plan Application attached hereto
and must be received by the DFI no later than the expiration of the 60-day
election period applicable to the employee. If the participant fails to timely
elect such transfers without cost or penalty, the DFI reserves the right to
charge any or all fees and expenses described in Section 8.05 of this SIMPLE IRA
plan agreement.
USE OF A NONDESIGNATED FINANCIAL INSTITUTION "NON-DFI" - If the employer's
SIMPLE plan permits the participants to select their own financial institution
to serve as trustee or custodian of the SIMPLE IRA, the rules explained above do
not apply and the Custodian may charge any and all fees described in Section
8.05 of the SIMPLE IRA plan agreement.
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TRANSFERS DEFINED - A direct transfer is a payment from this SIMPLE IRA
directly to another trustee or custodian of a SIMPLE IRA (or, after the two-year
period no longer applies, to the trustee or custodian of any IRA). Transfers do
not constitute a distribution since you are never in receipt of the funds. The
monies are transferred directly to the new trustee or custodian. If you should
transfer all or a portion of your SIMPLE IRA to your former spouse's IRA under a
divorce decree (or under a written instrument incident to divorce) or separation
instrument, you will not be deemed to have made a taxable distribution, but
merely a transfer. The portion so transferred will be treated at the time of the
transfer as the IRA of your spouse or former spouse. If your spouse is the
beneficiary of your SIMPLE IRA, in the event of your death, your spouse may
"assume" your SIMPLE IRA. The assumed IRA is then treated as your surviving
spouse's IRA.
SUMMARY DESCRIPTION REQUIREMENTS: In general, the Custodian of any SIMPLE IRA
must annually provide to the employer maintaining the SIMPLE plan a Summary
Description early enough to allow the employer to meet its notification
obligations. If the Custodian of this SIMPLE IRA is a DFI, the Summary
Description will be provided directly to the employer by the Custodian in the
underlying SIMPLE plan agreement. If the Custodian of this SIMPLE IRA is a
Non-DFI, the Summary Description will be provided directly to the employee by
the Custodian. The employee agrees to have the employer complete certain
information contained on the Summary Description with respect to the employer's
SIMPLE plan provisions. A sample Summary Description for a Non-DFI is located on
the following page. The Custodian of a "transfer SIMPLE IRA" is not required to
provide this Summary Description. A SIMPLE IRA is a "transfer SIMPLE IRA" if it
is not a SIMPLE IRA to which the employer has made contributions under the
SIMPLE plan.
PROCEDURES FOR WITHDRAWALS: All distributions from this SIMPLE IRA must be
requested in writing on a form provided to the participant by the Custodian.
After the withdrawal form has been completed and executed by the recipient, the
form must be either hand delivered to the Custodian during normal business hours
or mailed to the Custodian by first class mail, certified or registered mail
prepaid through the U.S. Postal Service, or through any means of an expedited
delivery service. After receipt of a properly executed withdrawal form, the
Custodian will process the distribution as soon as administratively feasible.
FEDERAL ESTATE AND GIFT TAXES: Generally, there is no specific exclusion for
SIMPLE IRAs under the estate tax rules. Therefore, in the event of your death,
your SIMPLE IRA balance will be includible in your gross estate for federal
estate tax purposes. However, if your surviving spouse is the beneficiary of
your SIMPLE IRA, the amount in your SIMPLE IRA may qualify for the marital
deduction available under Section 2056 of the Internal Revenue Code. A transfer
of property for federal gift tax purposes does not include an amount which a
beneficiary receives from a SIMPLE IRA plan.
PENALTIES: If you are under age 59 1/2 and receive a premature distribution from
your SIMPLE IRA, an additional 10% (or 25% for certain SIMPLE IRA distributions)
income tax will apply on the taxable amount of the distribution. If you make an
excess deferral to your SIMPLE IRA and it is not corrected on a timely basis, an
excise tax of 6% is imposed on the excess amount. This tax will apply each year
to any part or all of the excess which remains in your account. If you are age
70 1/2 or over or if you should die, and the appropriate required minimum
distributions are not made from your SIMPLE IRA, an additional tax of 50% is
imposed upon the difference between what should have been distributed and what
was actually distributed.
For tax years ending before 1/1/97, you will be taxed an additional 15% on
any amount you receive and include in income during a calendar year from
qualified plans, TSAs and all IRAs which exceeds the greater of $150,000
(unindexed) or $112,500 (indexed for cost of living). Before you receive an
excess distribution, you should seek advice from your tax advisor with respect
to the application of these rules. For tax years 1997, 1998 and 1999, the 15%
excess distribution tax will not apply. In the event of your death, your estate
may be subject to a 15% tax on the "excess accumulation" in all of your
qualified plans, TSAs and IRAs. You should seek the advice of your own tax
advisor with respect to the application of this excess accumulation excise tax.
You must file IRS Form 5329 with the Internal Revenue Service for any year an
additional tax is due.
IRS APPROVAL AS TO FORM: This SIMPLE IRA Custodial Agreement has been approved
by the Internal Revenue Service as to form. This is not an endorsement of the
plan in operation or of the investments offered.
ADDITIONAL INFORMATION: You may obtain further information on IRAs and SIMPLE
IRAs from your District Office of the Internal Revenue Service. In particular
you may wish to obtain IRS Publication 590 (Individual Retirement Arrangements).
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SIMPLE TRANSMITTAL FORM [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. EMPLOYER INFORMATION (Please print or type.)
Name of Employer_____________________________________________________________
Address______________________________________________________________________
City_________________________________State_____________________Zip Code______
- --------------------------------------------------------------------------------
2. EMPLOYER'S AUTHORIZATION (Signature(s) of authorized employer representative)
We hereby authorize INVESCO Trust Company to invest contributions in
accordance with the instructions below.
_________________________________________________ Date _________ /___ /____
Month Day Year
<TABLE>
<CAPTION>
(1) (2) (3) (4)
NAME OF SOCIAL SECURITY SELECTED CONTRIBUTION PER FUND**
PARTICIPANT NUMBER AIM FUNDS* (MINIMUM $25 PER FUND)
Salary Employer Nonelective
Deferral Match 2% Contribution
<S> <C> <C> <C> <C> <C>
1 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
2 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
3 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
4 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
5 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
6 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
7 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
</TABLE>
* Indicate funds used by each participant. ** Indicate dollar($) amount
contributed per fund.
15
<PAGE>
<TABLE>
<CAPTION>
(1) (2) (3) (4)
NAME OF SOCIAL SECURITY SELECTED CONTRIBUTION PER FUND**
PARTICIPANT NUMBER AIM FUNDS* (MINIMUM $25 PER FUND)
Salary Employer Nonelective
Deferral Match 2% Contribution
<S> <C> <C> <C> <C> <C>
8 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
9 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
10 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
11 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
12 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
Total Employer Contributions $______________
Total Employee Salary
Deferred Contributions $______________
Total Employer and
Employee Contributions $______________
</TABLE>
If a contribution for a participant is to be invested in more than one fund, $25
or more must be invested in each fund selected. Attach form, check (payable to
INVESCO Trust Company) and SIMPLE applications and mail to:
REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY
------------------------------------------------------------------------
AIM FUND SERVICES, INC. AIM FUND SERVICES, INC.
ATTN: RETIREMENT PLANS ATTN: RETIREMENT PLANS
OPERATIONS OPERATIONS
P.O. BOX 4739 P.O. BOX 4739
HOUSTON, TEXAS 77210-4739 HOUSTON, TEXAS 77210-4739
* Indicate funds used by each participant. ** Indicate dollar($) amount
contributed per fund.
[AIM LOGO APPEARS HERE] A I M Distributors, Inc.
12/97
16
<PAGE>
[AIM LOGO APPEARS HERE]
SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES OF SMALL EMPLOYERS (SIMPLE)
FORM 5304-SIMPLE (DECEMBER 1996)
(NOT SUBJECT TO THE DESIGNATED FINANCIAL INSTITUTION RULES)
Department of the Treasury
Internal Revenue Service
- --------------------------------------------------------------------------------
Name of Employer_____________________________________establishes the following
SIMPLE plan under section 408(p) of the Internal Revenue Code and pursuant to
the instructions contained in this form.
ARTICLE I - EMPLOYEE ELIGIBILITY REQUIREMENTS (Complete appropriate box(es) and
blanks--see instructions.)
1. GENERAL ELIGIBILITY REQUIREMENTS. The Employer agrees to permit salary
reduction contributions to be made in each calendar year to the SIMPLE IRA
established by each employee who meets the following requirements (select either
1a or 1b):
a / / FULL ELIGIBILITY. All employees are eligible.
b / / LIMITED ELIGIBILITY. Eligibility is limited to employees who are
described in both (i) and (ii) below:
(i) CURRENT COMPENSATION. Employees who are reasonably expected
to receive at least $____________ in compensation (not to exceed
$5,000) for the calendar year.
(ii) PRIOR COMPENSATION. Employees who have received at least
$_____________ in compensation (not to exceed $5,000) during any
___________ calendar year(s) (insert 0, 1, or 2) preceding the
calendar year.
2. EXCLUDABLE EMPLOYEES. (OPTIONAL)
/ / The Employer elects to exclude employees covered under a
collective bargaining agreement for which retirement benefits were the
subject of good faith bargaining.
ARTICLE II - SALARY REDUCTION AGREEMENTS (Complete the box and blank, if
appropriate--see instructions.)
1. SALARY REDUCTION ELECTION. An eligible employee may make a salary
reduction election to have his or her compensation for each pay period
reduced by a percentage. The total amount of the reduction in the
employee's compensation cannot exceed $6,000* for any calendar year.
2. TIMING OF SALARY REDUCTION ELECTIONS.
a. For a calendar year, an eligible employee may make or modify a
salary reduction election during the 60-day period immediately
preceding January 1 of that year. However, for the year in which the
employee becomes eligible to make salary reduction contributions, the
period during which the employee may make or modify the election is a
60-day period that includes either the date the employee becomes
eligible or the day before.
b. In addition to the election periods in 2a, eligible employees may
make salary reduction elections or modify prior elections
___________________. If the Employer chooses this option, insert a
period or periods (e.g., semiannually, quarterly, monthly or daily)
that will apply uniformly to all eligible employees.)
c. No salary reduction election may apply to compensation that an
employee received, or had a right to immediately receive, before
execution of the salary reduction election.
d. An employee may terminate a salary reduction election at any time
during the calendar year. / / If this box is checked, an employee who
terminates a salary reduction election not in accordance with 2b may
not resume salary reduction contributions during the calendar year.
17
<PAGE>
ARTICLE III - CONTRIBUTIONS (Complete the blank, if appropriate-see
instructions.)
1. SALARY REDUCTION CONTRIBUTIONS. The amount by which the employee
agrees to reduce his or her compensation will be contributed by the
Employer to the employee's SIMPLE IRA.
2. OTHER CONTRIBUTIONS.
a. Matching Contributions
(i) For each calendar year, the Employer will contribute a
matching contribution to each eligible employee's SIMPLE IRA
equal to the employee's salary reduction contributions up to a
limit of 3% of the employee's compensation for the calendar year.
(ii) The Employer may reduce the 3% limit for the calendar year
in (i) only if:
(1) The limit is not reduced below 1%; (2) The limit is not
reduced for more than two calendar years during the
five-year period ending with the calendar year the reduction
is effective; and (3) Each employee is notified of the
reduced limit within a reasonable period of time before the
employees' 60-day election period for the calendar year
(described in Article II, item 2a).
b. Nonelective Contributions
(i) For any calendar year, instead of making matching
contributions, the Employer may make nonelective contributions
equal to 2% of compensation for the calendar year to the SIMPLE
IRA of each eligible employee who has at least $___________ (not
more than $5,000) in compensation for the calendar year. No more
than $160,000* in compensation can be taken into account in
determining the nonelective contribution for each eligible
employee.
(ii) For any calendar year, the Employer may make 2% nonelective
contributions instead of matching contributions only if:
(1) Each eligible employee is notified that a 2% nonelective
contribution will be made instead of a matching
contribution; and
(2) This notification is provided within a reasonable period
of time before the employees' 60-day election period for the
calendar year (described in Article II, item 2a).
3. TIME AND MANNER OF CONTRIBUTIONS.
a. The Employer will make the salary reduction contributions
(described in 1 above) for each eligible employee to the SIMPLE IRA
established at the financial institution selected by that employee no
later than 30 days after the end of the month in which the money is
withheld from the employee's pay. See instructions.
b. The Employer will make the matching or nonelective contributions
(described in 2a and 2b above) for each eligible employee to the
SIMPLE IRA established at the financial institution selected by that
employee no later than the due date for filing the Employer's tax
return, including extensions, for the taxable year that includes the
last day of the calendar year for which the contributions are made.
ARTICLE IV - OTHER REQUIREMENTS AND PROVISIONS
1. CONTRIBUTIONS IN GENERAL. The Employer will make no contributions to
the SIMPLE IRAs other than salary reduction contributions (described
in Article III, item 1) and matching or nonelective contributions
(described in Article III, items 2a and 2b).
2. VESTING REQUIREMENTS. All contributions made under this SIMPLE plan
are fully vested and nonforfeitable.
3. NO WITHDRAWAL RESTRICTIONS. The Employer may not require the employee
to retain any portion of the contributions in his or her SIMPLE IRA or
otherwise impose any withdrawal restrictions.
4. SELECTION OF IRA TRUSTEE. The Employer must permit each eligible
employee to select the financial institution that will serve as the
trustee, custodian, or issuer of the SIMPLE IRA to which the employer
will make all contributions on behalf of that employee.
5. AMENDMENTS TO THIS SIMPLE PLAN. This SIMPLE plan may not be amended
except to modify the entries inserted in the blanks or boxes provided
in Articles I, II, III, VI, and VII.
6. EFFECTS OF WITHDRAWALS AND ROLLOVERS.
a. An amount withdrawn from the SIMPLE IRA is generally includible in
gross income. However, a SIMPLE IRA balance may be rolled over or
transferred on a tax-free basis to another IRA designed solely to hold
funds under a SIMPLE plan. In addition, an individual may roll over or
transfer his or her SIMPLE IRA balance to any IRA on a tax-free basis
after a two-year period has expired since the individual first
participated in a SIMPLE plan. Any rollover or transfer must comply
with the requirements under section 408.
18
<PAGE>
b. If an individual withdraws an amount from a SIMPLE IRA during the
two-year period beginning when the individual first participated in a
SIMPLE plan and the amount is subject to the additional tax on early
distributions under section 72(t), this additional tax is increased
from 10% to 25%.
ARTICLE V - DEFINITIONS
1. COMPENSATION.
a. GENERAL DEFINITION OF COMPENSATION. Compensation means the sum of
the wages, tips, and other compensation from the Employer subject to
federal income tax withholding [as described in section 6051(a)(3)]
and the employee's salary reduction contributions made under this
plan, and, if applicable, elective deferrals under a section 401(k)
plan, a SARSEP, or a section 403(b) annuity contract and compensation
deferred under a section 457 plan required to be reported by the
Employer on Form W-2 [as described in section 6051(a)(8)].
b. COMPENSATION FOR SELF-EMPLOYED INDIVIDUALS. For self-employed
individuals, compensation means the net earnings from self-employment
determined under section 1402(a) prior to subtracting any
contributions made pursuant to this plan on behalf of the individual.
2. EMPLOYEE. Employee means a common-law employee of the Employer. The
term employee also includes a self-employed individual and a leased
employee described in section 414(n) but does not include a
nonresident alien who received no earned income from the Employer that
constitutes income from sources within the United States.
3. ELIGIBLE EMPLOYEE. An eligible employee means an employee who
satisfies the conditions in Article 1, item 1 and is not excluded
under Article 1, item 2.
4. SIMPLE IRA. A SIMPLE IRA is an individual retirement account described
in section 408(a), or an individual retirement annuity described in
section 408(b), to which the only contributions that can be made are
contributions under a SIMPLE plan and rollovers or transfers from
another SIMPLE IRA.
ARTICLE VI - PROCEDURES FOR WITHDRAWAL (The Employer will provide each employee
with the procedures for withdrawals of contributions received by the financial
institution selected by that employee, and that financial institution's name and
address (by attaching that information or inserting it in the space below)
unless: (1) that financial institution's procedures are unavailable, or (2) that
financial institution provides the procedures directly to the employee.
See Employee Notification section in the instructions.)
ARTICLE VII - EFFECTIVE DATE
This SIMPLE plan is effective __________________________. (See instructions.)
Name of Employer
-------------------------------------------------------------
By:
--------------------------------------------------------------------------
Signature Date
Address of Employer
-----------------------------------------------------------
Name and Title
---------------------------------------------------------------
*This amount will be adjusted to reflect any annual cost-of-living increases
announced by the IRS.
19
<PAGE>
MODEL NOTIFICATION TO ELIGIBLE EMPLOYEES
I. OPPORTUNITY TO PARTICIPATE IN THE SIMPLE PLAN
You are eligible to make salary reduction contributions to
the_________________SIMPLE plan. This notice and the attached summary
description provide you with information that you should consider before
you decide whether to start, continue, or change your salary reduction
agreement.
II. EMPLOYER CONTRIBUTION ELECTION
For the ____________ calendar year, the Employer elects to contribute to
your SIMPLE IRA [employer must select either (1), (2), or (3)]:
/ / (1) A matching contribution equal to your salary reduction
contributions up to a limit of 3% of your compensation for the year;
/ / (2) A matching contribution equal to your salary reduction
contributions up to a limit of ___________% (employer must insert a
number from 1 to 3 and is subject to certain restrictions) of your
compensation for the year; or
/ / (3) A nonelective contribution equal to 2% of your compensation
for the year (limited to $160,000, adjusted periodically by the IRS)
if you are an employee who makes at least $____________ (Employer must
insert an amount that is $5,000 or less) in compensation for the year.
III. ADMINISTRATIVE PROCEDURES
If you decide to start or change your salary reduction agreement, you must
complete the salary reduction agreement and return it to
__________________________ (Employer should designate a place or
individual) by _________________(Employer should insert a date that is not
less than 60 days after notice is given).
IV. EMPLOYEE SELECTION OF FINANCIAL INSTITUTION
You must select the financial institution that will serve as the trustee,
custodian, or issuer of your SIMPLE IRA and notify your Employer of your
selection.
20
<PAGE>
PAPERWORK REDUCTION ACT NOTICE
You are not required to provide the information requested on a form that is
subject to the Paperwork Reduction Act unless the form displays a valid OMB
control number. Books or records relating to a form or its instructions must be
retained as long as their contents may become material in the administration of
any Internal Revenue law. Generally, tax returns and return information are
confidential, as required by section 6103.
The time needed to complete this form will vary depending on individual
circumstances. The estimated average time is:
<TABLE>
<S> <C> <C>
Recordkeeping. . . . . . . . . . . . . . 3 hr., 38 min.
Learning about the law or the form . . . 2 hr., 26 min.
Preparing the form . . . . . . . . . . . 47 min.
</TABLE>
If you have comments concerning the accuracy of these time estimates or
suggestions for making this form simpler, we would be happy to hear from you.
You can write to the Tax Forms Committee, Western Area Distribution Center,
Rancho Cordova, CA 95743-0001. DO NOT send this form to this address. Instead,
keep it for your records.
GENERAL INSTRUCTIONS
Section references are to the Internal Revenue Code unless otherwise noted.
NOTE: THE INSTRUCTIONS FOR THIS FORM ARE DESIGNED TO ASSIST IN THE ESTABLISHMENT
AND ADMINISTRATION OF THE SIMPLE PLAN; THEY ARE NOT INTENDED TO SUPERSEDE ANY
PROVISIONS IN THE SIMPLE PLAN.
PURPOSE OF FORM
Form 5304-SIMPLE is a model Savings Incentive Match Plan for Employees of Small
Employers (SIMPLE) plan document that an employer may use to establish a SIMPLE
plan described in section 408(p), under which each eligible employee is
permitted to select the financial institution for his or her SIMPLE IRA. It is
important that you keep this form for your records. DO NOT file this form with
the IRS. For more information, see Pub. 560, Retirement Plans for the Self-
Employed, and Pub. 590, Individual Retirement Arrangements (IRAs).
INSTRUCTIONS FOR THE EMPLOYER
WHICH EMPLOYERS MAY ESTABLISH AND MAINTAIN A SIMPLE PLAN?
You are eligible to establish and maintain a SIMPLE plan only if you meet both
of the following requirements:
1. Last calendar year, you had no more than 100 employees (including
self-employed individuals) who earned $5,000 or more in compensation from you
during the year. If you have a SIMPLE plan but later exceed this 100-employee
limit, you will be treated as meeting the limit for the two years following the
calendar year in which you last satisfied the limit. If the failure to continue
to satisfy the 100-employee limit is due to an acquisition or similar
transaction involving your business, special rules apply. Consult your tax
advisor to find out if you can still maintain the plan after the transaction.
2. You do not maintain during any part of the calendar year another
qualified plan with respect to which contributions are made, or benefits are
accrued, for service in the calendar year. For this purpose, a qualified plan
[defined in section 219(g)(5)] includes a qualified pension plan, a
profit-sharing plan, a stock bonus plan, a qualified annuity plan, a
tax-sheltered annuity plan, and a simplified employee pension (SEP) plan.
Certain related employers (trades or businesses under common control) must
be treated as a single employer for purposes of the SIMPLE requirements. These
are: (1) a controlled group of corporations under section 414(b); (2) a
partnership or sole proprietorship under common control under section 414(c); or
(3) an affiliated service group under section 414(m). In addition, if you have
leased employees required to be treated as your own employees under the rules of
section 414(n), then you must count all such leased employees for the
requirements listed above.
21
<PAGE>
WHAT IS A SIMPLE PLAN?
A SIMPLE plan is a written arrangement that provides you and your employees with
a simplified way to make contributions to provide retirement income for your
employees. Under a SIMPLE plan, employees may choose whether to make salary
reduction contributions to the SIMPLE plan rather than receiving these amounts
as part of their regular compensation. In addition, you will contribute matching
or nonelective contributions on behalf of eligible employees (see Employee
Eligibility Requirements below and Contributions on page 23). All contributions
under this plan will be deposited into a SIMPLE individual retirement account or
annuity established for each eligible employee with the financial institution
selected by each eligible employee (SIMPLE IRA).
The information provided below is intended to help you understand and
administer the rules of your SIMPLE plan.
WHEN TO USE FORM 5304-SIMPLE
A SIMPLE plan may be established by using this Model Form or any other document
that satisfies the statutory requirements. Thus, you are not required to use
Form 5304-SIMPLE to establish and maintain a SIMPLE plan. Further, do not use
Form 5304-SIMPLE if:
1. You want to require that all SIMPLE plan contributions initially go to a
financial institution designated by you (i.e., you do not want to permit each of
your eligible employees to choose a financial institution that will initially
receive contributions). However, Form 5305-SIMPLE, Savings Incentive Match Plan
for Employees of Small Employers (SIMPLE) (for Use With a Designated Financial
Institution), may be used in such a case;
2. You want employees who are nonresident aliens receiving no earned income
from you that constitutes income from sources within the United States to be
eligible under this plan; or
3. You want to establish a SIMPLE 401(k) plan.
COMPLETING FORM 5304-SIMPLE
Pages 1 and 2 of Form 5304-SIMPLE contain the operative provisions of your
SIMPLE plan. This SIMPLE plan is considered adopted when you have completed all
appropriate boxes and blanks and it has been executed by you.
The SIMPLE plan is a legal document with important tax consequences for you
and your employees. You may want to consult with your attorney or tax advisor
before adopting this plan.
EMPLOYEE ELIGIBILITY REQUIREMENTS (ARTICLE I)
Each year for which this SIMPLE plan is effective, you must permit salary
reduction contributions to be made by all of your employees who are reasonably
expected to receive at least $5,000 in compensation from you during the year,
and who received at least $5,000 in compensation from you in any two preceding
years. However, you can expand the group of employees who are eligible to
participate in the SIMPLE plan by completing the options provided in Article I,
items 1a and 1b. To choose full eligibility, check the box in Article I, item
1a. Alternatively, to choose limited eligibility, check the box in Article I,
item 1b, and then insert $5,000 or a lower compensation amount (including zero)
and two or a lower number of years of service in the blanks in (i) and (ii) of
Article I, item 1b.
In addition, you can exclude from participation those employees covered
under a collective bargaining agreement for which retirement benefits were the
subject of good faith bargaining. You may do this by checking the box in Article
I, item 2.
SALARY REDUCTION AGREEMENTS (ARTICLE II)
As indicated in Article II, item 1, a salary reduction agreement permits an
eligible employee to make a salary reduction election to have his or her
compensation for each pay period reduced by a percentage (expressed as a
percentage or dollar amount). The total amount of the reduction in the
employee's compensation cannot exceed $6,000* for any calendar year.
TIMING OF SALARY REDUCTION ELECTIONS
For a calendar year, an eligible employee may make or modify a salary reduction
election during the 60-day period immediately preceding January 1 of that year.
However, for the year in which the employee becomes eligible to make salary
reduction contributions, the period during which the employee may make or modify
the election is a 60-day period that includes either the date the employee
becomes eligible or the day before.
* This amount will be adjusted to reflect any annual cost-of-living increases
announced by the IRS.
22
<PAGE>
You can extend the 60-day election periods to provide additional
opportunities for eligible employees to make or modify salary reduction
elections using the blank in Article II, item 2b. For example, you can provide
that eligible employees may make new salary reduction elections or modify prior
elections for any calendar quarter during the 30 days before that quarter.
You may use (but are not required to) the Model Salary Reduction Agreement
to enable eligible employees to make or modify salary reduction elections.
Employees must be permitted to terminate their salary reduction elections
at any time. They may resume salary reduction contributions if permitted under
Article II, item 2b. However, by checking the box in Article II, item 2d, you
may prohibit an employee who terminates a salary reduction election outside the
normal election cycle from resuming salary reduction contributions during the
remainder of the calendar year.
CONTRIBUTIONS (ARTICLE III)
Only contributions described below may be made to this SIMPLE plan. No
additional contributions may be made.
SALARY REDUCTION CONTRIBUTIONS
As indicated in Article III, item 1, salary reduction contributions consist of
the amount by which the employee agrees to reduce his or her compensation. You
must contribute the salary reduction contributions to the financial institution
selected by each eligible employee.
OTHER CONTRIBUTIONS
MATCHING CONTRIBUTIONS.
In general, you must contribute a matching contribution to each eligible
employee's SIMPLE IRA equal to the employee's salary reduction contributions.
This matching contribution cannot exceed 3% of the employee's compensation. See
Definition of Compensation, below.
You may reduce this 3% limit to a lower percentage, but not lower than 1%.
You cannot lower the 3% limit for more than two calendar years out of the
five-year period ending with the calendar year the reduction is effective. NOTE:
If any year in the five-year period described above is a year before you first
established any SIMPLE plan, you will be treated as making a 3% matching
contribution for that year for purposes of determining when you may reduce the
employer matching contribution.
In order to elect this option, you must notify the employees of the reduced
limit within a reasonable period of time before the applicable 60-day election
periods for the year. See Timing of Salary Reduction Elections above.
NONELECTIVE CONTRIBUTIONS.
Instead of making a matching contribution, you may, for any year, make a
nonelective contribution equal to 2% of compensation for each eligible employee
who has at least $5,000 in compensation for the year. Nonelective contributions
may not be based on more than $160,000* of compensation.
In order to elect to make nonelective contributions, you must notify
employees within a reasonable period of time before the applicable 60-day
election periods for such year. See Timing of Salary Reduction Elections above.
NOTE: Insert $5,000 in Article III, item 2b(i) to impose the $5,000 compensation
requirement. You may expand the group of employees who are eligible for
nonelective contributions by inserting a compensation amount lower than $5,000.
EFFECTIVE DATE (ARTICLE VII)
Insert in Article VII, the date you want the provisions of the SIMPLE plan to
become effective. You must insert January 1 of the applicable year unless this
is the first year for which you are adopting any SIMPLE plan. If this is the
first year for which you are adopting a SIMPLE plan, you may insert any date
between January 1 and October 1, inclusive of the applicable year. Do not insert
any date before January 1, 1997.
OTHER IMPORTANT INFORMATION ABOUT YOUR SIMPLE PLAN
TIMING OF SALARY REDUCTION CONTRIBUTIONS
Under the Internal Revenue Code, for all SIMPLE plans, the employer must make
the salary reduction contributions to the financial institution selected by each
eligible employee for his or her SIMPLE IRA no later than the 30th day of the
month following the month in which the
*This amount will be adjusted to reflect any annual cost-of-living increases
announced by the IRS.
23
<PAGE>
amounts would otherwise have been payable to the employee in cash. The
Department of Labor has indicated that most SIMPLE plans are also subject to
Title I of the Employee Retirement Income Security Act of 1974 (ERISA). The
Department of Labor has informed the IRS that, as a matter of enforcement
policy, for these plans, salary reduction contributions must be made to each
participant's SIMPLE IRA as of the earliest date on which those contributions
can reasonably be segregated from the employer's general assets, but in no event
later than the 30-day deadline described above.
DEFINITION OF COMPENSATION
"Compensation" means the amount described in section 6051(a)(3) [wages, tips,
and other compensation from the employer subject to federal income tax
withholding under section 3401(a)]. Usually, this is the amount shown in box 1
of Form W-2, Wage and Tax Statement. For further information, see Pub. 15
(Circular E), Employer's Tax Guide. Compensation also includes the salary
reduction contributions made under this plan, and, if applicable, compensation
deferred under a section 457 plan. In determining an employee's compensation for
prior years, the employee's elective deferrals under a section 401(k) plan, a
SARSEP, or a section 403(b) annuity contract are also included in the employee's
compensation.
For self-employed individuals, compensation means the net earnings from
self-employment determined under section 1402(a) prior to subtracting any
contributions made pursuant to this SIMPLE plan on behalf of the individual.
EMPLOYEE NOTIFICATION
You must notify each eligible employee prior to the employee's 60-day election
period described above that he or she can make or change salary reduction
elections and select the financial institution that will serve as the trustee,
custodian, or issuer of the employee's SIMPLE IRA. In this notification, you
must indicate whether you will provide:
1. A matching contribution equal to your employees' salary reduction
contributions up to a limit of 3% of their compensation;
2. A matching contribution equal to your employees' salary reduction
contributions subject to a percentage limit that is between 1 and 3% of their
compensation; or
3. A nonelective contribution equal to 2% of your employees' compensation.
You can use the Model Notification to Eligible Employees on page 20 to
satisfy these employee notification requirements for this SIMPLE plan. A Summary
Description must also be provided to eligible employees at this time. This
summary description requirement may be satisfied by providing a completed copy
of pages 1 and 2 of Form 5304-SIMPLE (including the information described in
Article VI - Procedures for Withdrawal).
If you fail to provide the employee notification (including the summary
description) described above, you will be liable for a penalty of $50 per day
until the notification is provided. If you can show that the failure was due to
reasonable cause, the penalty will not be imposed.
If the summary description information with respect to the financial
institution (i.e., the name and address of the financial institution and its
withdrawal procedures) is not available at the time the employee must be given
the summary description, you must provide the summary description without this
information. In such a case, you will have reasonable cause for not including
this information with respect to the financial institution in the summary
description, but only if you see to it that this information is provided to the
employee as soon as administratively feasible once the financial institution has
been selected.
REPORTING REQUIREMENTS
You are not required to file any annual information returns for your SIMPLE
plan, such as Forms 5500, 5500-C/R or 5500-EZ. However, you must report to the
IRS which eligible employees are active participants in the SIMPLE plan and the
amount of your employees' salary reduction contributions to the SIMPLE plan on
Form W-2. These contributions are subject to social security, medicare, railroad
retirement and federal unemployment tax.
24
<PAGE>
DEDUCTING CONTRIBUTIONS
Contributions to this SIMPLE plan are deductible in your tax year containing the
end of the calendar year for which the contributions are made.
Contributions will be treated as made for a particular tax year if they are
made for that year and are made by the due date (including extensions) of your
income tax return for that year.
SUMMARY DESCRIPTION
Each year the SIMPLE plan is in effect, the financial institution for the SIMPLE
IRA of each eligible employee must provide the employer the information
described in section 408(I)(2)(B). This requirement may be satisfied by
providing the employer a current copy of Form 5304-SIMPLE (including
instructions) together with the financial institution's procedures for
withdrawals from SIMPLE IRAs established at that financial institution,
including financial institution's name and address. The summary description must
be received by the employer in sufficient time to comply with the Employee
Notification requirements above.
There is a penalty of $50 per day imposed on the financial institution for
each failure by the financial institution to provide the summary description
described above. However, if the failure was due to reasonable cause, the
penalty will not be imposed.
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[AIM LOGO APPEARS HERE]
SUMMARY DESCRIPTION FOR NONDESIGNATED FINANCIAL INSTITUTION
Employer must complete the following:
ELIGIBILITY REQUIREMENTS
All Employees of the Employer shall be eligible to participate under the Plan
except:
a. Employees included in a unit of employees covered under a collective
bargaining agreement described in Section 2.02(a) of the Plan.
b. Nonresident alien employees who did not receive U.S. source income
described in Section 2.02(b) of the Plan.
c. Employees who are not reasonably expected to earn $_____________(not to
exceed $5,000) during the Plan Year for which the contribution is being
made.
d. There are no eligibility requirements. All Employees are eligible to
participate upon the later of the plan's effective date or the employee's
date of hire.
Each Eligible Employee will be eligible to become a Participant after having
worked for the Employer during any prior years (not to exceed 2) and received at
least $____________ in compensation (not to exceed $5,000), during each of such
prior years.
WRITTEN ALLOCATION FORMULA
The Employer has agreed to provide contributions for the _______________ Plan
Year as follows (complete only one choice):
a. Matching Contribution
The amount of the Participant's Elective Deferral not in excess of 3% of
such Participant's Compensation (not to exceed $6,000).
b. Matching Contribution
The amount of the Participant's Elective Deferral not in excess of _______%
(not less than 1% nor more than 3%) of each Participant's Compensation (not
to exceed $6,000).
c. Nonelective Employer Contribution 2% of each Participant's Compensation.
The Employer has designated _________________________________________________
(insert Name & Title) to provide additional information to participants about
the Employer's SIMPLE Plan.
- --------------------------------------------------------------------------------
GENERAL DISCLOSURE INFORMATION
The following information explains what a Savings Incentive Match Plan for
Employees ("SIMPLE") is, how contributions are made and how to treat these
contributions for tax purposes. For more specific information, refer to the
employer's SIMPLE Retirement Plan document itself. For a calendar year, you may
make or modify a salary reduction election during the 60-day period immediately
preceding January 1 of that year. However, for the year in which you first
become eligible to make salary reduction contributions, the period during which
you may make or modify the election is a 60-day period that includes either the
date you become eligible or the day before. If indicated in your Employer's
SIMPLE plan, you may have additional opportunities during a calendar year to
make or modify your salary reduction election.
I. SIMPLE RETIREMENT PLAN AND SIMPLE IRA DEFINED
A SIMPLE Retirement Plan is a retirement income arrangement established by your
Employer. Under this SIMPLE Plan, you may choose to defer compensation to your
own Individual Retirement Account or Annuity ("IRA"). You may base these
"elective deferrals" on a salary reduction basis that, at your election, may be
contributed to an IRA or received in cash. This type of plan is available only
to an employer with 100 or fewer employees who earned at least $5,000 during the
prior calendar year. A SIMPLE IRA is a separate IRA plan that you establish with
an eligible financial institution for the purpose of receiving contributions
under this SIMPLE Retirement Plan. Your Employer must provide you with a copy of
the SIMPLE agreement containing eligibility requirements and a description of
the basis upon which contributions may be made. All amounts contributed to your
IRA belong to you, even after you quit working for your Employer.
II. ELECTIVE DEFERRALS - NOT REQUIRED
You are not required to make elective deferrals under this SIMPLE Retirement
Plan. However, if the Employer is matching your elective deferrals, no Employer
contribution will be made on your behalf unless you elect to defer under the
plan.
III. ELECTIVE DEFERRALS - ANNUAL LIMITATION
The maximum amount that you may defer under this SIMPLE Plan for any calendar
year is limited to the lesser of the percentage of your compensation that you
select or $6,000, subject to cost-of-living increases. If you work for other
employers (unrelated to this Employer) who also maintain a salary deferral plan,
there is an overall limit on the maximum amount that you may defer in each
calendar year to all elective SEPs, cash or deferred arrangements under section
401(k) of the Code, other SIMPLE plans and 403(b) plans regardless of how many
employers you may have worked for during the year. This limitation is referred
to as the section 402(g) limit. The section 402(g) limit on elective deferrals
is currently $9,500 and is indexed according to the cost of living.
IV. ELECTIVE DEFERRALS - TAX TREATMENT
The amount that you may elect to contribute to your SIMPLE IRA is excludible
from gross income, subject to the limitations discussed above, and is not
includible as taxable wages on Form W-2. However, these amounts are subject to
FICA taxes.
V. ELECTIVE DEFERRALS - EXCESS AMOUNTS CONTRIBUTED
When "excess elective deferrals" (i.e., amounts in excess of the $6,000 SIMPLE
elective deferral limit or the section 402(g) limit) are made, you are
responsible for calculating whether you have exceeded these limits in the
calendar year. For 1997, the section 402(g) limit for contributions made to all
elective deferral plans is $9,500. Excess elective deferrals are calculated on
the basis of the calendar year.
VI. EXCESS ELECTIVE DEFERRALS - HOW TO AVOID ADVERSE TAX CONSEQUENCES
Excess elective deferrals are includible in your gross income in the calendar
year of deferral. Income on the excess elective deferrals is includible in your
income in the year of withdrawal from the IRA. You should withdraw excess
elective deferrals and any allocable income, from your SIMPLE IRA by April 15
following the year to which the deferrals relate. These amounts may not be
transferred or rolled over tax-free to another SIMPLE IRA. If you fail to
withdraw excess elective deferrals, and any allocable income, by the following
April 15th, the excess elective deferrals will be subject to the IRA
contribution limitations of sections 219 and 408 of the Code and thus may be
considered an excess contribution to your IRA. Such excess deferrals may be
subject to a 6% excise tax for each year they remain in your SIMPLE IRA. Income
on excess elective deferrals is includible in your gross income in the year you
withdraw it from your IRA and must be withdrawn by April 15 following the
calendar year to which the deferrals relate.
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Income withdrawn from the IRA after that date may be subject to a 10% tax (or
25% if withdrawn within the first two years of participation) on early
distributions.
VII. INCOME ALLOCABLE TO EXCESS AMOUNTS
The rules for determining and allocating income attributable to excess elective
deferrals and other excess SIMPLE contributions are the same as those governing
regular IRA excess contributions. The trustee or custodian of your SIMPLE IRA
will inform you of the income allocable to such excess amounts.
VIII. AVAILABILITY OF REGULAR IRA CONTRIBUTION DEDUCTION
In addition to any SIMPLE contribution, you may contribute to a separate IRA the
lesser of $2,000 or 100% of compensation to an IRA as a regular IRA
contribution. However, the amount that you may deduct is subject to various
limitations since you will be considered an "active participant" in an
employer-sponsored plan. See Pub. 590, "Individual Retirement Arrangement," for
more specific information.
IX. SIMPLE IRA AMOUNTS - ROLLOVER OR TRANSFER TO ANOTHER IRA
You may not roll over or transfer from your SIMPLE IRA any SIMPLE contributions
(or income on these contributions) made during the plan year to another IRA
(other than a SIMPLE IRA) until the two years following the date you first
participated in the SIMPLE plan. Also, any distribution made before this time
will be includible in your gross income and may also be subject to a 25% percent
additional income tax for early withdrawal. You may, however, remove excess
elective deferrals and income allocable to such excess amounts from your SIMPLE
IRA before this time, but you may not roll over or transfer these amounts to
another IRA.
After the two-year restriction no longer applies, you may withdraw, or
receive, funds from your SIMPLE IRA, and no more than 60 days later, place such
funds in another IRA or SIMPLE IRA. This is called a "rollover" and may not be
done without penalty more frequently than at one-year intervals. However, there
are no restrictions on the number of times that you may make "transfers" if you
arrange to have such funds transferred between the trustees so that you never
have possession of the funds. You may not, however, roll over or transfer excess
elective deferrals, and income allocable to such excess amounts from your SIMPLE
IRA to another IRA. These excess amounts may be reduced only by a distribution
to you.
X. FILING REQUIREMENTS
You do not need to file any additional forms with the IRS because of your
participation in your employer's SIMPLE Plan.
XI. EMPLOYER TO PROVIDE INFORMATION
Your employer must provide you with a copy of the executed SIMPLE agreement, a
Summary Description, the form you should use to elect to defer amounts to your
SIMPLE IRA, and a statement for each taxable year showing any contribution to
your SIMPLE IRA.
XII. FINANCIAL INSTITUTION WHERE IRA IS ESTABLISHED TO PROVIDE
INFORMATION
The financial institution must provide you with a disclosure statement that
contains information described in section 1.408-6 of the regulations. The
Disclosure Statement that is a part of this Custodian's SIMPLE IRA account
documentation must be read in conjunction with this Summary Description for
Nondesignated Financial Institutions. The Disclosure Statement contains
important information about the SIMPLE plan rules and the contents of such
Disclosure Statement are incorporated herein by reference.
See Publication 590, "Individual Retirement Arrangements," which is available at
most IRS offices, for a more complete explanation of the disclosure
requirements. In addition to the disclosure statement, the financial institution
is required to provide you with a financial statement each year. It may be
necessary to retain and refer to statements for more than one year in order to
evaluate the investment performance of your IRA and in order that you will know
how to report IRA distributions for tax purposes.
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SIMPLE IRA DISCLOSURE STATEMENT [AIM LOGO APPEARS HERE]
RIGHT TO REVOKE YOUR SIMPLE IRA ACCOUNT: You may revoke your SIMPLE IRA within
seven days after you sign the SIMPLE IRA Plan Application by hand delivering or
mailing a written notice to the name and address indicated on the SIMPLE IRA
Plan Application. If you revoke your account by mailing a written notice, such
notice must be postmarked by the seventh day after you sign the Plan
Application. If you revoke your SIMPLE IRA within the seven-day period you will
receive a refund of the entire amount of your contributions to the SIMPLE IRA
without any adjustment for earnings or any administrative expenses. If you
exercise this revocation, we are still required to report certain information to
the IRS.
GENERAL REQUIREMENTS OF A SIMPLE IRA:
1. All SIMPLE contributions must be made in cash, unless you are making a
rollover contribution or transfer, and the Custodian accepts such noncash
assets.
2. The only types of contributions permitted to be made to this SIMPLE IRA are
salary reduction contributions and employer contributions under the
employer's SIMPLE Retirement Plan.
3. The custodian of your SIMPLE IRA must be a bank, savings and loan
association, credit union or person who is approved to act in such a
capacity by the Secretary of the Treasury.
4. No portion of your SIMPLE IRA funds may be invested in life insurance
contracts.
5. Your interest in your SIMPLE IRA must be fully vested and is nonforfeitable
at all times.
6. The assets in your SIMPLE IRA may not be commingled with other property
except in a common trust fund or common investment fund.
7. You may not invest the assets of your SIMPLE IRA in collectibles (as
described in Section 408(m) of the Internal Revenue Code.) A collectible is
defined as any work of art, rug or antique, metal or gem, stamp or coin,
alcoholic beverage, or any other tangible personal property specified by the
IRS. However, if the Custodian permits, specially minted U.S. Gold and
Silver bullion coins and certain state-issued coins are permissible SIMPLE
IRA investments.
8. Your interest in your SIMPLE IRA must begin to be distributed to you by the
April 1st following the calendar year you attain the age of 70-1/2. The
methods of distribution, election deadlines and other limitations are
described in detail below.
9. For purposes of the SIMPLE IRA Plan rules, in the case of an individual who
is not a self-employed individual, compensation means the amount described
in section 6051(a)(3) which includes wages, tips and other compensation from
the employer subject to income tax withholding under section 3401(a), and
amounts described in section 6051(a)(8), including elective contributions
made under a SIMPLE plan, and compensation deferred under a section 457
plan. In the case of a self-employed individual, compensation means net
earnings from self-employment determined under section 1402(a), prior to
subtracting any contributions made under the SIMPLE plan on behalf of the
individual.
10. Contributions to a SIMPLE IRA are excludible from federal income tax and not
subject to federal income tax withholding when made to the SIMPLE IRA.
Salary reduction contributions are subject to FICA, FUTA or RRTA tax when
made and must be reported on the employee's Form W-2 wage statement.
Matching and nonelective employer contributions made to a SIMPLE IRA are not
subject to FICA, FUTA or RRTA and are not required to be reported on Form
W-2.
11. A SIMPLE IRA must be established by or on behalf of an employee prior to the
first date by which a contribution is required to be deposited into the
SIMPLE IRA.
ELIGIBLE EMPLOYEES: Under a SIMPLE Retirement Plan established by an Eligible
Employer, all employees of the employer who received at least $5,000 in
compensation from the employer during any two preceding calendar years, whether
or not consecutive, and who are reasonably expected to receive at least $5,000
in compensation during the calendar year, must be eligible to participate in
the SIMPLE Plan for the calendar year. An employer may impose less restrictive
eligibility requirements, such as eliminating or reducing the prior year
compensation requirements, the current year compensation requirement, or both,
under its SIMPLE Plan.
An employer, at its option, may exclude from eligibility employees who are
included in a unit of employees covered by an agreement that the Secretary of
Labor finds to be a collective bargaining agreement between employee
representatives and one or more employers, if there is evidence that retirement
benefits were the subject of good faith bargaining between such employee
representatives and such employer or employers; in the case of a trust
established or maintained pursuant to an agreement that the Secretary of Labor
finds to be a collective bargaining agreement between air pilots represented in
accordance with Title II of the Railway Labor Act and one or more employees, all
employees not covered by that agreement; and employees who are nonresident
aliens and who received no earned income from the employer that constitutes
income from sources within the United States.
PARTICIPATION IN ANOTHER PLAN: An eligible employee may participate in an
employer's SIMPLE Plan, even if he or she also participates in a plan of a
different employer for the same year. However, the employee's salary reduction
contributions are subject to the limitation of section 402(g), which provides an
aggregate limit on the exclusion for elective deferrals for any individual.
Also, an eligible employee who participates in an employer's SIMPLE plan and an
eligible deferred compensation plan described in section 457(b) is subject to
the limitation described in section 457(c). The employee is responsible for
monitoring compliance with these limitations.
ELIGIBLE EMPLOYERS: SIMPLE plans may be established by employers (including
tax-exempt employers and governmental entities) that had no more than 100
employees who earned $5,000 or more in compensation during the preceding
calendar year. For purposes of the 100-employee limitation, all employees
employed at any time during the calendar year are taken into account,
regardless of whether they are eligible to participate in the SIMPLE plan. This
means that otherwise excludible employees (i.e., certain union employees,
nonresident aliens with no U.S.-source income, and those employees who have not
met the plan's minimum eligibility requirements) must be taken into account.
SIMPLE PLAN CONTRIBUTIONS:
ELECTIVE DEFERRALS (SALARY REDUCTION CONTRIBUTIONS) -- A salary reduction
contribution is a contribution made pursuant to an employee's election to have
an amount contributed to his or her SIMPLE IRA, rather than have the amount
paid directly to the employee in cash. An eligible employee must be permitted
to elect to have salary reduction contributions made at the level specified by
the employee, expressed as a percentage of compensation for the year or as a
specific dollar amount. The maximum salary reduction contribution per calendar
year may not exceed $6,000, subject to cost of living adjustments. Salary
reduction contributions may not begin until the eligible employee completes a
form provided by the employer designed to permit the employee to elect the
salary reduction percentage or specific dollar amount. An employer may not
place any restrictions on the amount of an employee's salary reduction
contributions (e.g., by limiting the contribution percentage), except to the
extent needed to comply with the annual limit.
EMPLOYER CONTRIBUTIONS -- TWO OPTIONS
1. MATCHING CONTRIBUTIONS: Under a SIMPLE plan, an employer is generally
required to make a contribution on behalf of each eligible employee in an
amount equal to the employee's salary reduction contributions, up to a limit of
3% of the employee's compensation for the entire calendar year.
The 3% limit on matching contributions is permitted to be reduced for a
calendar year at the election of the employer, but only if: the limit is not
reduced below 1%; the limit is not reduced for more than two years out of the
five-year period that ends with and includes the year for which the election is
effective; and employees are notified of the reduced limit within a reasonable
period of time before the 60-day election period during which employees can
enter into salary reduction agreements as described below.
In determining whether the limit was reduced below 3% for a year, any year
before the first year in which an employer (or a predecessor employer)
maintains a SIMPLE plan will be treated as a year for which the limit was 3%.
If an employer chooses to make nonelective contributions for a year in lieu of
matching contributions, that year also will be treated as a year for which the
limit was 3%.
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2. NONELECTIVE CONTRIBUTIONS: Under a SIMPLE plan, an employer may make
nonelective contributions in lieu of matching contributions. These nonelective
contributions must be equal to 2% of each eligible employee's compensation for
the entire calendar year, regardless of whether the employee elects to make
salary reduction contributions for the calendar year. The employer may, but is
not required to, limit nonelective contributions to eligible employees who have
at least $5,000 (or some lower amount selected by the employer) of compensation
for the year. For purposes of this 2% nonelective contribution only, the
compensation taken into account must be limited to the amount of compensation
under section 401(a)(17) for the year. For 1997, this limit is $160,000 and will
be adjusted in accordance with the cost of living.
An employer may substitute the 2% nonelective contribution for the matching
contribution for a year only if eligible employees are notified within a
reasonable period of time before the 60-day election period during which
employees can enter into salary reduction agreements that a 2% nonelective
contribution will be made instead of a matching contribution.
EMPLOYEE ELECTIONS: During the 60-day period immediately preceding
January 1st of a calendar year (i.e., November 2 to December 31 of the preceding
calendar year), an eligible employee must be given the right to enter into a
salary reduction agreement for the calendar year, or to modify a prior agreement
(including reducing the amount subject to this agreement to $0). However, for
the year in which the employee becomes eligible to make salary reduction
contributions, the period during which the employee may enter into a salary
reduction agreement or modify a prior agreement is a 60-day period that includes
either the date the employee becomes eligible or the day before that date. For
example, if an employer establishes a SIMPLE plan effective as of July 1, 1997,
each eligible employee becomes eligible to make salary reduction contributions
on that date and the 60-day period must begin no later than July 1 and cannot
end before June 30, 1997.
During these 60-day periods, employees have the right to modify their
salary reduction agreements without restrictions. In addition, for the year in
which an employee becomes eligible to make salary reduction contributions, the
employee must be able to commence these contributions as soon as the employee
becomes eligible, regardless of whether the 60-day period has ended. An employer
may, but is not required to, provide additional opportunities or longer periods
for permitting eligible employees to enter into salary reduction agreements or
to modify prior agreements.
An employee must be given the right to terminate a salary reduction
agreement for a calendar year at any time during the year even if this is
outside a SIMPLE plan's normal election period. The employer's SIMPLE plan may,
however, provide that an employee who terminates a salary reduction agreement
at any time other than the normal election period is not eligible to resume
participation until the beginning of the next calendar year.
EMPLOYER ADMINISTRATIVE AND NOTIFICATION REQUIREMENTS: An employer must notify
each employee, immediately before the employee's 60-day election period, of the
employee's opportunity to enter into a salary reduction agreement or to modify
a prior agreement. If applicable, this notification must disclose an employee's
ability to select the financial institution that will serve as the trustee or
custodian of the employee's SIMPLE IRA. Such notification must also include the
Summary Description required under section 408(1)(2)(B). Such notification must
also include whether the employer will be making either matching contributions
(including the employer's election to reduce the matching contribution below
3%) or nonelective contributions as previously described.
If an eligible employee who is entitled to a contribution under the
employer's SIMPLE plan is unwilling or unable to establish a SIMPLE IRA with
any financial institution prior to the date on which the contribution is
required to be made to the SIMPLE IRA of the employee, the employer may execute
the necessary SIMPLE IRA documents on the employee's behalf with a financial
institution selected by the employer.
The employer must deliver the salary reduction contributions to the
financial institution maintaining the SIMPLE IRA as of the earliest date on
which the contributions can reasonably be segregated from the employer's
general assets, but no later than the close of the 30-day period following the
last day of the month in which amounts would otherwise have been payable to
the employee in cash.
Matching and nonelective employer contributions must be made to the
financial institution maintaining the SIMPLE IRA no later than the due date for
filing the employer's income tax return, including extensions, for the taxable
year that includes the last day of the calendar year for which the
contributions are made.
ROLLOVERS:
ROLLOVER CONTRIBUTIONS FROM ANOTHER SIMPLE IRA - A rollover contribution to
this SIMPLE IRA is only permitted from another SIMPLE IRA. A rollover
contribution from another SIMPLE IRA is any amount the participant receives
from one SIMPLE IRA and redeposits some or all of it into this SIMPLE IRA. The
participant is not required to roll over the entire amount received from the
first SIMPLE IRA. However, any amount you do not roll over will be taxed at
ordinary income tax rates for federal income tax purposes and may also be
subject to an additional tax if the distribution is a premature distribution
described below.
ROLLOVER DISTRIBUTIONS FROM A SIMPLE IRA - A distribution from any SIMPLE
IRA may be rolled over only to another SIMPLE IRA during the two-year period
the participant first participated in the employer's SIMPLE plan. Thus, a
distribution from a SIMPLE IRA during that two-year period qualifies as a
rollover contribution (and is not includible in gross income of the
participant) only if the distribution is paid into another SIMPLE IRA and
satisfies the other requirements that apply to all IRA rollovers under section
408(d)(3). SIMPLE IRAs may never be rolled into an employer's plan, such as a
qualified plan or section 403(b) plan. After this two-year period, a
distribution from a SIMPLE IRA may be rolled over to any IRA maintained by the
individual. This two-year period begins on the first day on which contributions
made by the individual's employer are deposited in the individual's SIMPLE IRA.
SPECIAL RULES THAT APPLY TO ROLLOVERS -
o The rollover must be completed no later than the 60th day after the day the
distribution was received by you.
o You may have only one IRA-to-IRA rollover during a 12-consecutive-month
period measured from the date you received a distribution of an IRA which
was rolled over to another IRA. (See IRS Publication 590 for more
information).
o The same property you receive in a distribution must be the same property
you roll over into the second IRA. For example, if you receive a
distribution from an IRA of property, such as stocks, that same stock must
be rolled over into the second IRA.
o You are required to make an irrevocable election indicating that this
transaction will be treated as a rollover contribution.
o You are not required to receive a complete distribution from your IRA in
order to make a rollover contribution into another IRA, nor are you
required to roll over the entire amount you received from the first IRA.
o If you inherit an IRA due to the death of the participant, you may not roll
this IRA into your own IRA unless you are the spouse of the decedent.
o If you are age 70 1/2 or older and wish to roll over to another IRA, you
must first satisfy the minimum distribution requirement for that year and
then the rollover of the remaining amount may be made.
o Rollover contributions to a SIMPLE IRA may not be made from a qualified
plan, 403(b) plan, or any other IRA that is not a SIMPLE IRA.
EXCESS DEFERRALS: Excess elective deferrals (amounts in excess of the $6,000
SIMPLE elective deferral limit) are includible in your gross income in the
calendar year of deferral. Income on the excess elective deferrals is
includible in your income in the year of withdrawal from the SIMPLE IRA. You
should withdraw excess elective deferrals and any allocable income, from your
SIMPLE IRA by April 15 following the year to which the deferrals relate. These
amounts may not be transferred or rolled over tax-free to another SIMPLE IRA.
If you fail to withdraw excess elective deferrals, and any allocable income, by
the following April 15th, the excess elective deferrals will be subject to the
IRA contribution limitations of sections 219 and 408 of the Code and thus may
be considered an excess contribution to your IRA. Such excess deferrals may be
subject to a 6% excise tax for each year they remain in your SIMPLE IRA. Income
on excess elective deferrals in includible in your gross income in the year you
withdraw it from your IRA and must be withdrawn by April 15 following the
calendar year to which the deferrals relate. Income withdrawn from the IRA
after that date may be subject to a 10% tax (or 25% if withdrawn within the
first two years of participation) on early distributions. The rules for
determining and allocating income attributable to excess elective deferrals and
other excess SIMPLE contributions are the same as those governing regular IRA
excess contributions. The trustee or custodian of your SIMPLE IRA will inform
you of the income allocable to such excess amounts.
DISTRIBUTIONS: In general, all distributions from a SIMPLE IRA are subject to
federal income tax by the payee or distributee, whichever the case may be. When
you start withdrawing from your SIMPLE IRA, you may take the distributions in
regular payments, random withdrawals or in a single-sum payment. Generally, all
amounts distributed to you from your SIMPLE IRA are included in your gross
income in the taxable year in which they are received. However, if you have
made nondeductible contributions to any regular IRA as permitted under section
408(o) of the Code, the nontaxable portion of the distribution, if any, will be
a percentage based upon the ratio of your unrecovered nondeductible
contributions to the aggregate of all IRA balances, including SEP, SIMPLE and
rollover contributions, as of the end of the year in which you take the
distribution, plus distributions from the account during the year. All taxable
distributions from your SIMPLE IRA are taxed at ordinary income tax rates for
federal income tax purposes and
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are not eligible for either capital gains treatment or 5/10 year averaging. An
employer may not require an employee to retain any portion of the contribution
in the SIMPLE IRA or otherwise impose any withdrawal restrictions.
PREMATURE DISTRIBUTIONS -- In general, if you are under age 59 1/2 and
receive a distribution from your SIMPLE IRA account, a 10% additional income tax
will apply to the taxable portion of the distribution, unless the distribution
is received due to death; disability; a series of substantially equal periodic
payments at least annually over your life expectancy or the joint life
expectancy of you and your designated beneficiary; medical expenses that exceed
7.5% of your adjusted gross income; health insurance premiums paid by certain
unemployed individuals; a qualifying rollover distribution; or the timely
withdrawal of an excess deferral plus income attributable. If you request a
distribution in the form of a series of substantially equal payments, and you
modify the payments before five years have elapsed and before attaining age
59 1/2, the 10% additional income tax will apply retroactively to the year
payments began through the year of such modification. In addition, if you
request a distribution from your SIMPLE IRA within your first two years of
participation in the SIMPLE plan and none of the exceptions listed above applies
to the distribution, the normal 10% additional income tax referred to earlier is
increased to 25%.
AGE 70 1/2 REQUIRED MINIMUM DISTRIBUTIONS -- You are required to begin
receiving minimum distributions from your SIMPLE IRA by your required
beginning date (the April 1 of the year following the year you attain age
70 1/2). The year you attain age 70 1/2 is referred to as your "first
distribution calendar year." Your minimum distribution is based upon the value
of your account at the end of the prior year (less any required distributions
you received between January 1 and April 1 of the year following your first
distribution calendar year) by the joint life expectancy of you and your
designated beneficiary. If you do not have a designated beneficiary then the
minimum distribution will be based upon your single life expectancy.
As you can see, who you designate as beneficiary under your SIMPLE IRA
will affect the period over which distributions may be made. If you have more
than one primary beneficiary, generally the beneficiary with the shortest life
expectancy will be the measuring life expectancy used for determining the
period over which distributions will be made. If no beneficiary is named or
you name a beneficiary which is not an individual (i.e., your estate),
distributions will be based upon your single life expectancy.
By the April 1 following your first distribution calendar year, you must
make certain elections on a form provided by the Custodian. If no election is
made, you will be deemed to have elected to take your distributions over a
period not to exceed your single life expectancy. The required distributions
for the second distribution calendar year and for each subsequent distribution
calendar year must be made by December 31 of such year.
Unless otherwise elected by the Custodian (or by you, if the Custodian
permits) in determining the amount to be distributed for the second
distribution calendar year and subsequent distribution calendar years, your
life expectancy (and your designated beneficiary's life expectancy) shall not
be recalculated. If the Custodian elects (or you elect, if the Custodian
permits) to recalculate your life expectancy or your spouse's life expectancy,
you will generally have a longer period of time over which payments will be
made and therefore the minimum distribution will be less.
CAUTION: If you or your spouse should die, the decedent's life expectancy
that is being recalculated is reduced to zero which will reduce the period of
distribution to the survivor's single life expectancy. If recalculation is not
elected, the death of either person will not have an effect on the payment
period.
In any distribution calendar year you may take more than the required
minimum. However, if you take less than the required minimum with respect to
any distribution calendar year, you are subject to a federal excise tax penalty
of 50% of the difference between the amount required to be distributed and the
amount actually distributed.
MINIMUM DISTRIBUTION INCIDENTAL BENEFIT (MDIB) RULE -- Basically, this
rule specifies that benefits provided under a retirement plan must be for the
primary benefit of a participant rather than for his/her beneficiaries. If your
spouse is your sole beneficiary, these special MDIB rules do not apply. The
amount required to be distributed under the MDIB rule may in some cases be more
than the amount required under the normal age 70 1/2 required minimum
distribution rules. If someone other than or in addition to your spouse is a
named primary beneficiary, the minimum distribution required is the greater of
the amount determined under the regular 70 1/2 rules and the amount determined
under the MDIB rules. The minimum amount to be distributed under the MDIB rules
is the amount determined by taking the balance in your SIMPLE IRA account and
dividing it by a factor taken from an IRS table specified in IRS regulations.
The table provides life expectancies for you and a beneficiary who is assumed
to be 10 years younger.
DEATH DISTRIBUTIONS -- If you die after your required beginning date, the
balance in your SIMPLE IRA will be distributed in a manner which is at least as
rapid as the method of distribution being used on the date of your death. If
you die before your required beginning date, the balance in your SIMPLE IRA
must generally be distributed within five years from the date of your death.
However your beneficiary(ies) may elect to receive the balance in your account
over the single life expectancy of your designated beneficiary if distributions
begin no later than the end of the year containing the one year anniversary of
your death. In addition, if your only beneficiary is your surviving spouse,
distributions need not commence until December 31st of the year you would have
attained age 70 1/2.
PROHIBITED TRANSACTIONS -- If you or your beneficiary engage in a
prohibited transaction (as defined under Section 4975 of the Internal Revenue
Code) with your SIMPLE IRA, it will lose its tax exemption and you must include
the value of your account in your gross income for that taxable year. If you
pledge any portion of your SIMPLE IRA as collateral for a loan, the amount so
pledged will be treated as a distribution and will be included in your gross
income for that year.
INCOME TAX WITHHOLDING -- All withdrawals from your SIMPLE IRA (except a
direct transfer) are subject to federal income tax withholding. You may,
however, elect not to have withholding apply to your SIMPLE IRA distribution in
most cases. If withholding does apply to your distribution, it is at the rate
of 10% of the amount of the distribution.
DESIGNATED FINANCIAL INSTITUTION "DFI":
In general, under section 408(p), an employer must permit an employee to select
the financial institution for the SIMPLE IRA to which the employer will make
all contributions on behalf of the employee. In this case, the financial
institution is referred to as a "Non-DFI." Alternatively, under section
408(p)(7), an employer may require that all SIMPLE contributions initially be
made to a single designated financial institution selected by the employee. In
this case, the financial institution is referred to as a "DFI." Refer to your
employer's SIMPLE Retirement Plan document to determine if the financial
institution is a DFI or a Non-DFI.
USE OF A DESIGNATED FINANCIAL INSTITUTION "DFI" -- If an employer
requires that all SIMPLE contributions initially be made to a DFI, the
following requirements must be met:
1. The employer and the financial institution must agree that the
financial institution will be a DFI for the employer's SIMPLE plan;
2. The DFI must agree that, if a participant elects before the
expiration of the employee's 60-day election period, the
participant's balance will be transferred without cost or penalty to
another SIMPLE IRA (or after the two-year period no longer applies,
to any IRA) to a financial institution selected by the participant;
and
3. Each participant is given written notification describing the
procedures under which, if a participant so elects, the participant's
balance will be transferred without cost or penalty to another SIMPLE
IRA (or after the two-year period no longer applies, to any IRA) to a
financial institution selected by the participant.
If the participant elects before the expiration of the 60-day election
period to have the balance transferred without cost or penalty as described
above, such election is valid only with respect to the balance attributable to
SIMPLE contributions for the calendar year following that 60-day election
period (or, for the year in which an employee becomes eligible to make salary
reduction contributions for the remainder of that year) and subsequent calendar
years if such election so provides.
If the participant timely elects the transfer of the balance without cost
or penalty as described above, the participant's balance must be transferred on
a reasonably frequent basis, such as on a monthly basis. If a participant
timely elects this transfer without cost or penalty, the Custodian reserves the
right to restrict the investment to a specified investment option until
transferred, even though a variety of investment options are available with
respect to contributions that the participant has not elected to transfer.
A transfer is deemed to be made without cost or penalty if no liquidation,
transaction, redemption or termination fee, or any commission, load (whether
front-end or back-end) or surrender charge or similar fee or charge is imposed
with respect to the balance being transferred that the participant has filed a
timely election with the DFI. However, the DFI can charge a reasonable annual
administrative fee to a SIMPLE IRA from which balances must be transferred in
accordance with the participant's timely transfer election.
In order to timely elect a transfer without cost or penalty, the
participant must indicate such election on the SIMPLE IRA Plan Application
attached hereto and must be received by the DFI no later than the expiration of
the 60-day election period applicable to the employee. If the participant fails
to timely elect such transfers without cost or penalty, the DFI reserves the
right to charge any or all fees and expenses described in Section 8.05 of this
SIMPLE IRA plan agreement.
USE OF A NONDESIGNATED FINANCIAL INSTITUTION "NON-DFI" -- If the
employer's SIMPLE plan permits the participants to select their own financial
institution to serve as trustee or custodian of the SIMPLE IRA, the rules
explained above do not apply and the Custodian may charge any and all fees
described in Section 8.05 of the SIMPLE IRA plan agreement.
TRANSFERS DEFINED -- A direct transfer is a payment from this SIMPLE IRA
directly to another trustee or custodian of a SIMPLE IRA (or, after the
two-year period no longer applies, to the trustee or custodian of any IRA).
Transfers do not constitute a distribution since you are never in receipt of
the funds. The monies
31
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are transferred directly to the new trustee or custodian. If you should transfer
all or a portion of your SIMPLE IRA to your former spouse's IRA under a divorce
decree (or under a written instrument incident to divorce) or separation
instrument, you will not be deemed to have made a taxable distribution, but
merely a transfer. The portion so transferred will be treated at the time of the
transfer as the IRA of your spouse or former spouse. If your spouse is the
beneficiary of your SIMPLE IRA, in the event of your death, your spouse may
"assume" your SIMPLE IRA. The assumed IRA is then treated as your surviving
spouse's IRA.
SUMMARY DESCRIPTION REQUIREMENTS: In general, the Custodian of any
SIMPLE IRA must annually provide to the employer maintaining the SIMPLE plan a
Summary Description early enough to allow the employer to meet its notification
obligations. If the Custodian of this SIMPLE IRA is a DFI, the Summary
Description will be provided directly to the employer by the Custodian in the
underlying SIMPLE plan agreement. If the Custodian of this SIMPLE IRA is a
Non-DFI, the Summary Description will be provided directly to the employee by
the Custodian. The employee agrees to have the employer complete certain
information contained on the Summary Description with respect to the employer's
SIMPLE plan provisions. A sample Summary Description for a Non-DFI is located on
the following page. The Custodian of a "transfer SIMPLE IRA" is not required to
provide this Summary Description. A SIMPLE IRA is a "transfer SIMPLE IRA" if it
is not a SIMPLE IRA to which the employer has made contributions under the
SIMPLE plan.
PROCEDURES FOR WITHDRAWALS: All distributions from this SIMPLE IRA
must be requested in writing on a form provided to the participant by the
Custodian. After the withdrawal form has been completed and executed by the
recipient, the form must be either hand delivered to the Custodian during normal
business hours or mailed to the Custodian by first class mail, certified or
registered mail prepaid through the U.S. Postal Service, or through any means of
an expedited delivery service. After receipt of a properly executed withdrawal
form, the Custodian will process the distribution as soon as administratively
feasible.
FEDERAL ESTATE AND GIFT TAXES: Generally, there is no specific exclusion for
SIMPLE IRAs under the estate tax rules. Therefore, in the event of your death,
your SIMPLE IRA balance will be includible in your gross estate for federal
estate tax purposes. However, if your surviving spouse is the beneficiary of
your SIMPLE IRA, the amount in your SIMPLE IRA may qualify for the marital
deduction available under Section 2056 of the Internal Revenue Code. A transfer
of property for federal gift tax purposes does not include an amount which a
beneficiary receives from a SIMPLE IRA plan.
PENALTIES: If you are under age 59 1/2 and receive a premature distribution from
your SIMPLE IRA, an additional 10% (or 25% for certain SIMPLE IRA distributions)
income tax will apply on the taxable amount of the distribution. If you make an
excess deferral to your SIMPLE IRA and it is not corrected on a timely basis, an
excise tax of 6% is imposed on the excess amount. This tax will apply each year
to any part or all of the excess which remains in your account. If you are age
70 1/2 or over or if you should die, and the appropriate required minimum
distributions are not made from your SIMPLE IRA, an additional tax of 50% is
imposed upon the difference between what should have been distributed and what
was actually distributed.
For tax years ending before 1/1/97, you will be taxed an additional 15% on
any amount you receive and include in income during a calendar year from
qualified plans, TSAs and all IRAs which exceeds the greater of $150,000
(unindexed) or $112,500 (indexed for cost of living). Before you receive an
excess distribution, you should seek advice from your tax advisor with respect
to the application of these rules. For tax years 1997, 1998 and 1999, the 15%
excess distribution tax will not apply. In the event of your death, your estate
may be subject to a 15% tax on the "excess accumulation" in all of your
qualified plans, TSAs and IRAs. You should seek the advice of your own tax
advisor with respect to the application of this excess accumulation excise tax.
You must file IRS Form 5329 with the Internal Revenue Service for any year an
additional tax is due.
IRS APPROVAL AS TO FORM: This SIMPLE IRA Custodial Agreement has been approved
by the Internal Revenue Service as to form. This is not an endorsement of the
plan in operation or of the investments offered.
ADDITIONAL INFORMATION: You may obtain further information on IRAs and SIMPLE
IRAs from your District Office of the Internal Revenue Service. In particular
you may wish to obtain IRS Publication 590 (Individual Retirement Arrangements).
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EXHIBIT 14(f)
[AIM LOGO APPEARS HERE]
ROTH IRA APPLICATION
TO OPEN YOUR AIM ROTH IRA ACCOUNT.
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Complete Sections 1-9.
Return completed application and check to: A I M Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739. Phone: 800-959-4246.
Minors cannot open an AIM Roth IRA account.
1 INVESTOR INFORMATION (Please print or type.)
Name ________________________________________________________________________________________________________________________
First Middle Last
Address _____________________________________________________________________________________________________________________
Street
_____________________________________________________________________________________________________________________________
City State ZIP Code
Social Security Number _____________________________________________________________________ Birth Date _____ /_____ /_____
(Required to Open Account) Month Day Year
Home Telephone (_____)_______________________________________Work Telephone (_____)__________________________________________
2 DEALER INFORMATION (To be completed by securities dealer.)
Name of Broker/Dealer Firm _________________________________________________________________________________________________
Home Office Address _________________________________________________________________________________________________________
Representative Name and Number _____________________________________________________________________________________________
Authorized Signature of Dealer _____________________________________________________________________________________________
Branch Address ______________________________________________________________________________________________________________
Branch Telephone _____________________________________________________________________________________________________________
/ / Authorized for NAV purchase. (If authorized for NAV purchase, other than the Broker, please attach NAV Certification
Form.)
3 CONTRIBUTION TYPE
/ / REGULAR - Contribution for tax year 19 _____ .
/ / CONVERSION - Represents a conversion from a Traditional IRA account.
/ / TRANSFER - Transfer from another Roth IRA account. Please complete Roth IRA Asset-Transfer Form.
4 FUND INVESTMENT
Indicate Fund(s) and contribution amount(s).
MAKE CHECK PAYABLE TO INVESCO TRUST COMPANY. Minimum purchase to open a Roth IRA is $250.
Fund Amount of Investment Class of Shares (check one)
/ / AIM Advisor Flex Fund $_________________ / / Class A / / Class C
/ / AIM Advisor International Value Fund $________________ / / Class A / / Class C
/ / AIM Advisor Large Cap Value Fund $________________ / / Class A / / Class C
/ / AIM Advisor MultiFlex Fund $________________ / / Class A / / Class C
/ / AIM Advisor Real Estate Fund $________________ / / Class A / / Class C
/ / AIM Aggressive Growth Fund $________________ Fund currently closed to new investors
/ / AIM Balanced Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Blue Chip Fund $________________ / / Class A / / Class B / / Class C
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/ / AIM Capital Development Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Charter Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Constellation Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Global Aggressive Growth Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Global Growth Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Global Income Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Global Utilities Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Growth Fund $________________ / / Class A / / Class B / / Class C
/ / AIM High Yield Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Income Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Intermediate Government Fund $________________ / / Class A / / Class B / / Class C
/ / AIM International Equity Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Limited Maturity Treasury Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Money Market Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Cash Reserve Shares
/ / AIM Value Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Weingarten Fund $________________ / / Class A / / Class B / / Class C
Total $________________
If no class of shares is selected, Class A shares will be purchased, except in the case of AIM Money Market Fund, where AIM
Cash Reserve Shares will be purchased. If you are funding your retirement account through a transfer, please indicate the
contribution amounts both in this section and in Section 3 of the Asset-Transfer Form.
5 TELEPHONE EXCHANGE PRIVILEGE
Unless indicated below, I authorize A I M Fund Services, Inc., to accept instructions from any person to exchange shares in my
account(s) by telephone in accordance with the procedures and conditions set forth in the Fund's current prospectus.
/ / I DO NOT want the Telephone Exchange Privilege.
6 DOLLAR-COST AVERAGING PLAN (Must be under the same registration and class of shares with the exception of AIM Cash
Reserve Shares of the AIM Money Market Fund, which may only be exchanged for Class A shares of another AIM fund.)
I have at least $5,000 in shares in my __________________________ Fund, for which no certificates have been issued, and I
would like to exchange:
$ _________________ into the ______________________________ Fund, Account # ____________________________
($50 minimum)
$__________________ into the ______________________________ Fund, Account # ____________________________
($50 minimum)
$__________________ into the ______________________________ Fund, Account # ____________________________
($50 minimum)
on a / / monthly / / quarterly basis starting in the month of ________ on or near the / / 10th or / / 25th of the
month.
7 REDUCED SALES CHARGE (optional)
RIGHT OF ACCUMULATION (This option is for Class A shares only.)
I apply for Right of Accumulation reduced sales charges based on the following accounts in The AIM Family of Funds-Registered
Trademark-:
Fund(s)/ Account No.(s) _______________________ Social Security No.(s)_________________________________
_______________________ __________________________________
_______________________ __________________________________
LETTER OF INTENT
I agree to the Letter of Intent provisions in the Prospectus. I plan to invest during a 13-month period a dollar amount of at
least:
/ / $25,000 / / $50,000 / / $100,000 / / $250,000 / / $500,000 / / $1,000,000
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8 BENEFICIARY INFORMATION
I hereby designate the following beneficiary(ies) to receive the balance in my Roth IRA custodial account upon my death. To be
effective, the designation of beneficiary and any subsequent change in designation of beneficiary must be filed with the
Custodian prior to my death. The balance of my account shall be distributed in equal amounts to the beneficiary(ies) who
survives me. If no beneficiary is designated or no designated beneficiary or contingent beneficiary survives me, the balance
in my Roth IRA will be distributed to the legal representatives of my estate. This designation revokes any prior designations.
I retain the right to revoke this designation at any time.
I hereby certify that there is no legal impediment to the designation of this beneficiary.
PRIMARY BENEFICIARY(IES)
Name _____________________________________________ __________ % Relationship _________________________
Address _____________________________________________________________________________________________________
Street City State ZIP Code
Beneficiary's Social Security Number _________________________________ Birth Date _____ /_____ /_____
Month Day Year
Name__________________________________________________ _________ % Relationship_________________________
Address ___________________________________________________________________________________________________
Street City State ZIP Code
Beneficiary's Social Security Number______________________________________ Birth Date _____ /_____ /_____
Month Day Year
CONTINGENT BENEFICIARY
In the event that I die and no primary beneficiary listed above is alive, distribute all Fund accounts in my Roth IRA to the
following contingent beneficiary(ies) who survives me, in equal amounts unless otherwise indicated. If more than one, please
attach a list.
Name _________________________________________________ _________ % Relationship______________________________
Address __________________________________________________________________________________________________________
Street City State ZIP Code
Beneficiary's Social Security Number_______________________________________ Birth Date _____ /_____ /_____
Month Day Year
9 SERVICE ASSISTANCE
Our knowledgeable Client Service Representatives are available to assist you between 7:30 a.m. and 5:30 p.m. Central time
at 800-959-4246.
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10 AUTHORIZATION AND SIGNATURE
I hereby establish the A I M Distributors, Inc. Roth Individual Retirement
Account (IRA) appointing INVESCO Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the Roth IRA
custodial agreement and disclosure statement and consent to the custodial
account fees as specified. I understand that a $10 annual Maintenance Fee
will be deducted early in each December from my AIM Roth IRA.
WITHHOLDING INFORMATION (SUBSTITUTE FORM W-9)
Under the Interest and Dividend Tax Compliance Act of 1983, the Fund
is required to have the following certification: Under the penalties
of perjury I certify by signing this Application as provided below
that:
1. The number shown in Section 1 of this Application is my correct
Social Security (or Tax Identification) Number, and
2. I am not subject to backup withholding either because (a) I have
not been notified by the Internal Revenue Service (the "IRS") that I
am subject to backup withholding as a result of a failure to report
all interest or dividends or (b) the IRS has notified me that I am no
longer subject to backup withholding. (This paragraph (2) does not
apply to real estate transactions, mortgage interest paid, the
acquisition or abandonment of secured property, contributions to an
individual retirement arrangement and payments other than interest and
dividends.)
YOU MUST CROSS OUT PARAGRAPH (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY
THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE
OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN.
In addition, the Fund hereby incorporates by reference into this
section of the Application either the IRS instructions for Form
W-9 or the substance of those instructions--whichever is
incorporated in the Prospectus.
SIGNATURE PROVISIONS
I, the undersigned Depositor, have read and understand the foregoing
Application and the attached material included herein by reference. In
addition, I certify that the information which I have provided and the
information which is included within the Application and the attached
material included herein by reference is accurate including but not limited
to the representations contained in the Witholding Information section of
this Application above. (The Internal Revenue Service does not require your
consent to any provision of this document other than the certifications to
avoid backup withholding.)
Dated _____ /_____ /_____
Signature of Roth IRA Shareholder ______________________________________
11 MAILING INSTRUCTIONS
Make check payable to INVESCO Trust Company.
Return Application to:
REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY
AIM Fund Services, Inc. AIM Fund Services, Inc.
P.O. Box 4739 11 Greenway Plaza, Suite 763
Houston, TX 77210-4739 Houston, TX 77046
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[AIM LOGO APPEARS HERE]
ROTH IRA ASSET-TRANSFER FORM
USE THIS FORM ONLY WHEN TRANSFERRING ASSETS FROM AN EXISTING ROTH IRA TO AN AIM
ROTH IRA.
THIS FORM IS NOT TO BE USED FOR CONVERSIONS.
Note: Use this form ONLY if you want AIM to request the money directly from
another custodian.
Complete Sections 1-5.
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If you do not already have an AIM Roth IRA, you must also submit an AIM Roth IRA Application. AIM will arrange
the transfer for you.
1 INVESTOR INFORMATION (Please print or type.)
Name_________________________________________________________________________________________________________________________
First Name Middle Last Name
Address______________________________________________________________________________________________________________________
Street
_____________________________________________________________________________________________________________________________
City State Zip Code
Social Security Number______________________________________________________________________ Birth Date _____ /_____ /_____
Month Day Year
Home Telephone (_____)______________________________________________________ Work Telephone(_____)__________________________
2 CURRENT TRUSTEE/CUSTODIAN
Name of Resigning Trustee/Custodian__________________________________________________________________________________________
Account Number of Resigning Trustee/Custodian _____________________________________________________________________________
Address of Resigning Trustee/Custodian_______________________________________________________________________________________
Street
_____________________________________________________________________________________________________________________________
City State Zip Code
Attention _______________________________________________________ Telephone________________________________________________
3 ROTH IRA ACCOUNT INFORMATION
Please deposit proceeds in my / / New AIM Roth IRA* / / Existing AIM Roth IRA Account Number _________________________
INVESTMENT ALLOCATION:
Fund Name ____________________________________________________ Class __________________________ % ______________________
Fund Name ____________________________________________________ Class __________________________ % ______________________
Fund Name ____________________________________________________ Class __________________________ % ______________________
*If this is a new AIM Roth IRA account, you must attach a completed AIM Roth IRA Application. If no class of shares is
selected, Class A shares will be purchased with the exception of the AIM Money Market Fund, where AIM Cash Reserve Shares
will be purchased.
4 TRANSFER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
OPTION 1: Please liquidate from my Roth IRA account listed in Section 2 and transfer the amount indicated below to my Roth IRA
with INVESCO Trust Company.
Amount to liquidate: / / All / / Partial amount of $_______________
When to liquidate: / / Immediately / / At maturity _____/_____ /_____
OPTION 2: (If the account listed in Section 2 contains shares of an AIM Fund, you may choose to transfer them "in kind.")
Please deposit "in kind" the shares of the AIM Fund held in my account to INVESCO Trust Company. NOTE: ONLY AIM FAMILY OF FUND
SHARES MAY BE TRANSFERRED IN KIND. TO TRANSFER ALL OTHER ASSETS, THEY MUST BE LIQUIDATED.
Amount to transfer "in kind" immediately: / / All / / Partial amount of shares_____________
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5 AUTHORIZATION AND SIGNATURE
I have established a Roth Individual Retirement Account with the AIM Funds and have appointed INVESCO Trust Company as the
successor Custodian. Please accept this as your authorization and instruction to liquidate or transfer in kind the assets
noted above, which your company holds for me.
Your Signature ___________________________________________________________________________________ Date _____ /_____ /_____
Note: Your resigning trustee or custodian may require your signature to be guaranteed. Call that institution for
requirements.
Name of Bank or Brokerage Firm ______________________________________________________________________________________________
Signature Guaranteed by _____________________________________________________________________________________________________
(Name and title)
REMAINDER OF FORM TO BE COMPLETED BY AIM
6 CUSTODIAN ACCEPTANCE
This is to advise you that INVESCO Trust Company, as custodian, will accept the account identified above for:
Depositor's Name ____________________________________________________________________ Account Number ______________________
This transfer of assets is to be executed from fiduciary to fiduciary and will not place the participant in actual receipt
of all or any of the plan assets. No federal income tax is to be withheld from this transfer of assets.
Authorized Signature /s/ illegible Mailing Date _____ /_____ /_____
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(INVESCO Trust Company)
7 INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check. Return this completed form and completed Roth IRA application to:
INVESCO Trust Company, c/o A I M Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739.
Make check payable to INVESCO Trust Company.
Indicate the AIM account number and the Social Security number of the Roth IRA holder on all documents.
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[AIM LOGO APPEARS HERE]
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Form 5305-RA ROTH INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT Do not file
(January 1998) (Under Section 408A of the Internal Revenue Code) with the Internal
Department of the Treasury Revenue Service
Internal Revenue Services
- --------------------------------------------------------------------------------------------------------------------------
Name of depositor Date of birth of depositor Social security number
- --------------------------------------------------------------------------------------------------------------------------
Address of depositor Check if Roth Conversion IRA / /
Check if Amendment / /
- ---------------------------------------------------------------------------------------------------------------------------
Name of Custodian Address or principal place of business or custodian
- ---------------------------------------------------------------------------------------------------------------------------
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The depositor whose name appears above is establishing a Roth individual
retirement account (Roth IRA) under section 408A to provide for his or her
retirement and for the support of his or her beneficiaries after death.
The custodian named above has given the depositor the disclosure statement
required under Regulations section 1.408-6.
The depositor assigned the custodial account $........................
The depositor and the custodian make the following agreement:
- --------------------------------------------------------------------------------
ARTICLE I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then,
except in the case of a rollover contribution described in section 408A(e), the
custodian will accept only cash contributions and only up to a maximum amount of
$2,000 for any tax year of the depositor.
2. If this Roth IRA is designated as a Roth Conversion IRA, no
contributions other than IRA Conversion Contributions made during the same tax
year will be accepted.
ARTICLE II
The $2,000 limit described in Article I is gradually reduced to $0
between certain levels of adjusted gross income (AGI). For a single
depositor, the $2,000 annual contribution is phased out between AGI of
$95,000 and $110,000; for a married depositor who files jointly, between AGI
of $150,000 and $160,000; and for a married depositor who files separately,
between $0 and $10,000. In the case of a conversion, the custodian will not
accept IRA Conversion Contributions in a tax year if the depositor's AGI for
that tax year exceeds $100,000 or if the depositor is married and files a
separate return. Adjusted gross income is defined in section 408A(c)(3) and
does not include IRA Conversion Contributions.
ARTICLE III
The depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE IV
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with
other property except in a common trust fund or common investment fund
(within the meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
ARTICLE V
1. If the depositor dies before his or her entire interest is distributed
to him or her and the grantor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the depositor or, if the
depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:
(a) Be distributed by December 31 of the year containing the fifth
anniversary of the depositor's death, or
(b) Be distributed over the life expectancy of the designated
beneficiary starting no later than December 31 of the following the year of
the depositor's death.
If distributions do not begin by the date described in (b), distribution
method (a) will apply.
2. In case of distribution method 1.(b) above, to determine the minimum
annual payment for each year, divide the grantor's entire interest in the trust
as of the close of business on December 31 of the preceding year by the life
expectancy of the designated beneficiary using the attained age of the
designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent year.
3. If the depositor's spouse is the sole beneficiary on the depositor's
date of death, such spouse will then be treated as the depositor.
ARTICLE VI
1. The depositor agrees to provide the custodian with information
necessary for the custodian to prepare any reports required under sections
408(I) and 408A(d)(3)(E). Regulations sections 1.408-5 and 1.408-6, and under
guidance published by the Internal Revenue Service.
2. The custodian agrees to submit reports to the Internal Revenue Service
and the depositor prescribed by the Internal Revenue Service.
ARTICLE VII
Notwithstanding any other articles which may be added or Incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
ARTICLE VIII
This agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance. Other
amendments may be made with the consent of the persons whose signatures appear
below.
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17 Cat No. 25094Y Form 5305-RA (1-98)
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ARTICLE IX
The following information is applicable to Roth IRAs, not Traditional IRAs.
The rules regarding Roth IRAs are new. Congress and the Internal Revenue Service
are refining the rules, so the following rules and/or their interpretation are
subject to change.
1. PURSUANT TO THE TERMS of this A I M Distributors, Inc. Individual
Retirement Custodial Account Agreement and the related Roth IRA Application
(referred to herein as the "Roth IRA Adoption Agreement"), the Depositor directs
the Custodian to invest all custodial account funds after deductions for sales
charges and Custodian fees, in shares issued by the investment company or
companies selected by the Depositor on the Roth IRA Adoption Agreement, until
the Depositor hereafter gives the Custodian contrary instructions pursuant to
Article XIII below. The investment companies from which the Depositor may select
are enumerated on the applicable list prepared by A I M Distributors, Inc. (the
"Distributor"), a copy of which accompanies the Adoption Agreement. Such
investment companies are part of "The AIM Family of Funds-Registered
Trademark-," which are managed or advised by subsidiaries of A I M Management
Group Inc. and any such investment company will hereafter be referred to as
"Investment Company."
2. (i) ANNUAL CASH CONTRIBUTIONS:
The Depositor may make annual cash contributions to the account within the
limits specified in Article I. All contributions shall be hand delivered or
mailed to the Custodian by the Depositor, with an indication of the taxable year
to which such contribution relates.
(ii) ROLLOVER CONTRIBUTIONS:
In addition to any annual contributions referred to in Paragraph (i) above,
but subject to this Paragraph (ii), the Depositor may contribute to the account,
at any time, a rollover contribution of such cash or other property as shall
constitute a rollover amount or contribution under section 402(c), 403(a)(4),
403(b)(8), 408(d)(3) or 408A(e) of the Code. The Depositor shall be responsible
for determining whether a rollover to a Roth IRA is permissible under the
Internal Revenues Code, and the timeliness of any rollover. The Custodian will
accept for the account all rollover contributions which consist of cash, and it
may, but shall be under no obligation to, accept any other rollover
contribution. In the case of rollover contributions composed of assets other
than cash, the prospective Depositor shall provide the Custodian with a
description of such assets and such other information as the Custodian may
reasonably require. The Custodian may accept all or any part of such a rollover
contribution if it determines that the assets of which such contribution
consists are either in a medium proper for investment hereunder or that the
assets can be promptly liquidated for cash. The Custodian may reject any
rollover contribution.
The Depositor warrants that any rollover contribution to the account
consists of cash, the same property received in the distribution or, in the case
of amounts distributed to the Depositor from a qualified employer's plan or
annuity, the proceeds from the sale of the same property received in the
distribution.
3. THE DEPOSITOR SHALL BE FULLY AND SOLELY RESPONSIBLE for all taxes,
interest and penalties which might accrue or be assessed by reason of any excess
or impermissible deposit, and interest, if any, earned thereon. Any
contributions made by or on behalf of the Depositor in respect of a taxable year
of the Depositor shall be made by or on behalf of the Depositor to the Custodian
for deposit in the custodial account within the time period for claiming any
income tax deduction for such taxable year. It shall be the sole responsibility
of the Depositor to determine the amount of the contributions made hereunder.
The Depositor shall execute such forms as the Custodian may require in
connection with any contribution hereunder.
ARTICLE X
1. THE CUSTODIAN SHALL from time to time, subject to the provisions of
Articles IV and V, make distributions out of the custodial account to the
Depositor, in such manner and amounts as may be specified in written
instructions of the Depositor. All such instructions shall be deemed to
constitute a certification by the Depositor that the distribution so directed is
one that the Depositor is permitted to receive. A declaration of the Depositor's
intention as to the disposition of an amount distributed pursuant to Article V
hereof shall be in writing and given to the Custodian. The Custodian shall have
no liability with respect to any contribution to the custodial account, any
investment of assets in the custodial account or any distribution therefrom
pursuant to instructions received from the Depositor or pursuant to this
Agreement, or for any consequences to the Depositor arising from such
contributions, investments or distributions including, but not limited to,
excise and other taxes and penalties which might accrue or be assessed by reason
thereof, nor shall the Custodian be under any duty to make any inquiry or
investigation with respect thereto.
2. THE DEPOSITOR SHALL BE fully and solely responsible for all taxes and
penalties which might accrue or be assessed for having failed to make the annual
minimum withdrawal required in any year.
ARTICLE XI
A Depositor shall have the right to designate a beneficiary or
beneficiaries to receive any amounts remaining in his account in the event of
his death. Any prior beneficiary designation may be changed or revoked at any
time by a Depositor by written designation signed by the Depositor on a form
acceptable to, and filed with, the Custodian; provided, however, that such
designation, or change or revocation of a prior designation shall not become
effective until it has been received by the Custodian, nor shall it be effective
unless received by the Custodian no later than thirty days before the death of
the Depositor, and provided further that the last such designation of
beneficiary or change or revocation of beneficiary executed by the Depositor, if
received by the Custodian within the time specified, shall control. Unless
otherwise provided in the beneficiary designation, amounts payable by reason of
the Depositor's death will be paid in equal shares only to the primary
beneficiary or beneficiaries who survive the Depositor, or, if no primary
beneficiary survives the Depositor, to the contingent beneficiary or
beneficiaries who survive the Depositor. If the Depositor had not, by the date
of his death, properly designated a beneficiary in accordance with the preceding
sentences, or if no designated beneficiary survives the Depositor, then the
Depositor's beneficiary shall be the Depositor's estate.
ARTICLE XII
1. ANY ADMINISTRATIVE OR OTHER FEES of the Custodian and its agents for
performing duties pursuant to this Agreement shall be in such amount as shall be
established from time to time. The Depositor agrees to pay the Custodian the
fees specified in its current fee schedule and authorizes the Custodian to
charge the Depositor's custodian account for the amount of such fees.
2. UPON 30 DAYS' PRIOR WRITTEN NOTICE, the Custodian may substitute a new
fee schedule. The Custodian's fees, any income, gift, estate and inheritance
taxes and other taxes of any kind whatsoever, including transfer taxes incurred
in connection with the investment or reinvestment of the assets of the custodial
account, that may be levied or assessed in respect of such assets, and all other
administrative expenses incurred by the Custodian in the performance of its
duties including fees for legal services rendered to the Custodian, may be
charged to the custodial account with the right to liquidate Investment Company
shares for this purpose, or at the Custodian's option, shall be billed to the
Depositor directly.
ARTICLE XIII
1. THIS AGREEMENT SHALL take effect only when accepted and signed by the
Custodian. As directed, the Custodian shall then open and maintain a separate
custodial account for Depositor and invest the initial contribution hereunder in
shares of the Investment Company. Where the Roth IRA Adoption Agreement is
checked for spousal accounts, separate custodial accounts will be opened and
maintained in each spouse's name. The amounts specified in the Roth IRA Adoption
Agreement shall be credited to each spouse's separate custodial account except
that no more than $2,000 shall be credited to either custodial account.
2. THE CUSTODIAN SHALL invest subsequent contributions as directed. If any
such written instructions are not received as required however, or if received,
are in the opinion of the Custodian unclear, or if the accompanying contribution
exceeds $2,000 for the Depositor and/or $2,000 for the Depositor's spouse, the
Custodian may hold or return all or a portion of the contribution uninvested
without liability for loss of income or appreciation, and without liability for
interest, pending receipt of written instructions or clarification.
3. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, less charges, received on
Investment Company shares held in the custodial account shall (unless received
in additional such shares) be reinvested in shares of the Investment Company,
which shall be credited to the custodial account. If any distribution on such
shares may be received at the election of the Depositor in additional such
shares or in cash or other property, the Custodian shall elect to receive it in
additional Investment Company shares.
4. ALL INVESTMENT COMPANY SHARES ACQUIRED by the Custodian hereunder shall
be registered in the name of the Custodian (with or without identifying the
Depositor) or of its nominees. The Custodian shall deliver, or cause to be
executed and delivered, to the Depositor all notices, prospectuses, financial
statements, proxies and proxy solicitation materials relating to such Investment
Company shares held in the custodial account. The Custodian shall not vote any
Investment Company shares except in accordance with the written instructions
received from the Depositor.
ARTICLE XIV
1. THE CUSTODIAN SHALL keep adequate records of transactions it is required
to perform hereunder. Not later than six months after the close of each calendar
year or after the Custodian's registration or removal pursuant to Article XV
below, the Custodian shall render to the Depositor or the Depositor's legal
representative a written report or reports reflecting the transactions effected
by it during such period and the assets and liabilities of the custodial account
at the close of the period. Sixty days after rendering such report(s), the
Custodian shall (to the extent permitted by law) be forever released and
discharged from all liability and accountability to anyone with respect to its
acts and transactions shown in or reflected by such report(s), except with
respect to those as to which the Depositor or the Depositor's legal
representative shall have filed written objections with the Custodian within the
latter such sixty-day period.
2. THE CUSTODIAN SHALL receive and invest contributions as directed by the
Depositor, hold and distribute such investments, and keep adequate records and
reports thereon, all in accordance with this Agreement. The parties do not
intend to confer any other fiduciary duties of the Custodian, and none shall be
implied. The Custodian shall not be liable (and assumes no responsibility) for
the
18
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collection of contributions, the deductibility or propriety of any contribution
under this Agreement, or the purposes or propriety of any distribution from the
account, which matters are the responsibility of the Depositor or the
Depositor's legal representative.
3. THE DEPOSITOR, to the extent permitted by law, shall always fully
indemnify the Custodian and save it harmless from any and all liability
whatsoever which may arise in connection with this Agreement and matters which
it contemplates, except that which arises due to the Custodian's negligence and
willful misconduct. The Custodian shall not be obligated or expected to commence
or defend any legal action or proceeding in connection with this Agreement or
such matters unless agreed upon by the Custodian and Depositor or said legal
representative, and unless fully indemnified for so doing to the Custodian's
satisfaction.
4. THE CUSTODIAN MAY conclusively rely upon and shall be protected in
acting upon any written order from the Depositor or the Depositor's legal
representative or any other notice, request, consent, certificate or other
instruments or paper believed by it to be genuine and to have been properly
executed, and as long as it acts in good faith in taking or omitting to take any
other action in reliance thereon.
ARTICLE XV
1. THE CUSTODIAN MAY resign at any time upon 30 days' notice in writing to
the Depositor, and may be removed by the Depositor at any time upon thirty days'
notice in writing to the Custodian. Upon such resignation or removal, the
Depositor shall appoint a successor custodian to serve under this Agreement.
Upon receipt by the Custodian of written acceptance of such appointment by the
successor custodian, the Custodian shall transfer to such successor the assets
of the custodial account and all necessary records (or copies thereof)
pertaining thereto, provided that (at the Custodian's request) any successor
custodian shall agree not to dispose of any such records without the Custodian's
consent. The Custodian is authorized, however, to reserve such assets as it may
deem advisable for payment of any other liabilities constituting a charge on or
against the assets of the custodial account or on or against the Custodian, with
any balance of such reserve remaining after the payment of all such items to be
paid over to the successor custodian.
2. THE CUSTODIAN SHALL NOT be liable for the acts or omissions of such
successor custodian.
3. THE CUSTODIAN, AND EVERY SUCCESSOR CUSTODIAN appointed to serve under
this Agreement, must be a bank (as defined in Section 408(n) of the Code) or
such other person who qualifies with the Internal Revenue Service to serve in
the manner prescribed by Code section 408(a)(2) and satisfies the Custodian,
upon request, as to such qualification.
4. AFTER THE CUSTODIAN HAS transferred the custodial account assets
(including any reserve balance as contemplated above) to the successor
custodian, the Custodian shall be relieved of all further liability with respect
to this Agreement, the custodial account and the assets thereof.
ARTICLE XVI
1. THE CUSTODIAN SHALL terminate the custodial account and pay the
proceeds of the account to the depositor if within 30 days after the resignation
or removal of the Custodian pursuant to Article XV above, the Depositor has not
appointed a successor custodian which has accepted such appointment unless
within that time the Distributor appoints such successor and gives written
notice thereof to the Depositor and the Custodian. The Distributor shall have
the right, but not the duty, to appoint such a successor. Termination of the
custodial account shall be effected by distributing all of the assets therein in
cash or in kind to the Depositor in a lump sum, subject to the Custodian's right
to reserve funds as provided in said Article XV.
2. UPON TERMINATION of the custodial account in any manner provided for in
this Article XVI, this Agreement shall terminate and have no further force and
effect, and the Custodian shall be relieved from all further liability with
respect to this Agreement, the custodial account and all assets thereof so
distributed.
ARTICLE XVII
1. ANY NOTICE FROM THE CUSTODIAN TO THE DEPOSITOR provided for in this
Agreement shall be effective when mailed if sent by first class mail to the
Depositor at the Depositor's last known address as shown on the Custodian's
records. Any notice required or permitted to be given to the Custodian, shall
become effective upon actual receipt by the Custodian at such address as the
Custodian shall provide the Depositor from time to time in writing.
2. THIS AGREEMENT IS accepted by the Custodian and shall be construed and
administered in accordance with the laws of the State of Colorado. The Custodian
and the Depositor hereby waive and agree to waive right to trial by jury in an
action or proceeding instituted in respect to this custodial account. The
Depositor further agrees that the venue of any litigation between him and the
Custodian with respect to the custodial account shall be in the State of
Colorado.
3. THIS AGREEMENT IS intended to qualify under section 408A of the Code as
a Roth IRA and if any provision hereof is subject to more than one
interpretation or any term used herein is subject to more than one construction,
such ambiguity shall be resolved in favor of that interpretation or construction
which is consistent with that intent.
4. ALL PROVISIONS IN THIS AGREEMENT ARE subject to the Code and to
regulations promulgated thereunder. In the event that any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
5. THE CUSTODIAN SHALL have no duties whatsoever except such duties as it
specifically agrees to in writing, and no implied covenants or obligations shall
be read into this Agreement against the Custodian. The Custodian shall not be
liable under this Agreement, except for its own bad faith, gross negligence or
willful misconduct.
6. NO INTEREST, RIGHT OR CLAIM IN OR TO ANY PART of the custodial account
or any payment therefrom shall be assignable, transferable, or subject to sale,
mortgage, pledge, hypothecation, communication, anticipation, garnishment,
attachment, execution, or levy of any kind and the Custodian shall not recognize
any attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute or
anticipate the same, except as required by law.
7. THE DEPOSITOR HEREBY DELEGATES to the Custodian the power to amend
this Agreement from time to time as it deems appropriate, and hereby consents
to all such amendments, provided, however, that all such amendments are in
compliance with the provisions of the Code and the regulations promulgated
thereunder. All such amendments shall be effective as of the date specified
in a written notice of amendment which will be sent to the Depositor.
INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF FORM
This model custodial account agreement may be used by an individual who
wishes to adopt a Roth IRA under section 408A. When fully executed by the
Depositor and the Custodian not later than the time prescribed by law for filing
the Federal income tax return for the Depositor's tax year (not including any
extensions thereof), a Depositor will have a Roth IRA custodial account which
meets the requirements of section 408A. This account must be created in the
United States for the exclusive benefit of the Depositor or his/her
beneficiaries.
DEFINITIONS
CUSTODIAN. The Custodian must be a bank or savings and loan association, as
defined in section 408(n), or other person who has the approval of the Internal
Revenue Service to act as custodian.
DEPOSITOR. The Depositor is the person who establishes the custodial
account.
ROTH IRA FOR NONWORKING SPOUSES
Contributions to a Roth IRA custodial account for a non-working spouse must
be made to a separate Roth IRA custodial account established by the nonworking
spouse.
This form may be used to establish the Roth IRA custodial account for the
nonworking spouse.
An individual's social security number will serve as the identification
number of his or her individual retirement account.
For more information, obtain a copy of the required disclosure statement
from your custodian or get Publication 590, Individual Retirement Arrangements
(IRAs).
SPECIFIC INSTRUCTIONS
ARTICLE IV -- Distribution made under this Article may be made in a single
sum, periodic payment, or a combination of both.
ARTICLE IX -- This article and any that follow it may incorporate
additional provisions that are agreed upon by the Depositor and the Custodian to
complete the agreement. These may include, for example: definitions, investment
powers, voting rights, exculpatory provisions, amendment and termination,
removal of Custodian, Custodian's fees, state law requirements, beginning date
of distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the Depositor, etc. Use additional pages if
necessary and attach them to this form.
Note: This form may be reproduced and reduced in size for adoption to
passbook or card purposes.
THE AIM FAMILY OF FUNDS-Registered Trademark-
ROTH IRA CUSTODIAL ACCOUNT DISCLOSURE STATEMENT
Under applicable federal regulations, a custodian of a Roth IRA account is
required to furnish each depositor who has established or is establishing a Roth
IRA account with a statement which discloses certain information regarding the
account. INVESCO Trust Company (hereinafter referred to as the "Custodian") is
providing this Disclosure Statement to you in accordance with that requirement,
and this Disclosure Statement contains general information about the The AIM
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Family of Funds-Registered Trademark- Roth IRA Custodial Account (hereinafter
referred to as "Roth IRA"). This Disclosure Statement should be reviewed in
conjunction with both the Roth Individual Retirement Custodial Account agreement
(Form 5305 and any attachments thereto, hereinafter referred to as the
"Custodial Agreement") and the Adoption Agreement for your Roth IRA. You should
review this Disclosure Statement and the Roth IRA documents with your attorney
or tax advisor. The Custodian cannot give tax advice or determine whether or not
the Roth IRA is appropriate for you.
The following information is applicable to Roth IRAs, not Traditional IRAs. The
rules regarding Roth IRAs are new. Congress and the Internal Revenue Service are
refining the rules, so the following rules and/or their interpretation are
subject to change.
A. SEVEN DAY RIGHT TO REVOKE YOUR ROTH IRA.
You may revoke your Roth IRA at any time within 7 business days after the
date the Roth IRA is established, by giving proper notice. For purposes of
revocation, it will be assumed that you received the Disclosure Statement no
later than the date of your check with which you opened your Roth IRA. Written
notice must be hand delivered or sent by first class mail, in which case, the
revocation will be effective as of the date the notice is postmarked (or if sent
by certified or registered mail, the date of certification or registration).
Notice of revocation should be made to: A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 763, P.O. Box 4739, Houston, Texas 77210-4739, Attention:
Shareholder Services Department, area code (800) 959-4246. If you revoke your
Roth IRA, you are entitled to a refund of your entire contribution to the Roth
IRA, without adjustment for such items as sales commissions, administrative
expenses or fluctuation in market value. If you do not revoke within 7 business
days after the establishment of the Roth IRA, you will be deemed to have
accepted the terms and conditions of the Roth IRA and cannot later revoke the
Roth IRA without certain potential penalties.
B. STATUTORY REQUIREMENTS.
A Roth IRA is a trust or custodial account created or organized in the
United States for your exclusive benefit or that of your beneficiaries. It must
be created by a written governing instrument that meets the following
requirements:
(1) THE TRUSTEE OR CUSTODIAN MUST BE A BANK, federally insured credit
union, savings and loan association or another person eligible to act as trustee
or custodian;
(2) EXCEPT FOR ROLLOVER CONTRIBUTIONS (as described in Part F below), no
contribution will be accepted unless it is in cash or cash equivalent,
including, but not by way of limitation, personal checks, cashier's checks,
and wire transfers;
(3) EXCEPT FOR ROLLOVERS contributions of more than $2,000 for any tax year
may not be made;
(4) YOU WILL HAVE A NONFORFEITABLE INTEREST IN THE ACCOUNT;
(5) NO PART OF THE TRUST OR CUSTODIAL FUNDS will be invested in life
insurance contracts, nor may the assets be commingled with other property
except in a common trust fund or common investment fund. Furthermore, as
provided in section 408(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), your Roth IRA may not be invested in "collectibles," such as
art works, antiques, metals, gems, stamps, coins (with an exception for
certain U.S.-minted gold and silver coins and certain bullion), and certain
other types of tangible personal property. An investment in a collectible
would be treated as a distribution from your Roth IRA which would be
includible in your gross income, and, if you had not attained the age of 59
1/2, the distribution would also be subject to the premature distribution
penalty as discussed in Part E(5) below;
(6) UNLIKE A TRADITIONAL IRA, YOUR INTEREST IN YOUR ROTH IRA IS NOT
REQUIRED TO BE DISTRIBUTED WHEN YOU REACH AGE 70 1/2.
C. INVESTMENT OF YOUR ROTH IRA.
Under the terms of the Custodial Agreement, your contributions will be
invested by the Custodian in full and fractional shares of the investment
company or companies that you select. As provided in the Custodial Agreement,
you may only invest your Roth IRA Funds in shares of investment companies which
are part of "The AIM Family of Funds-Registered Trademark-," which are managed
or advised by subsidiaries of A I M Management Group Inc. You will be provided
with a list of the investment companies from which you may choose to invest.
Subject to the foregoing and to any additional restrictions described in the
Custodial Agreement, you have complete control over the investment of your Roth
IRA Funds. The Custodian will not provide any form of investment advice or make
investment recommendations of any type, so you will make all investment
decisions on the basis of information you obtain from other sources. When you
make a decision on how you wish to invest Funds held in your Roth IRA, you
should provide the Custodian with specific instructions, detailing your
investment decision so that the Custodian can effectuate such investments as
provided in your Roth IRA Custodial Agreement. If you fail to direct the
Custodian as to the Investment of all or any portion of your Roth IRA account,
the Custodian shall hold such uninvested amount in your account and shall incur
no liability for interest or earnings thereon. All dividends and capital gain
distributions received on shares of an investment company held in your Roth IRA
will be reinvested in shares of that investment company, if available, which
shall be credited to the Custodian account. Detailed information about the
shares of the AIM fund(s) you select must be furnished to you in the form of
prospectuses governed by rules of the Securities and Exchange Commission.
D. LIMITATIONS AND RESTRICTIONS ON ROTH IRA CONTRIBUTIONS AND DEDUCTIONS.
Except in the case of rollover contributions (see Part F below), generally
you may contribute up to the lesser of $2,000 or 100% of your compensation
(earned income) to your Roth IRA for any taxable year. A non-working spouse may
contribute up to $2,000 to a separate Roth IRA.
Contributions to a Roth IRA are nondeductible, but earnings on a Roth IRA
generally are not subject to federal income tax. The $2,000 individual Roth IRA
limit is reduced by any deductible or nondeductible contributions you make to a
Traditional IRA. You should consult your tax advisor to determine the specific
application of such rules to your Roth IRA contributions for any particular
taxable year.
Contributions to a Roth IRA are not deductible, but earnings on a Roth
IRA generally are not subject to federal income tax if they are distributed
after the account has been in existence for five years and the distribution
is made on account of death, disability, after age 59 1/2, or for certain
qualifying events. The $2,000 maximum contribution to a Roth IRA is reduced
for taxpayers whose income exceeds $95,000 (single filer) or $150,000 (joint
filers) and is phased-out entirely for taxpayers whose income exceeds
$110,000 (single) or $160,000 (joint).
E. FEDERAL INCOME TAX STATUS OF THE ROTH IRA AND CERTAIN DISTRIBUTIONS.
(1) IN GENERAL. Except as described below, your Roth IRA and earnings
thereon are exempt from federal income tax at least until distributions are made
from the Roth IRA.
(2) TAX TREATMENT OF DISTRIBUTIONS FROM A ROTH IRA. Contributions to a Roth
IRA are not tax-deductible, but distributions may be received tax-free under
certain circumstances. After a Roth IRA account has been maintained for at least
five years (whether or not contributions were made for all years), investment
earnings may be withdrawn without being subject to federal income tax if the
distribution is made after age 59 1/2, in the case of death or disability, or
for a first home purchase. A withdrawal for a first home purchase is limited to
$10,000 and is available to a person who has not had an ownership interest in a
principal residence during the two years ending on the date of purchase. The
dollar amount of contributions (but not earnings) to a Roth IRA may be withdrawn
without penalty at any time.
(3) EXCESS CONTRIBUTIONS. If contributions to your Roth IRA are in excess
of the limits stated in Part D above, you will be assessed a 6% nondeductible
excise tax on such excess amounts. This tax is payable for each year the excess
is permitted to remain in your Roth IRA. However, if the excess contribution and
all earnings thereon are returned before the due date for filing your income tax
return for the year in which the excess contribution was made, the 6% excise tax
will not be assessed. The earnings on such excess contributions that are
returned to you will be taxable as ordinary income and will be deemed to have
been earned and taxable in the tax year during which the excess contribution was
made. In addition, if you are not disabled or have not reached age 59 1/2, the
earnings will be subject to the 10% premature withdrawal penalty discussed
below. The 6% excess contribution tax may be eliminated for future tax years by
withdrawing the excess contribution from your Roth IRA before the due date for
filing your tax return for that year or by under-contributing for a subsequent
year by an amount equal to the excess contribution. If the total contributions
for the year to your Roth IRA are $2,000 or less, you may withdraw any excess
contributions after the due date for filing your tax return, including
extensions, and not include the amount withdrawn in your gross income. It is not
necessary to withdraw the interest or other income earned on the excess. You
will have to pay the 6% tax on the excess amount for each year the excess
contribution was in the Roth IRA.
If less than the maximum amount of contributions has been made in years
before the year you make an excess contribution, the prior year's difference may
not be used to reduce the excess contribution. Qualified rollover contributions,
as described in Part F below, are not considered excess contributions.
(4) PREMATURE DISTRIBUTIONS. In addition to any regular income tax that
may be payable, distributions from your Roth IRA that occur before you reach
age 59 1/2 (except in the event of disability, death, rollover, or as a
qualifying distribution), will be assessed a 10% additional income tax on the
amount distributed which is includible in your gross income. However, the
additional 10% income tax will not be imposed if the distribution is one of a
scheduled series of level payments to be made over your life or life
expectancy or over the joint lives or joint life expectancies of you and your
beneficiary. Amounts treated as distributions from the Roth IRA because of
pledging the Roth IRA as described below, or prohibited transactions as
described below, will also be considered premature distributions if they
occur before you reach age 59 1/2 (assuming you are not disabled).
(5) PLEDGING THE ROTH IRA. If you pledge your Roth IRA as security for a
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loan, the portion so pledged is treated as being distributed to you in that
year. In addition to any regular income tax that may be payable on the
distribution, the premature distribution penalty as discussed above may also be
applicable.
(6) PROHIBITED TRANSACTIONS. If you or your beneficiary engages in a
prohibited transaction, as described in section 4975 of the Code with respect to
your Roth IRA, your Roth IRA will lose its exemption from tax and you must
include the fair market value of your Roth IRA in your gross income for the year
during which the prohibited transaction occurred. In addition to any regular
income tax that may be payable, the premature distribution penalty as discussed
above may also be applicable.
(7) ESTATE AND GIFT TAX STATUS OF DISTRIBUTIONS. You should consult your
tax advisor with respect to the application of community property laws on estate
and gift tax issues relating to your Roth IRA.
(8) FEDERAL INCOME TAX WITHHOLDING. The taxable portion of distributions
from your Roth IRA, if any, is subject to federal income tax withholding unless
you elect not to have withholding applied. If you elect not to have withholding
applied to taxable distributions from your IRA, or if insufficient federal
income tax is withheld from any distribution, you may be responsible for payment
of estimated taxes, as well as for penalties under the estimated tax rules, if
withholding and estimated tax payments were not sufficient. Additional
information regarding withholding and the necessary election forms will be
provided no later than at the time a distribution is requested.
F. ROLLOVER CONTRIBUTIONS.
A rollover is a contribution of cash or other assets from one retirement
program to another. There are two kinds of rollover contributions to an IRA.
In one, you contribute amounts distributed to you from one IRA to another IRA.
With the other type, you contribute amounts distributed to you from your
employer's qualified plan or 403(b) plan to an IRA. A rollover is an allowable
IRA contribution which is not subject to the limits on regular contributions
discussed in Part D above. However, you may not deduct a rollover contribution
to your IRA on your tax return.
If you receive a distribution from the qualified plan of your employer or
former employer, the distribution must be an "eligible rollover distribution" in
order for you to be able to roll all or part of the distribution over to your
IRA. Your employer or former employer will give you the opportunity to roll over
the distribution directly from the plan to the IRA. If you elect, instead, to
receive the distribution, you must deposit it into the IRA within 60 days after
you receive it.
An "eligible rollover distribution" is any distribution from a qualified
plan that would be taxable other than (1) a distribution that is one of a series
of periodic payments for an employee's life or over a period of 10 years or
more, (2) a required distribution after you attain age 70 1/2 and (3) certain
corrective distributions.
The proceeds of a Roth IRA may be rolled over only to another Roth IRA. A
Roth IRA may accept the proceeds of a tax-qualified plan or a traditional IRA,
but any taxable portion of such a rollover shall be subject to federal income
tax. Similarly, a Traditional IRA may be redesignated as a Roth IRA, with the
taxable portion of the converted IRA being subject to federal income tax at the
time of conversion. In the case of such a rollover or conversion during 1998,
the amount required to be included in income shall be spread ratably over four
years.
G. AMENDMENTS.
The Custodian of your Roth IRA may amend the agreements establishing your
Roth IRA at any time. The Custodian will comply with the amendment procedures
set forth in your Custodial Agreement.
H. FINANCIAL DISCLOSURE.
Because the value of assets held in your Roth IRA is subject to market
fluctuation, the value of your Roth IRA can neither be guaranteed nor projected.
There is no assurance of growth in the value of your Roth IRA or guarantee of
investment results. You will, however, be provided with periodic statements of
your Roth IRA, including current market values of investments.
Certain fees will be charged by the Custodian in connection with your Roth
IRA. Such fees are disclosed on the Custodian's fee schedule, a copy of which
has been provided to you. Upon thirty days' prior written notice, the Custodian
may substitute a new fee schedule. Any fees or other expenses incurred in
connection with your Roth IRA will be deducted from your Roth IRA (with
liquidation of Fund Shares, if necessary), or at the Custodian's option, such
fees or expenses may be billed to you directly.
For its services to the various funds, in The AIM Family of
Funds-Registered Trademark-, INVESCO Trust Company receives a custodian fee.
This fee is in addition to fees it receives for acting as Custodian under the
Roth IRA. INVESCO Trust Company and A I M Distributors, Inc., also will receive
additional fees for performing specific services with respect to the various
funds in the AIM Family of Funds. Any such fees will be fully disclosed to you.
Potential investors should obtain a copy of the current Prospectus relating to
the fund(s) selected for investment prior to making an investment. Also, copies
of the Statement of Additional Information relating to such fund(s) will be
provided upon your request to A I M Distributors, Inc.
I. MISCELLANEOUS.
Each year you will be provided a statement(s) of account which will give
the amount of contributions to the Roth IRA, the year to which each contribution
relates, and the total value of the Roth IRA as of the end of the year.
Information relating to contributions and distributions must be reported
annually to the Internal Revenue Service and to you. You must also file Form
5329 (Return for Individual Retirement Savings Arrangement) with the Internal
Revenue Service for each taxable year during which you are assessed any penalty
or tax as discussed in Part E above.
Further information about Roth IRAs can be obtained from any district
office of the Internal Revenue Service or from the Custodian.
All provisions in this Disclosure Statement are subject to the Code and to
the regulations promulgated thereunder. This Disclosure Statement constitutes a
nontechnical restatement and summary of certain provisions of the Code which may
affect your Roth IRA. This is not a legal document. Your legal rights and
obligations are governed by the federal tax laws and regulations and your
Custodial Agreement and Adoption Agreement with the Custodian.
The Depositor has assigned the Roth IRA custodial account ______ dollars
($______) in cash.
The Depositor has assigned the Roth IRA custodial account ______ dollars
($______) in cash.
__________________________________________________________________________
Depositor's signature Date
__________________________________________________________________________
Custodian's signature Date
__________________________________________________________________________
Witness
(Use only if signature of the Depositor or the Custodian is required to be
witnessed.)
21
<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 TRUST
<TABLE>
<S> <C> <C>
/s/ WILLIAM J. GUILFOYLE
- ---------------------------------------- Trustee, Chairman of the May 7, 1998
William J. Guilfoyle Board and President
/s/ C. DEREK ANDERSON
- ---------------------------------------- Trustee May 7, 1998
C. Derek Anderson
/s/ FRANK S. BAYLEY
- ---------------------------------------- Trustee May 7, 1998
Frank S. Bayley
/s/ ARTHUR C. PATTERSON
- ---------------------------------------- Trustee May 7, 1998
Arthur C. Patterson
/s/ RUTH H. QUIGLEY
- ---------------------------------------- Trustee May 7, 1998
Ruth H. Quigley
</TABLE>
